The people of Massachusetts spent more than 20 years wrangling over whether and how to bring Las Vegas-style casinos into the state. Now, along comes Draft-
Kings, the Boston-based daily fantasy sports website that offers huge prizes for successful sports prognosticators. While DraftKings insists it isn’t in the gambling business, it’s at least in the close vicinity. The company’s sudden rise — not to mention the hostile reaction from regulators in Nevada — underscores how vulnerable the traditional casino industry is to disruption.
It also shows that the gambling environment in Massachusetts a decade from now could look far different from what anyone planned.
So far, the glitzy brick-and-mortar resorts envisioned by the state’s 2011 gambling law — which allowed for up to three of them, plus a slot-machine parlor — exist only in artists’ renderings. Steve Wynn’s casino project in Everett has been embroiled in litigation with the City of Boston. As Connecticut ponders a new Hartford-area casino as a defensive move, the proposed MGM casino in Springfield is scaling back its building plans. Only the slots parlor in Plainville has opened, and in its first few months revenues are trending downward.
The guardians of the state’s nascent casino industry aren’t despairing yet. “I don’t think you can look at those two or three lumps of data in Plainville and conclude anything,” says Stephen Crosby, chairman of the Massachusetts Gaming Commission.
Still, traditional casinos have entered an era of diminished expectations.
When the Mashantucket Pequot tribe opened the Foxwoods casino in Connecticut in the early 1990s, the parking lots were full of cars with Massachusetts plates. From then on, opening casinos in the Bay State looked like a way to keep gamblers from crossing the border, while creating thousands of middle-class jobs in a state that’s ever less hospitable to people without advanced degrees.
The old debate had a moral crispness to it: Opponents foresaw epidemics not just of compulsive gambling, but also of political scandal. Casino licenses are valuable because of their government-enforced exclusivity. And because brick-and-mortar gambling halls can’t even be built without the approval of state and local agencies, casino bigwigs go out of their way to flatter or co-opt public officials.
Internet gambling has a different mix of benefits and costs. Unlike casino resorts, daily fantasy sports websites can launch without government doing anything on their behalf. So they’ve had little incentive up to now to engage in behind-the-scenes intrigue.
On the other hand, while DraftKings employs about 200 people in Massachusetts, websites generally don’t hire construction workers and card dealers and cocktail waitresses. For all the concern about “convenience gambling” at the local slots parlor, nothing’s more convenient than wagering on your smartphone.
Even as sports sites wake up to the inevitability of government regulation — on Monday, DraftKings acknowledged it had brought former attorney general Martha Coakley on as an adviser — the political dialogue around gambling has changed. Having allowed casinos into the state, Massachusetts is in no position to feign indignation over gambling startups. Meanwhile, after voters reaffirmed the casino law last year, even diehard gambling opponents, such as former attorney general Scott Harshbarger, have backed off.
“People got a chance to vote, and they voted for it. That’s democracy,” Harshbarger says. He (mostly) resists the urge to say, “We told you so,” and argues for rules that protect consumers and discourage gambling addiction.
It’s not that the legalization of all online gambling is inevitable. Preet Bharara, the US attorney in New York City, shut down the online poker industry by indicting key executives in 2011. But even if DraftKings disappeared tomorrow, it won’t be the last startup to probe the limits of what state and federal gambling laws allow. Crosby describes other emerging technologies — such as skill-based video games and Dungeons and Dragons-like games that also involve wagering — that regulators around the country are watching with interest.
Over time, these changes could present Massachusetts with awkward choices. If the state’s resort casinos underperform, either because of online competition or because the regional casino market is saturated, don’t be shocked if they come back to the Legislature seeking lower tax rates and looser restrictions on their operations. (It’s happened elsewhere.)
Regardless, the sudden emergence of DraftKings reveals the flawed premise of the long debate over commercial gambling in Massachusetts. We presumed that the decision about what to allow would always be ours to make.Dante Ramos can be reached at email@example.com. Follow him on Twitter @danteramos.