Alabama: a Case Study in the Counterproductive Nature of Prohibition

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Alabama is among the most conservative states in the US on many fronts, including gambling. Only in Utah will you find fiercer moral opposition.

Such is Alabama’s historical tendency towards prohibitionist policies that it feels appropriate that the state flag bears a big, red X.

Even so, Alabama has recently been casting its eyes in the direction of gambling expansion. So far, it hasn’t made any progress and is already beginning to feel the negative impacts of that failure.

Governor Kay Ivey, who won re-election in this week’s midterms, commissioned an important study on the topic in 2020.

It concluded that there were “few if any benefits” to maintaining the status quo in the state. However, it didn’t make a firm recommendation for which forms of gambling would suit Alabama the best. Instead, it simply projected revenue for a variety of scenarios. Even Gov. Ivey declined to advocate for a particular plan, perhaps fearing backlash from her constituents. Rather, she put the question to those constituents.

Her preliminary statement on the study read, in part:

As my team and I pour [sic] over the findings, I encourage the Legislature and the people of Alabama to do the same […]

I continue to maintain the final say on gambling belongs to the people of our great state, and if and when I have a recommendation regarding a specific course of action, I will do so in full transparency to the people of Alabama, working hand-in-hand with the Alabama Legislature.

That legislative attempt came in 2021 and again this year after the first try failed. Unfortunately, the second verse was much the same as the first.

Inside Alabama’s Gambling Expansion Effort

The Montgomery Advisor described this year’s legislation as “a Rubik’s Cube.” Like that famously-frustrating puzzle, apparent progress on one facet of the situation only created new problems elsewhere.

Resistance to gambling itself was only half the problem. The other half is an issue familiar to many states: competing financial interests. That’s what sunk the recent California sports betting effort, which took many years to resolve in Connecticut, and may thwart Illinois’ attempts to follow up on sports betting with an Internet Gaming Act.

There are two basic types of gambling Alabama is considering. The first is electronic bingo, also known as Class II gaming at tribal casinos. These machines resemble slots but use simulated bingo rather than the usual slot machine mathematics. The state has never legalized this, but tribes offer the games anyway, and two counties have been allowing them under local constitutional amendments.

There is also the question of a state lottery. With neighboring Mississippi having created one with a 2018 bill, Alabama is now the only state east of Utah without a lottery. (The others are Alaska and Hawaii due to their low population and remoteness, and Nevada due to resistance from the local casino industry.)

The tribes were concerned about the prospect of competition from a lottery. Therefore, they opposed any legislation that didn’t give them something in compensation. The Senate, too, was seen as unlikely to approve a lottery-only bill.

Alternative legislation would have allowed for casino expansion for the tribes in addition to a lottery. However, casino gaming is a tougher sell with social conservatives than a lottery, so this version had its own problems.

In the end, neither version passed.

Moving in the Wrong Direction

While the legislative branch of government failed to expand gambling, the judicial branch was hard at work pushing things in the opposite direction.

Alabama has tried to shut down electronic bingo at tribal casinos over the years. However, federal courts have prevented that due to tribal sovereign immunity. 

The non-tribal entertainment centers are within state jurisdiction, however. They’ve created friction within the judicial system, as local courts support them, but the state’s Supreme Court does not.

In September 2022, the Supreme Court ruled against electronic bingo. It issued a directive to the lower courts to issue injunctions and prepare for a crackdown.

So far, they have not done so. However, it seems inevitable that the entertainment centers will have to shut down. Already, some are sounding the alarm over what that will mean for those towns’ economies.

Commissioner Charlie King told the Greenville Advocate:

They have been very diligent in giving to the towns and nonprofit organizations in the county to support them in what they do. They’ve made donations to towns like Gordonville and Mosses, and they employ roughly 100 people in the area.

Money Moves Out of Alabama

Prohibition has almost always proven to be a policy failure. For one thing, it tends to produce criminal activity. That was true for Prohibition with a capital-P in the 1920s US, and it’s true today with China’s attempt to eradicate gambling from the mainland.

It’s also pointless at the state level since residents who want to gamble can easily take their business elsewhere.

The cost of Alabama’s refusal to create a lottery was plainly apparent last week. As the Powerball jackpot closed in on record levels, ticket sales spiked. And yet, all the revenue Alabama could have reaped from that went to its neighbors. Residents flocked across the borders to Florida, Tennessee, Georgia and even Mississippi to buy their tickets. (That jackpot did set a record at over $2 billion, and a winner was found on Tuesday morning after the Monday night draw was delayed.)

Even the Poarch Band of Creek Indians, who dominate tribal gaming in the state, are seeking greener pastures. They would love to offer full casino gaming, sports betting, and maybe even online casinos. With the odds so heavily against gambling expansion in Alabama, however, they’ve been seeking to expand on their own terms.

Wind Creek Hospitality, the Poarch Band’s gambling company, bought and rebranded the Sands Bethlehem casino in Pennsylvania after that state legalized online gambling. It’s one of the few instances in which a tribal gaming company has expanded beyond the tribe’s territory, something the Poach Band is seemingly doing out of necessity.

It now has its own Wind Creek Online Casino in Pennsylvania, and even a free-to-play casino app, Casinoverse

A Cautionary Tale

Most other states are well ahead of Alabama on gambling. From the perspective of the 45 states which already have a lottery, Alabama’s failure looks like a wasted opportunity.

And yet, similar attitudes about other forms of gambling are prevalent across the US. The arguments against prohibition are the same regardless of what gambling product we’re discussing.

The same principle applies to cross-border lottery sales as to casinos strategically positioned along the state line or the black market offshore industry for online gambling. Tax dollars, jobs and investments all flow away from places that prohibit the products consumers want and go to anyone willing to provide those products elsewhere.

No matter what, people will find a way to gamble. Prohibition never successfully prevents that. It only prevents the state from dictating the terms on which it happens and from collecting money in the process.

About the Author

Alex Weldon

Alex Weldon is the Casino News Managing Editor for Bonus. He’s a former semiprofessional poker player and has been writing about online gambling professionally since 2014. Prior to his current position, he was Managing Editor at Online Poker Report and, before that, the GameIntel Poker Update, a subscription newsletter for industry executives. Alex provides insightful content on the regulated online casino and poker industries, with an emphasis on legislation, regulation, responsible gambling and business strategy. His writing about poker has earned him multiple nominations for the American Poker Awards over the years.

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