"Nevada is the first state to make it legal for state residents to play poker online. It won't be the last, however. At least a dozen states are looking at Internet gambling as the latest means to replenish their coffers.

States got the official go-ahead to consider online gambling late last year -- two days before Christmas. Illinois and New York had asked the U.S. Department of Justice (DOJ) to clarify whether they could sell lottery tickets over the Internet. The DOJ ruled that neither the 1961 Wire Act (a law that many believed precluded Internet gambling) nor the Unlawful Internet Gambling Enforcement Act (which makes it illegal for financial institutions to process payments for online wagers) applies to lottery sales over the Internet. More specifically, the opinion assured states that so long as the gambling operator and the customer are within the same state and the betting activity does not include sporting events, a state's own laws apply. That gives state legislators permission to pass Internet gaming laws.

The temptation is the revenue. The American Gaming Association, in testimony before a congressional subcommittee, estimated that legalizing online poker would generate roughly $2 billion a year in new tax revenues. Supporters of legalizing online poker in California came up with an estimate that would indeed be golden to the Golden State: It would net $100 million to $250 million a year from online poker. But Iowa released a study in December that found that its state intake would be far less than private companies had estimated, only $3 million to $13 million a year."

Get the Story:
Penelope Lemov: The Pros and Cons of Internet Gambling (Governing Magazine 2/16)