Economic Impact

While some arguments for and against legalizing online poker or gambling in California hinge on other issues (such as gambling addiction, or the rights of people to spend their money how they choose), the most significant debate has come over how much California’s economy would benefit from making intrastate online poker legal.

Several studies have been made to find out just what California could expect should a bill such as SB 40 pass into law. For instance, an economic impact study released by the California Online Poker Association suggested that California might see an additional $1 billion in revenues over the next 10 years from online poker regulation. In addition, this same study found that legalizing intrastate online poker would create 1,100 new jobs for Californians, which would provide additional benefits to the economy.

Other studies, as well as changes to SB 40, have only increased these estimates. For instance, the upfront payments required by SB 40 would provide an immediate cash infusion for California, generating up to $250 million in revenue before a single hand would be dealt. According to COPA, these payments would likely be used to offset cuts to public services such as police and fire departments, as well as schools.

In addition, the group has upped their estimates for the amount of income the state would receive in the long-term. According to an economic impact study by former California Finance Director Timothy Gage, online poker might bring in as much as $1.4 billion in revenue over the first decade after a bill was passed. This income would come directly froom taxes on the profits of the gambling providers, as well as taxes on winnings, and indirectly from taxes on the employees who took new jobs that were created by the online gambling expansion. Up to 1,300 new jobs could possibly be created – led by jobs in marketing services, high tech jobs like programmers, and gaming providers.

Clearly, online gambling would provide both new revenues and job opportunities in California. However, some argue that there are negative economic consequences from legalized gambling, most of which would apply if online gambling were to be legalized in the state.

One of the most common arguments used is that gambling does not create any wealth or goods; instead, money is simply moved from one person or group to another. Since gambling is primarily used for recreation, it’s also argued that this money would simply be spent in other ways if it were not used on gambling – and those expenditures would likely stimulate the economy more than gambling spending.

Others counter that while it may be true that gambling spending isn’t as beneficial to the economy as some other kinds of business, it’s still far preferable to having that same gambling money being spent out of state. Currently, billions of dollars are spend by Californians in Las Vegas, as well as on offshore online gambling sites. It is believed that much of the revenue that would come from online poker (or more expanded online gambling) would come from those who currently play at sites that are located overseas, and thus provide no income at all for California.