There are a number of officials in Tennessee who believe that legalized online poker would cut into their state lottery revenues, much of which goes towards education programs. Shirley Raines, President of the University of Memphis, is opposed to bill H.R. 2366 that Joe Barton (R-Tex.) has presented to congress. His bill would set up a framework for legalized and regulated online poker at a federal level. Raines believes that allowing online gambling would reduce lottery revenues in not only Tennessee, but in other states as well.
Tennessee is one of a small number of states in the United States that has no state income tax for individuals. Funds generated from other means such as lotteries are integral to the public programs of these states. Since the start of the Tennessee state lottery program in 2004, over $2.2 billion has been generated for education programs. However, there isn’t a consensus on what effect legalized online gaming would have on these revenues.
Tennessee Representative Stephen Cohn points out that “Legalizing online poker would not weaken Tennessee’s Lottery because online poker caters to a different population of gamblers”. This is a very important point, as it is very likely that legalized online gambling would in fact give state governments an even larger revenue stream.
While Barton’s bill H.R. 2366 does not currently spell out revenues for individual states, its regulatory framework would help ensure the collection of taxes. This would apply to both gambling winnings as well as on profits earned by the operators of the sites. According to a 2011 report by gamblinginfo.com, it is estimated that current online gambling operations generate revenue in excess of $60 billion per year in the United States alone. This amount is mostly made up of online casino sites, meaning that legalized online poker in the U.S. would generate even more revenue.