Virginia Legislature Passes Bills to Expand Gambling in the Commonwealth

Legalized casino gambling and sports wagering are approaching the finish line in Virginia following the recent passage of two bills by the Virginia General Assembly. Senate Bill 36 and House Bill 896, both awaiting the signature of Virginia Governor Ralph Northam, would permit five land-based casinos, online sports betting and up to 2,000 additional historical horse racing machines.

View the full Alert on the Duane Morris LLP website.

States Shutting Casinos Down to Combat COVID-19

In the midst of the COVID-19 pandemic, casinos and racetracks have become the next domino to fall.  Ohio, Indiana, Massachusetts, Illinois, Rhode Island, and parts of Pennsylvania have been required to shut down their facilities or keep the total number of individuals present under a designated limit.  These announcements came late Friday afternoon after many of the states enforced limiting the number of public gatherings.

Ohio’s four casinos and seven racetracks have been ordered to shut down or limit the total number of people in their buildings, including employees, to under 100.  The order came from Ohio Governor Mike DeWine as part of the state’s effort to contain the spread of COVID-19.  The Indiana Gaming Board has suspended all casino operations for 14 days beginning Monday, March 16.  The Massachusetts Gaming Commission also has voted to shut down casino operations.  Massachusetts will reevaluate the decision in two weeks, but all gaming floors are set to be closed to patrons at 5:59 a.m. Sunday.  Like Massachusetts, Illinois’ ten casinos will close for at least 14 days, and  Rhode Island’s two casinos are being required to close for at least a week.  Lastly, four of Pennsylvania’s twelve casinos have closed temporarily for 14 days.

States such as New Jersey have not yet shut down, and according to New Jersey’s Governor Phil Murphy, there is no plan for New Jersey casinos to shut down.  Also, in Las Vegas, Wynn Resorts and MGM Resorts International are temporarily closing to stop the spread of the virus.

Although casinos are closing, online casino gaming will not be affected.  Moreover, online casino gaming can potentially grow during the 14 days shutdown.  In states like New Jersey, where there is no shutdown, many people may stay away from casinos and decide to play online.

Sports wagering has also been affected by COVID-19, and is essentially shut down nationwide with no sports available to bet on.  This comes at a time where states such as Michigan, Indiana, and Illinois have just begun to accept sports wagers.

The casinos that are facing shut down are also taking the initiative to provide for their workers.  Penn National Gaming and Wynn Resorts have stated it plans to continue to pay its employees full wages and benefits while the suspension period is in place.  Penn National has also stated it plans to continue its deep cleaning efforts to prepare to welcome back its customers when the pandemic ends.

We will continue to follow this situation closely and provide any additional updates.

Updated on 3/16/2020.

 

 

PA Court Rules that Pennsylvania Skill Games are Neither Governed by the Gaming Act nor Regulated by the Pennsylvania Gaming Control Board. So What?

In two decisions issued in the last few months, the Commonwealth Court of Pennsylvania has established conclusively that the state’s Gaming Act is inapplicable to so-called “skill-based” video game machines that are ubiquitous in taverns, restaurants, and other liquor-licensed establishments in the Commonwealth. After a comprehensive discussion of the rules of statutory construction and the Gaming Act’s legislative history, the Court reasoned that the Gaming Act applies only to legal gambling devices operated in licensed establishments, and not to unlicensed or illegal slot machines, which remain governed by the Crimes Code. Therefore, the Court also held, the games and those who manufacture, distribute and operate them are not subject to regulation by the Pennsylvania Gaming Control Board.

In a January 22, 2020 article, the Delco Times declared the decision a “decisive win” for the game’s proponents. But was it? Continue reading “PA Court Rules that Pennsylvania Skill Games are Neither Governed by the Gaming Act nor Regulated by the Pennsylvania Gaming Control Board. So What?”

Colorado Voters Cover the Spread and Approve Sports Betting Bill

Colorado House Bill 1327, titled “Proposition DD: Legalization and Taxation of Sports Betting” was put to voters in a ballot measure and was narrowly approved on Tuesday, November 5.  Colorado Governor, Jared Polis, signed Proposition DD into law in May 2019 and Colorado voters decided its final, successful outcome making Colorado the 19th state to legalize sports betting.  The law will permit land-based sports betting at Colorado’s 33 casinos, as well as state-wide mobile betting.  Notably, Proposition DD does not permit proposition bets for college sports.

The Colorado Division of Gaming is charged with regulating the new market which will allow three types of licenses to be submitted for approval.  Each casino will be limited to a single online/mobile platform or “skin.”  A master license will be issued to an operator that holds a retail gaming license in the state prior to May 1, 2020, or has obtained one through the purchase of an ownership interest in a casino that was in operation prior to May 1, 2020.   A sports betting operator license or an internet license sport betting operator license will be allowed  to contract with a master licensee to operate sports betting in person or online.  The bill sets the maximum license fee at $125,000 and each license must be renewed every two years.

Proposition DD’s passing will allow legal bets to be placed as early as May, 2020 and will tax a casino’s net sports-betting proceeds at a 10% rate.  This tax revenue will be used to pay for regulating sports betting in Colorado, a hold harmless fund, gambling addiction services, water projections, and other obligations.  According to Colorado’s fiscal impact statement, lawmakers expect around $10 million in tax revenue in the first year based on the expectation that Colorado sports betting licensees would take between $1.3 billion to $1.5 billion in bets.  We will continue to monitor this topic and provide updates on this legislation.

“No Collusion.” Sands Bethlehem KOs MMA Promoter’s Antitrust Claim

Last week, the United States District Court for the Eastern District of Pennsylvania, Judge Jeffrey Schmehl, granted the Motions to Dismiss of Sands Bethlehem Casino Resort and other Pennsylvania casinos, which were alleged to have engaged in a retaliatory boycott impacting a mixed martial arts (MMA) promoter’s events. Sands Bethlehem was alleged to have engaged in a boycott of plaintiff’s events as a retaliation for a prior lawsuit promoter Ryan Kerwin filed against Valley Forge Casino and Harrah’s in Chester, Pennsylvania.

Sands, Parx and Sugarhouse Casinos and their respective event directors faced allegations that certain emails cited in the Complaint established a conspiracy. The plaintiff alleged that the defendants’ “horizontal group boycott” would put the plaintiff promoter out-of-business. The Court found the emails, at best, demonstrated nothing more than unilateral action by the individual casinos. There was no “plus factor” in the complaint’s allegation that would have shown a motive, actions that were against the individual casinos’ economic interests or, evidence that implied a traditional conspiracy. In the Sands instance, it was alleged that Sands actually emailed with plaintiff offering to contract for MMA events but plaintiff would not agree to Sands’ “inflated terms”.

Judge Schmehl found that nowhere in the Amended Complaint did there appear evidence of “a conspiracy that supports an inference of collusion.” The Court’s holding that plaintiff failed to plead an unlawful agreement precluded an analysis of the other elements of the Section I Sherman Act claim.

The Court also dismissed claims that the defendant casinos (and Harrah’s and Valley Forge) were collective monopolists by keeping essential facilities from the MMA promoter. The plaintiff’s own pleadings that MMA events were staged elsewhere in Pennsylvania, other than the casinos’ event centers, convinced the Court that defendants’ properties were not “essential facilities”.

Sands was represented by Duane Morris lawyers – Manly Parks and Sarah O’Laughlin Kulik.

Poker Or Slots? Games Of Skill And Chance Have Legal Distinctions In Pennsylvania

Pennsylvania State Police seized 414 illegal gaming machines in southwestern Pennsylvania in 2018.

Currently, people can gamble at state-regulated casinos, through the Pennsylvania Lottery, for horse races and, after the expansion of the law last year, online and at some truck stops. But the changes didn’t include gaming machines in bars and restaurants. In those venues, if a game is mostly chance, like a slot machine, it’s illegal. But if it requires skill, like poker, it’s legal.

Frank DiGiacomopartner with the Duane Morris law firm, said the distinction comes from a 2014 court case out of Beaver County.

To read the full text of this article, please visit the WESA 90.5 website.

Dept. of Justice Reconsiders Its View on the Wire Act… So What Happens Now?

On January 14, 2019, the U.S. Department of Justice published a legal opinion that may restrict online gambling. The opinion, dated November 2, 2018, (although only now published) reconsidered the DOJ’s 2011 opinion that declared the Wire Act (18 U.S.C. § 1084) only applied to sports gambling. After the release of the 2011 opinion, several states, including New Jersey, Delaware and Pennsylvania, launched or moved forward with intrastate online lottery, casino gaming and poker. The new opinion, however, somewhat clouds the landscape regarding these operations. Online gaming businesses would be well advised to quickly determine whether their operations comply with the DOJ’s new reading.

The reconsideration stems from one phrase in the Wire Act: “on any sporting event or contest.” In 2011, the DOJ opined that the Wire Act was ambiguous and “that the more logical result” was that the phrase “on any sporting event or contest” applied to the entirety of the Wire Act, thereby prohibiting only the transmission of “bets or wagers” or “information assisting in the placing of bets or wagers” across state lines, if the bet or wager were on a sporting event. This logic follows in part from the Act’s legislative history, which reveals that Congress’ overriding goal in passing the Wire Act was to stop the use of wire communications by organized crime for illegal sports gambling. In 2018, the Supreme Court of the United States, in Murphy v. Nat’l Collegiate Athletic Ass’n—a decision that paved the way for states to authorize sports betting, in dicta—noted Congress’ original intent in characterizing a general federal approach to gambling: Operating a gambling business violates federal law only if that conduct is illegal under state or local law.

Read the full Duane Morris Alert.

Federal Court Strikes Down Pennsylvania’s Ban on Political Contributions from Casino Interests

By Samantha Haggerty

Samantha Haggerty

Yesterday, the District Court for the Middle District of Pennsylvania struck down Section 1513 of the Pennsylvania Gaming Act, 4 Pa. C.S. § 1513, as unconstitutional under the United States Constitution. Section 1513 prohibits gaming license applicants, licensees, and principals of licensees from making any political contributions. Judge Sylvia H. Rambo of the Middle District applied the modified intermediate scrutiny analysis applicable to restrictions on direct campaign contributions under the First Amendment to determine that, although Pennsylvania demonstrated a sufficiently important interest in preventing quid pro quo corruption or the appearance of such corruption, the Commonwealth failed to craft legislation that was closely drawn to achieve that important interest. Continue reading “Federal Court Strikes Down Pennsylvania’s Ban on Political Contributions from Casino Interests”

Game On! Chris Soriano Featured on Good Law | Bad Law Podcast on Sports Betting

Duane Morris partner Chris Soriano was a guest on the Good Law | Bad Law podcast, “Game on! After a historic Supreme Court decision, sports betting is a go.”

Chris joined podcast host, Aaron Freiwald, to discuss the recent Supreme Court decision that in effect legalized sports betting across the country and the implications this decision may have for the future of gambling, as well as professional sports. Chris also talks about how his interest in the gaming area introduced him to gaming law.

Listen to Chris’ segment on the Good Law | Bad Law podcast.