Online gambling 101: What the new gambling expansion means for states

Online lotto – and virtual slot machines, blackjack, and poker – could be coming to your state or one near you. Here are five questions on internet gambling, following the US Justice Department's policy reversal late last year, possibly producing a boon to both the industry and state budgets.

3. How will this decision help states?

State lotteries across the US – there are now more than 40 – already bring in close to $18 billion per year. Now, some states are salivating at the prospect of plugging budget gaps by selling lottery tickets online and by legalizing, licensing, and taxing online gambling, which the Congressional Committee on Taxa-tion estimates could generate $42 billion in tax revenue over 10 years.

Minnesota already has an online lottery. The District of Columbia authorized a plan to offer online poker, blackjack, and bingo, though that was repealed in early February. California, Nevada, Iowa, and New Jersey are also redoubling efforts to legalize online gambling, with Gov. Chris Christie declaring his goal to make New Jersey the "epicenter" of the online gambling industry.

But state officials are questioning just how much income online gambling will attract. For example, a study in Iowa found that legalizing online poker would net the state only $3 million to $13 million a year.

"Internet gambling is chump change," says John Kindt, a professor of business and legal policy at the University of Illinois at Urbana-Champaign and a senior editor of the US International Gambling Report.

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