Arkansas’s Online Gambling Proposal Explained
Arkansas legislators have been making a lot of noise about passing online gambling legislation, and Arkansas online casinos’ history and laws can be viewed here.
Currently, there is no specific bill on file, but it is being discussed as an extension of current lottery efforts over the internet. The problem with this interpretation is that the state’s constitution outlaws any form of lottery and advertisements promoting them.
In addition to this bit of law, voters overwhelmingly rejected a constitutional amendment in 2012 that would have given the green light for intrastate and interstate online gambling. Rocking these facts today (and perhaps not clearly understanding their laws and industry), Arkansas officials and lobbyists are pushing for legalized Internet poker and sports betting.
To understand Arkansas’s online gambling plan, it is first necessary to know where lottery revenue is. In 2007, a ballot measure was passed by voters who created the Arkansas Scholarship Lottery Corporation (ASLC). The ASLC is responsible for running all Arkansas’s lottery games, including Powerball and traditional scratch-off games. It’s also permitted to sell tickets with prizes higher than $600.
Complicating things further is that this original constitutional amendment barred the state government from directly receiving any profits generated by these games. Any money generated through the sale of lottery tickets must be used ‘for purposes prescribed by law’.
Once they had covered expenses, nearly all proceeds were directed toward K-12 education programs.
The state constitution currently forbids lotteries. Voters have only permitted their creation through a constitutional amendment which can be changed at any time by another measure passed by voters.
The lottery is operated as a non-profit corporation limited to specific revenue sources, which are then transferred into different programs at the State level. Since it’s not owned or operated by the government, Arkansas’s lottery falls under federal law, where gambling on sporting events is permitted within specific strict guidelines. Changes to this definition require voter approval.
What are the details of the proposal?
Little is known regarding legislative efforts or potential pitfalls. The state wants to tap into a revenue stream that’s currently not regulated by any of its laws.
There may be resistance from taxpayers who don’t want to spend their tax dollars on lawyers, lobbyists, and federal politicians whose primary job is to keep them safe.
There is also some concern about which version of the online lottery will be authorized. The existing law only permits sales via the internet following purchasing a physical scratch-off ticket at retail locations (gas stations, convenience stores, etc.).
There are no provisions for direct electronic funds transfer (EFT) as in 2012. Nothing stops this practice from running afoul with federal guidelines that prevent Internet gambling beyond particular circumstances.
Arkansas’s small population and large land area make it tricky for any lottery to cover administrative costs and the expense of advertising.
In 2016, this was partially solved by allowing online fundraising drives to collect donations directly via EFT.
The state has not yet addressed how they plan to provide this service in 2018, but it’s unlikely any continuing efforts would come to fruition without some cash on hand to conduct testing before launch. What isn’t clear is if legislators believe their existing equipment would be sufficient or if they’re willing to consider investing taxpayer money into modernizing their services.
What was supposed to happen this week, and why was it postponed?
The Arkansas Lottery Commission was expected to meet this week to discuss moving forward with the proposed legislation. No official statement has been made by any member regarding what transpired during their meeting—as of Friday, Nov. 10th.
The main question facing commissioners is whether or not Lottery funds should be used as seed money to conduct testing before the launch date. Or is it better to spend those dollars on advertising and other promotional efforts following a soft launch once the system has been tested and verified?
Also up for debate is whether online lottery should follow existing rules (purchase at retail only) or stick with federal guidelines (EFT). Because these laws are complicated and can change without warning, state legislators are in the habit of using national laws as a “placeholder” until their own rules are finalized.
At present, there is no draft language available to review, and it’s expected that any new bill won’t make its way into the legislature until early 2019. Completed legislation would then need another 60 days (minimum) before Governor Asa Hutchinson could sign it.
It’s anyone’s guess when Arkansas might begin testing online lottery, but it doesn’t appear they’re in much of a hurry since they can still collect taxes on out-of-state sales for the time being. They may be waiting for federal law to change, but that isn’t likely under President Donald Trump or his Attorney General Jeff Sessions, who have made no secret about their support for expanding the war on drugs.
What is clear at this point is that Arkansas wants to get into the online gambling business, and they’re willing to invest some money if it means better returns than what’s currently available. It remains to be seen whether or not either gamblers or taxpayers will support such a plan, but new revenue sources are always a good thing regardless of motive.
Until an official proposal is made available, it’s impossible to guess how popular (or not) online lottery may prove. Still, it’s safe to assume that anyone willing to run the risk of supporting such a project isn’t doing so out of pure altruism.
