US legislators crafting model legislation to create pathway to legal igaming
The initiative will put a framework in the hands of any legislator anywhere in the US who chooses to move forward with an online gambling bill in 2025 or later.
The project has been in the works for months. At NCLGS last week in Pittsburgh, former Florida State Senator Steve Geller outlined what lawmakers think will be in the model legal igaming legislation. He also led a hearing-style discussion about what stakeholders think should be priorities and why. The panelists included regulators and stakeholders, all of whom heartily engaged in the discussion.
Geller said the current draft suggests a 15%-25% tax rate. The average igaming tax in the seven legal US states is 19%.
Beyond that, Geller said, the proposed legislation aims to cover seven other key areas:
- Revenue generation
- Responsible gaming
- The cannibalisation question
- Advertising guidelines
- Licensing
- Age limits
- Data sharing
Draft coming next week?
NCLGS president Shawn Fluharty said the goal is to release a draft of the legislation to NCLGS membership by 1 August. It will then be open for public comment for 30 days. From there, lawmakers will consider comments and redraft as needed, presenting a final “bill” at the 12-15 December meeting in New Orleans.
“We’re trying to have a foundation that will work in most any state,” Fluharty, a state rep from West Virginia told iGB last Thursday.
Nearly 40 US states have legalised some form of sports betting since the US Supreme Court overturned the Professional and Amateur Sports Protection Act in 2018. But only seven have legal igaming. Fluharty’s West Virginia is one. In addition, online gambling is legal and live in Connecticut, Delaware, Michigan, New Jersey, Pennsylvania and Rhode Island.
Online gambling revenue dwarfs that of digital sports betting, although it has proved much more difficult to get through state legislatures. Igaming compliance director at the Pennsylvania Gaming Control Board Lee Copella said there are key differences between the two.
“It’s a different audience,” Copello said regarding online gambling. “I look at sports betting more as an amenity while casino has more set numbers coming out. Sports betting is up and down. Sportsbook on top of online casino just means that you will bring in more people who might not have played.”
There is crossover, stakeholders said, between the two. And having both allows operators to cross promote.
Legal igaming lessons learned in Maryland
Maryland State Senator Ronald Watson spearheaded an attempt to legalise in his state this year. He said the road to legal igaming must be paved with education – both of lawmakers and the public. In Maryland, any expansion of gaming must go to the voters.
Watson said that, typically, a lawmaker has an idea and then sends that idea to the bill writers, who draft a proposal. That goes “into the hopper” and, with any luck or interest, comes up for discussion, debate and exploration. He said his lesson learned this year is that that process should be turned on its head for legal online gambling to succeed.
“We need to treat it like a campaign,” Walters said. “The person who introduces (legislation) is just the quarterback. In this case, you need a whole team behind you.”
The next opportunity for Maryland to send the question of legal digital gambling to the voters will be in 2026.
Money always a key driver
Stakeholders are hoping that the landscape in 2025 will make it easier to move legislation. This year is an election year and traditionally lawmakers don’t like to move potentially controversial issues forward with an election looming. Many states will also run out of Covid funding, which could create the ultimate need in some states – money.
Across the US, tax revenue for online gambling is three to five times as much as that of sports betting, according to databases maintained by US Bets and Sports Handle.
Legislatures across the US will also have new looks after the election and, in some states, that could create a more favourable climate for gambling expansion.
Although the details of the proposed model bill are still a work in progress, Geller, head of the igaming committee, said lawmakers are slimming down the current 100-page draft and will separate out legislative suggestions and regulatory suggestions. Lawmakers joked that 100-page bills don’t get read while regulators said that they should be left with the flexibility to implement the rule of the law.
It’s likely that the NCLGS igaming committee will offer up a 15-20-page model bill and strip out any currently regulatory language. The organisation also has plans to share suggested regulations.
Technology, AML critical to consider
During discussion last Thursday, former New Jersey Division of Gaming Enforcement David Rebuck was quick to share lessons learned in his state. Rebuck, considered by many the dean of regulators, pointed to uniform and comprehensive technology standards as critical. He said that “tech companies should be held to the same standard as gambling companies”.
Rebuck also said revenue certification standards are often “overlooked, but shouldn’t be” when considering legal igaming.
After regulators had their say, a group of industry stakeholders comprised the second witness panel. Howard Glaser, director of government affairs at Light and Wonder, said anti-money laundering should be a key tenet of legalisation.
“The US has become the ATM for money laundering worldwide to fund terrorism… and the casino is the vehicle for that,” Glaser said, pointing to the existence of illegal operators in the US. He said that money can be wagered on those sites and then returned to the US, and that regulators must be “equipped with the right tools to push back on this”.
Cannibalisation a faulty argument against legal igaming
Lobbyist Bill Pascrell III of the Princeton Group was equally as vocal but his main focus was cannibalisation. Or, to be more specific, the”ridiculous rhetoric” of cannibalisation.
Pascrell said the concern first arose as early as 2010 and has played a key role in derailing legalisation efforts. Studies on the subject reveal varying and sometimes conflicting information. New Jersey’s Rebuck has long believed that the argument does not hold merit.
“When you hear the fearmongering of cannibalisation and loss of jobs from internet gaming,” Rebuck has been quoted as saying, “I have 12 years of data in New Jersey showing it isn’t true. Online gaming doesn’t cannibalise brick-and-mortar casinos and it doesn’t hurt casino jobs.”
Geller and Fluharty included that quote in the powerpoint presentation that was the backdrop of the legal igaming discussion. Many studies have found that if cannibalisation is an issue, that it draws 10% or less business away from brick-and-mortars. On the flip side, the payoff is significantly more revenue for operators who offer both retail and online casino.