Alabama Gambling Laws: Leaders Say Status Quo Must Go So Illegal Casinos Will Leave

Alabama gambling laws may gain visibility in 2024 because leaders from the Alabama House of Representatives spent November saying illegal retail and online gambling must go. The lawmakers believe the Alabama Legislature must propose a body to regulate gaming to get that done.

What’s unusual about that sentiment is there isn’t much legal gambling in Alabama for a gaming commission to regulate. So state leaders are talking about the inverse — creating a regulator to combat illegal gambling.

On Nov. 27, House Speaker Nathaniel Ledbetter added that a comprehensive bill penned by state Rep. Andy Whitt may also include expanding legal gambling “at select locations statewide,” according to Bill Britt‘s Nov. 28 article in the Alabama Political Reporter.

However, his speech to the Dothan Rotary Club emphasized ridding Alabama of illegal gambling operations, reports APR:

We got to clean it up because it’s bringing a lot of ill will in the state. I mean, we’ve been better off to try to clean it up, put a committee together to recognize what’s going on, and so we’ll see what they come up with.

Governor’s Study Shows Illegal Gambling Problem

More than 1 million of Alabama’s 5 million residents are illegally betting $2.3 billion each year on sports, according to a study commissioned by Gov. Kay Ivey in 2020.

That means the state is losing $17 million to $35 million in possible tax revenue from just that form of illegal gambling, the research said.

Sometimes, Alabamians might even be responsible for illegal sports betting. For instance, on Jan. 6, the US Attorney’s Office for the Northern District of Alabama announced a federal grand jury indicted 11 individuals accused of running an illegal offshore sportsbook called Red44. Six were state residents, but the site that generated $36 million in 2021 had a Costa Rican server.

Plus, Alabama is losing money just by trying to regulate the current forms of legal gambling, the research said.

That’s why, under the status quo, the research states that the following is happening:

The current system of segmented gambling laws and regulatory jurisdictions affords the State limited enforcement mechanisms to oversee gambling operations, which has cost the State of Alabama considerable time and money over the years and which will inevitably persist into the future.

So, while gaming commissions are often formed to regulate legal gambling, Alabama may start by doing the opposite.

John Sharp of AL.com quoted Ledbetter on Nov. 12:

It’s no longer about gaming, but fixing the problem we got. I think the fact of the matter is we’ll reduce gambling tremendously if we pass something to regulate.

Ledbetter, R-Rainsville, said those words on Nov. 9 at the Mobile Chamber of Commerce’s event, Forum Alabama.

Previously, Alabama State Senators had been out front on the issue, proposing legal gambling bills that House members didn’t approve.

Alabama Gambling Laws Are Sparse

At the moment, there aren’t many legal forms of gambling.

Alabama has no legal commercial casinos, lottery, sports betting, or online casino gambling sites. Plus, any gambling expansion must receive voter approval because it amends the state constitution.

The American Gaming Association (AGA) shows the state houses three casinos, all owned by the Poarch Band of Creek Indians of Alabama. The AGA credits the tribal casinos with supporting 12,270 jobs.

As the 2020 report puts it:

Under its current system, Alabama realizes few, if any, benefits of gambling, as there is currently no system for taxing gambling revenue, nor is the State able to designate beneficiaries of gambling proceeds.

Ivey’s study showed Alabama could gain up to $710 million in annual tax revenue from legalizing a lottery, sports betting, and commercial casinos.

That figure doesn’t account for other possible forms of legal gambling income, such as online casino and poker sites. So, the study’s total potential tax revenue could have shown a larger number.

Alabama Gambling Laws Are a Hodgepodge

For those familiar with current Alabama gambling laws, “select locations statewide” sounds a bit like the parimutuel rules that say greyhound and horse racing betting are legal. However, they’re available based on municipal approval.

So, it’s unclear whether a proposed gambling law would also base the “select locations” on city or county approval.

However, if that idea for a gambling bill advances, Alabama may continue to have a hodgepodge set of gaming laws. For instance, daily fantasy sports (DFS) sites are legal statewide.

Plus, any gambling expansion must receive voter approval because it amends the state constitution.

Legal Gray Areas May Persist

A more complicated issue may arise for Alabama’s proposed gaming commission, as it has in states with in-place gaming regulators.

Legal gray areas, such as social casino sites and retail skill machines that work like slots, are prevalent nationwide. However, southern states have a bigger problem than the rest of the country with the latter, according to the AGA.

Americans find unregulated skill game machines at gas stations and convenience stores everywhere. However, according to AGA research released in November 2022, half of them are in the South.

In the four regions of the US — the Northeast, South, Midwest, and West — there are 580,651 skill game machines. About 261,253 of them are in the South, the AGA study said.

About the Author

Heather Fletcher

Heather Fletcher

Heather Fletcher is Lead Writer at Bonus, concentrating on online casino coverage. She specializes in breaking news, legislative coverage, and gambling marketing strategy overviews. To reach Heather with a news tip, email [email protected].
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