by Caleb Talley
Roughly two weeks ago, the US Supreme Court cleared the way for states to legalize sports betting, striking down a 1992 federal law that prohibited most states from authorizing the controversial activity. The high court didn’t rule on the side of gambling; but rather, it passed the decision down to the state level, where it belongs.
“The legalization of sports gambling requires an important policy choice, but the choice is not ours to make,” wrote Justice Samuel Alito in the 6-3 opinion. “Congress can regulate sports gambling directly, but if it elects not to do so, each state is free to act on its own.”
The decision opened up an interesting window for Arkansas, a state where the issue of gambling has been hotly debated. Little more than a week after the high court decision, Attorney General Leslie Rutledge cleared the way for a ballot committee with a proposed constitutional amendment to authorize casinos in four counties to begin collecting signatures to qualify for the November ballot.
She didn’t want to. Rutledge has proven unwilling to certify ballot language for anycitizen groups. But the Arkansas Supreme Court didn’t really give her a choice – they ruled that she had to do her job, after all.
If the measure makes the ballot, we’ll get a chance to see where Arkansans stand on gambling. When given the opportunity to decide a measure on state lotteries, the people supported it by a nearly 2-to-1 margin. If this measure makes the ballot, I believe it will pass. But I’m sure there will be plenty of forces – Rutledge, included – who will try to keep it from the people. So, consider me skeptical.
As for sports betting, don’t hit the ATM just yet. The state still has laws on the books keeping Razorback and Red Wolf fans from placing their wagers. Sports betting is forbidden by Arkansas Code 5-66-114. The law deems sports betting an “offense against public health, safety or welfare.” After all, you’ll need that money to buy a case of beer and a pack of smokes before the game.
But lawmakers will have the opportunity, if they choose, to revisit sports betting in the 2019 regular legislative session, especially given the significant reductions in tax revenue projected to the state. Over the past couple of years, individual income-tax rates have been slashed, which is projected to reduce state revenue by $150 million a year. The governor has signaled that, in 2019, he wants the legislature to cut the state’s individual income-tax rates from 6.9 percent to 6 percent. That’s expected to cost the state an additional $180 million in tax revenue a year.
You can’t cut $330 million in tax revenue without also making massive cuts in spending – which would mean eliminating services to Arkansans – or supplementing the budget with new revenue streams.
Plenty of other states across the country are looking at sports betting as a means of serious tax revenue generation. Why can’t we? If lawmakers were to look at tax revenue from gambling as means of offsetting current and future cuts to income and sales taxes, they might find it much more palatable. And I’m sure their constituents would, too. Heck, plenty of Arkansans are betting on sports already. They’re just sending their dollars to Las Vegas to do so.
And we’re not talking chump change here, either.
According to a recent Bloomberg report, the sports gambling market in the United States is estimated to surpass $150 billion. With last month’s Supreme Court announcement, casino stocks like Caesars Entertainment, Boyd Gaming, Penn National and Churchill Downs shot up. And according to Oxford Economics, more than $3.4 billion in tax revenue could directly benefit states and local governments.
Are you telling me Arkansas is going to turn its nose up to that? It’s not like good folk of Arkansas are above gambling, either. There are prominent gambling presences in the state with Oaklawn in Hot Springs and Southland in West Memphis. And those two venues raked in more than $5 billionin revenue last year in electronic gaming alone. Granny might talk down on gamblers during Tuesday night canasta with the girls from church. But you can find her hitting the penny slots at Oaklawn on prime rib Thursdays.
Legalized sports betting in Arkansas would be a boon for the state’s two gambling intuitions, both of which contribute heavily to their local legislators. Oaklawn and Southland have collectively donated nearly $2 million to political candidates in Arkansas; so, expect there to be a conversation when the session rolls around.
There are, however, valid concerns regarding the integrity of the state’s collegiate athletics if sports betting were to be allowed in Arkansas. Nearly every college and professional sports organization has come out against the Supreme Court decision. Maintaining the integrity of these athletic events will be a full-time job.
But it’s not as if sports betting doesn’t already exist. It does. With their decision, the high court paved the way for the activity to come out from the shadows. Sports betting is not more dangerous, immoral or harmful to families than alcohol or pornography, both of which are very much legal.
Rather than to try and legislate morality, let’s legalize it, regulate it and tax it.
In Cash & Candor, Arkansas Money & Politics / AY Magazine Editor Caleb Talley aims to shoot it straight when it comes to business and politics in and around the Natural State. Talley comes to AMP by way of the Arkansas Delta, where he called balls and strikes at the Forrest City Times-Herald. He can be contacted by email at email@example.com. Read more Cash & Candor here.