Is Alabama Ready To Legalize Gambling? It Appears It Is

COVID-19 has states scrambling for revenue, and in many locales, that has accelerated interest in legalized gambling. One of those locales is Alabama, which recently received an 876-page report from Gov. Kay Ivey’s Study Group on Gambling Policy.

The report concludes the state of Alabama could benefit to the tune of $700 million through a combination of casino gambling, lottery, and retail and online sports betting.

Under a sports betting best practices header, the study group proposes the following:

• Authorize sales distribution channels under their current regulatory agencies
• Establish a fair tax rate without league fees or data requirements for this low margin offer
• Allow wagering on professional, collegiate, and in-state events without league veto power
• Authorize intrastate mobile and online wagering to maximize state revenues
• Permit 3rd party vendors to facilitate sports wagering operations
• Provide responsible gaming controls for players
• Prohibit wagering on the results of authorized Lottery games/events
• Contract with responsible vendors supporting sports wagering in regulated markets

The above policies are an industry wish list and would create a very robust and competitive market.

Alabama took a crack at sports betting in 2020, but the legislation made little progress before the legislature adjourned. In 2019 the state legalized daily fantasy sports, so there is some appetite for online wagering in the legislature.

Sports Betting Revenue Lags Casinos and Lottery

That’s the good news. The bad news is the 12-member study group laid out five options for the state, most of which would prohibit or severely limit gambling in the state:

• Maintain the status quo.
• Prohibit gambling and provide uniform enforcement that does not now exist.
• Prohibit all forms of gambling except a lottery.
• Allow expanded gambling on a limited basis and possibly limited by geographic locations.
• Allow a full expansion of gambling, including a lottery and casinos.

Based on the above, mobile sports betting would likely only fall in the last bullet point. And any expansion of gambling in the state would require a constitutional amendment approved by the voters.

Further, if revenue is the goal, estimates from a May 2020 report by the Public Affairs Research Council of Alabama point to sports betting being by far the least impactful:

• Lottery: $270 to $386 million
• Casino Gaming: $398 to $423 million
• Electronic Gaming: $233 to $290 million
• Sports Betting: $6 million

Compared to the state’s other options and its goal of creating revenue, sports betting looks more like an add-on and not something the legislature will devote a copious amount of time to discussing.

Polling Indicates More Support for Lottery and Casinos

Further, if legislators are putting their finger to the wind, their constituents are far more open to lottery and casinos than mobile sports betting.

Poll results included in the report indicate certain forms of gambling in Alabama have more support than others, and once again, it’s mobile sports betting at the bottom:

• Lottery: 70.8% support (60.6% strongly)
• Casino style slot machines: 63.2% support (47% strongly)
• Casino style table games (including poker): 60.6% support (42.6% strongly)
• Online Sports Betting: 51.8% support (30% strongly)

Additionally, online sports betting is the only offering that had a higher percentage strongly opposed than strongly support, 30.8% to 30%.

Sports Betting Appears to be the More Difficult Lift

The fact that Alabama is considering legalized gambling and that mobile sports betting is included in the analysis (but strangely, online casino isn’t) is a positive development.

That said, this is Alabama, and an expansion of gambling will eat up a lot of political capital. Based on the revenue projections and public support, sports betting would generate the least amount of revenue and the most blowback.

With gambling expansion requiring a constitutional amendment, the lack of support for sports betting will undoubtedly weigh on lawmakers’ minds.