Airlines are going through unprecedented challenges as a result of the global pandemic. Despite a massive government bailout, crew are being laid off once CARES Act restrictions permit. Carriers are taking on enormous levels of debt and won’t be in a position to invest in their product again for some time. What if the solution to airline solvency were right in front of us? What if it took just a tweak to one law to make happen?
Inflight gambling would open up a new revenue source for airlines. Consumers would be entertainment. Airlines would be incentivized to install seat back video. That’s good for airline contractors, too. And partnerships could be forged by Las Vegas gaming companies who are themselves struggling, giving them access to a new captive market in the skies.
Furthermore, passengers could gamble not just with cash but with frequent flyer miles, and participation could open up a new path towards earning elite status with the airline.
We’ve experimented with inflight gaming before, but one law stands in the way of improving the flight experience and airline solvency at the same time.
Under the Gambling Devices Act of 1962 (also known as the Johnson Act, 15 USC 1171) gambling is illegal on US commercial aircraft. For 32 years, however, it was legal for foreign airlines flying to and from the U.S. to offer inflight gambling. And some have experimented with it.
- In 1981 Singapore Airlines engaged in a two month test offering slot machines on the Singapore – San Francisco route. They proved so popular that the machines in the back of the cabin caused egress and service issues, with too many passengers congregating. The light weight machines that were selected (lighter weight means less fuel burn) weren’t sturdy enough either.
In fact all seven slot machines broke on their inaugural run. Singapore Airlines revisited the idea in the late 1990s.
- Swiss tried seat-based inflight gambling in the 1990s but ended the option when the crash of Swissair Flight 111 in 1998 was linked to arcing in the wiring of the inflight entertainment system. New systems have been greatly improved over the last 20 years.
- Ryanair announced in 2005 that it would offer inflight gambling, with CEO Michael O’Leary going so far as to suggest passengers would eventually fly free with the airline making money off games of chance. The effort never came to fruition.
Today you can gamble in airports in jurisdictions where gambling is otherwise legal. And you can now place horseracing bets on your credit card.
Reno Airport Slot Machines
US-registered cruise ships got the ability to offer gambling with 1991’s United States-Flag Cruise Ship Competitiveness Act. TWA and Northwest Airlines lobbied for airlines to receive a similar exemption. However the government protected them from an uneven playing field in a different way — the Gorton amendment (49 USC 41311) prohibited gambling not just on US-registered aircraft but on any plane flying to or from the U.S. This may not be legal under US aviation treaties, but it has not been tested. Swiss operated under an exemption to the Gorton amendment.
While the Gorton amendment says that foreign airlines may not “install, transport, or operate, or permit the use of, any gambling device on board an aircraft in foreign air transportation” the FAA has said that it’s permissible for an aircraft flying to the U.S. to have an installed gambling device as long as it is deactivated for the flight.
The Department of Transportation studied inflight gambling in 1996, largely concluding it was fine, but stopping short of recommending legalizing the practice. The Clinton Administration at the time was proposing a national study on the effects of gambling. At the time that study concluded that airlines could earn $1 million per aircraft per year by offering gambling, $1.6 million in 2020 dollars or $1.3 billion per year for an 800 plane airline. (Airlines have argued that the potential economic impact is even greater than this.)
With American and United no longer offering seat back video on their standard domestic product, and with Southwest Airlines offering longer flights since they now serve Hawaii, it’s time to revisit the inflight gambling ban. Just as I’ve argued that advertising in lavatories could fund larger, more comfortable inflight lavs the opportunity to gamble through seat back entertainment would be a great way to encourage airlines to offer the screens.
Making flights more profitable means more routes and more flights will be offered. It means fewer airline layoffs. And it makes travel more affordable in a challenging economy, Michael O’Leary wasn’t wrong to suggest that making money from gambling in the sky supports lower airfares – more flights would mean more competition driving down those fares, but airlines would still do well because they’d make up the revenue (just as they do today through ancillary fees).
I’ve spoken with more than one vendor looking to allow customers to gamble online using their frequent flyer miles. My advice has been that airlines are fairly conservative – even if lawyers are suggesting that using their proprietary currency in this way wouldn’t run afoul of US law, they’d need to convince the Department of Transportation of this first.
Actually legalizing inflight gambling and we’d likely be able to gamble with miles, not just cash. Delta has gone the farthest of the major carriers fixing a value on their miles, being willing to effectively admit that they are worth a penny apiece.
And they’ve also done the most to sell non-flight products and services with their miles (they’ve even publicly mused about the possibility of redeeming miles for haircuts). Miles as a gambling currency seems natural.
Who wants to bet on saving the airlines?