As an example of the conflict of interests, let's go to Massachusetts where there's a new bill in the state House to establish two new real world casinos. As always, the declared intention is to generate more revenue for the state. To maintain a monopoly for the land-based casino operations, the bill proposes to criminalize all online gambling. It will be an offense for any resident of Massachusetts to place or accept a wager placed by a telecommunication device, no matter where they may be located. You will realize, of course, this includes all telephone betting and would hit the racing and sports betting operations. Not surprisingly, this has stirred up an intense lobbying exercise.
Real world operations are preferred because they are easier to police and monitor when it comes to collecting the tax or levy. Once operations disappear down telephone lines or into the internet, they can be based anywhere. This seriously complicates the collection of any tax. States like to keep their worlds simple. They want the maximum revenue from licensed gambling with the lowest possible cost for collection. Just crossing state lines makes collection more difficult. If casino games are offered from outside US territory, tax cannot be collected. That's one of the reasons why the federal government clamped down on the use of credit cards and other easy payment methods. It forced more operations onshore where they could be taxed. Whether you agree with this approach to balancing the budgets is irrelevant. Casino games are seen as the easy way to raise money without upsetting the electorate. Imagine a world without gambling and hear the roar of anger if states announced an increase in sales tax.