The Promise and Peril of Online Gaming

Pennsylvania Forges into the Frontier of Online Sports Betting

By Hazel Trice Edney

(TriceEdneyWire.com) – Nearly two years ago, after a Supreme Court ruling paved the way for legalized sports betting in the United States, Pennsylvania entered the online gaming market with the aim of generating both tax revenue and jobs for the state.

Now, Pennsylvania appears to be off to a strong start in this nascent industry, with the Pennsylvania Gaming Control Board reporting that the state experienced a 17 percent surge in total revenues last year.

But the prospects of long-term success remain far from certain for Pennsylvania and other states that have embraced online sports betting, in large part because this online space is relatively new and fraught with risk.

Specifically, online gaming not only draws waves of enthusiastic consumers. Experts warn that it draws dubious players, including sports betting companies from foreign markets where a kind of wild-west mentality has bred practices that are problematic in the U.S.

A great deal is riding on getting this right, particularly at a time when many communities, including African Americans, stand to benefit significantly from the economic benefit that online gaming promises.

Anyone who doubts this need only consider the important role Pennsylvania’s gaming industry already plays, particularly among lower-income workers and communities of color. Roughly 38 percent of the state’s gambling industry’s employees are African Americans and other individuals of color. In addition, the industry provides opportunities to individuals without college degrees, a group that makes up 66 percent of the gambling industry’s workforce.

Nationally, the trend is similar, with African Americans and other workers of color making up approximately 40 percent of the gambling industry’s workforce, according to the American Gaming Association.

But to ensure future success, elected leaders and regulators must make every effort to ensure that this new market is transparent, safe and reliable for consumers. And that starts with ensuring that the state selects companies that submit to the highest levels of transparency to run its gaming operation.

Otherwise, the results can be problematic — if the experience elsewhere in the country is any measure. Consider, for example, the experience of Oregon, where a foreign gaming company has become enmeshed in a public controversy that has placed a harsh spotlight on the state’s gaming industry.

SBTech, a Malta-based gaming operator, was awarded an exclusive contract to run Oregon’s new sports betting market last May. Even then, SBTech was already mired in controversy: amid allegations that it operated in black markets such as Turkey and Iran, a background check conducted by the Oregon State Police was withheld from the public.

Then, after the state attorney general ordered the company to disclose its contract with the state, SBTech refused. Instead, SBTech sought a restraining order to block the release of the contract and brought a lawsuit against the lottery agency, lottery director Barry Pack, the Oregon Department of Justice, Attorney General Ellen Rosenblum, and The Oregonian, the state’s paper of record.

In February, a judge ordered the release of SBTech’s contract, giving the company 30 days to either comply or move forward with an appeal. “Public contracts are a matter of significant public interest,” the judge wrote in his decision. “That interest is heightened where the contract relates to an emerging market for gambling.”

But while the debate over transparency in Oregon might seem like a distant problem to Pennsylvanians, the reality is that it’s closer to home than some would suspect.

Just months after SBTech inked a deal with Oregon, the company struck a deal to become the official sportsbook supplier for Presque Isle Downs and Casino in Erie. Melissa Riahei, President of SBTech US, said at the time that the company looks forward “to becoming a key player in the emerging Pennsylvania sports betting market.”

Given that SBTech’s deal with Pennsylvania was executed with much less fanfare, a number of questions hang over the deal, including the extent of the vetting the company underwent to be cleared to partner with the state in this ambitious venture. The answer is vitally important.

Make no mistake about it: Pennsylvania lawmakers will likely face sharp questions from the public if there are any significant problems associated with any private company in the online gambling space that the state partners with to put in place online sports betting offerings for Pennsylvanians.

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