[toc]For the second time in recent weeks, online gambling legalization came up in the mainstream press in Rhode Island.
Online gambling gaining traction
The first mention occurred just before the holidays, when Rhode Island State Senator William Conley told local news station WPRI that online gambling was on the legislature’s radar.
“Absolutely, I do think that the Senate president thinks that that’s something that we should look at seriously, and that it will bring in revenue,” Conley said in the interview.
The comments raised some eyebrows for a couple reasons:
- This is the first real mention of online gambling legalization by a prominent elected official in the Ocean State.
- Conley appeared to be conflating the New Jersey sports betting case with the possibility of Rhode Island legalizing online casino gaming.
Because of the ambiguity of Conley’s comments, they raised more questions than answers. However, now more lawmakers besides Conley are discussing the option.
The latest mention of online gambling comes from local news source GoLocal, which wrote the following snippet in an article discussing upcoming legislative issues Rhode Island will be tackling:
“Online Gambling — Watch for the emergence of online gambling. It is in place in New Jersey and is being seen as a possible solution to the budget whole. Sources tell GoLocal that [Rhode Island Governor Gina] Raimondo polled the issue and that the public likes the expansion of gaming over marijuana.”
Rhode Island was one of the state’s PlayUSA highlighted as an online gaming contender, albeit a dark horse. Taking into account these latest comments, online gambling watchers should definitely keep Rhode Island in their sights.
Rhode Island’s budget problem
In its analysis, Play USA postulated that a budget shortfall was the number-one reason a state would turn to online gambling.
Rhode Island is facing a $60 million shortfall for the current fiscal year. This is a number that could explode beyond $230 million in the upcoming fiscal year.
When it comes to state budgets, $60 million may seem like a drop in the bucket. However, in the tiny state of Rhode Island, $60 million is a significant amount of money. Rhode Island’s budget is $9.2 billion, so $230 million is 2.5 percent of the total budget.
Online gambling could help generate some of the revenue needed. The state’s minute population severely limits the amount of possible revenue though.
Assuming the state offers up several online gaming licenses at a cost of a few million dollars, and imposes a reasonable tax rate, the state could collect upwards of $10 million in the first year. Most of that money comes from the upfront licensing fees. Perhaps another $4-$5 million annually could come from online gaming tax revenue.
This is far from the $60 million deficit the state is facing this year, and the projected $230 million shortfall in the upcoming fiscal year.
If online gambling is going to be part of a budgetary fix it will have to be a piece of a larger puzzle, similar to the way Pennsylvania used online gambling legalization to fill its budget deficit a few months ago.