Arizona Lawmakers Pass Sports Betting and Gaming Expansion Bill  

Arizona legislative leaders passed Arizona’s sports betting bill late Monday which sets the state for the legalization of land-based and state-wide online sports betting. Following the Arizona House of Representatives’ approval last month, the Arizona Senate approved Senate Bill 1797 with a 23-6 vote.  Arizona Governor Doug Ducey has indicated he will sign the bill once it reaches his desk for signature.

In summary, the bill legalizes sports betting, daily fantasy sports, retail and online keno, and mobile lottery draw games.  In regards to sports betting, the bill allows for 20 total licenses to be awarded for online sports betting.   The twenty licenses are designated as “event wagering licenses” which includes ten licenses designated for Indian tribes and ten licenses designated for professional sports franchises and facilities. Currently, Arizona is home to six professional sports franchises and facilities, including the Arizona Cardinals, Arizona Coyotes, Arizona Diamondbacks, Phoenix Suns, Phoenix Raceway and TPC Scottsdale, a PGA Tour affiliate.  Each event wagering operator may partner with a sportsbooks “designee” to operate its state-wide mobile sports wagering on the licensee’s behalf.

The event wagering licensee is also permitted to operate a land-based sportsbook in their stadium, or nearby retail locations that are within five miles of their designated facility, called a “limited event wagering license.”  The Arizona Department of Gaming is permitted to issue ten total limited event wagering licenses to authorize wagering at the ten specific retail locations.   Accordingly, the bill also permits an event wagering operator to partner with a racetrack enclosure that holds a permit issued by the Division of Racing to obtain one of the ten “limited event wagering license”.  The limited event wagering license only permits retail sports betting, and not online sports betting.

All licensed sportsbook are required to use official league data to settle “in-play” or “live” wagers.  Most significantly, the professional sports leagues are expressly permitted to share in the handle from the sports betting operators without requiring any gaming license or regulatory approval.

In addition to sports betting, Senate Bill 1797 permits fantasy sports operators to finally enter the Arizona market.  All fantasy sports operators must be licensed with the Department of Gaming.  Indian tribes that conduct Class III Gaming pursuant to the tribal-state gaming company may offer fantasy sports contests as well, either directly or through a third-party operator.

Key Components

  • Twenty total event wagering licenses are available
    • Ten licenses for Arizona professional sports franchise and facilities
    • Ten licenses for Indian tribes
  • Ten licenses for limited event wagering, for retail sports betting including racetracks and specific retail locations
  • The Department of Gaming will establish application fees and renewal fees for all licenses
  • Licensees are required to use official league data for live in-game wagers
  • Professional sports leagues are permitted to share in the handle from licensees without having to go through a separate licensing process
  • Fantasy sports contests are now legalized

Amendments to Arizona Tribal Gaming Compact

Governor Ducey plans to sign this bill to help facilitate amendments to the tribal gaming compact between Arizona and the 23 federally-recognized gaming tribes.  Following the signing of this bill, Governor Duce is expected to sign amendments to the state-tribal gaming compacts to allow tribes to expand casinos and offer additional table games such as baccarat, craps, and roulette.  The amendments also permit the Tribes to expand casinos to an unspecified number of new casinos in Phoenix.

Christopher Soriano Speaking at Mastering Fantasy Sports and Online Gaming Law CLE

Duane Morris’ Christopher Soriano will be speaking at a telephonic seminar about fantasy sports, online gaming and digital sports gambling on February 28, 2018 at 12:00 p.m.

The teleconference will discuss the latest on Mastering Fantasy Sports and Online Gaming Law. The seminar will introduce the most relevant issues and solutions along with latest legal developments and Supreme Court decisions affecting the industry.

For more information and to register, please visit the event website.

Christopher Soriano Speaking at Seton Hall Law School’s Gambling Law Symposium

Duane Morris’ Christopher Soriano will be presenting at a gambling law symposium hosted by the Seton Hall Law School’s Continuing Legal Education at Seton Hall University on March 1, 2018 at 3:30 p.m.

The symposium will discuss New Jersey’s gambling laws while focusing on the following topics:

  • The New Jersey Constitution, Statutes, Rules, and Regulations Governing Gambling
  • The Definition of Gambling Under New Jersey Law: The Chance Versus Skill Debate Involving Fantasy Platforms and Poker
  • The Impact Of Technological Advances Upon Laws Governing The Placement of Wagers On Horse races
  • Overview Of Supreme Court’s Sports Betting Case and
  • On-Line Casino and Other Forms of Gambling Under Federal and New Jersey Law

For more information and to register, please visit the event website.

Can You Get Busted for Your Bracket? Duane Morris Partner Christopher Soriano on Office Pools, Fantasy Sports and All Things Gaming Law

Duane Morris partner Christopher Soriano of the firm’s Cherry Hill office appeared on a recent broadcast of the “Wagner & Winick on the Law” radio program, during which he joined co-hosts Dean Mitchel Winick and Professor Stephen Wagner, both of Monterey College of Law, to discuss the interplay of federal and state laws in the United States related to regulating gambling and how many of these laws are outdated. A sampling of the topics discussed include Internet gaming, office brackets, fantasy sports, casinos and the lottery.

Within the context of the NCAA March Madness Tournament, Mr. Soriano provided insights on the gaming law implications of office bracket tournaments, which, as in most instances where people put in money on the results of a sporting event, are illegal for the most part. Mr. Soriano also commented on the developing area of fantasy sports and the important distinction to be drawn between games of skill and games of chance. For example, the traditional season-long fantasy sports contests are considered legal because skill is involved; while daily fantasy contests have been viewed as being illegal games of chance. Therefore, where is the line between when something is a contest of skill and when it is a contest of chance?

To listen to the radio program in its entirety, please visit the Recent Podcasts, Webcasts and Audio section on the Duane Morris website.

Future of North Jersey Casinos Now In Voters’ Hands

On Monday, three-fifths of each house of the New Jersey legislature passed resolutions that will put a question on the ballot in November asking voters if they want to expand casino gaming outside of Atlantic City.  As we previously posted here and here, the North Jersey casino proposal will allow for two casinos to be located at least 72 miles from Atlantic City, in separate counties.  The minimum investment required for a North Jersey casino will be $1 billion.  Current Atlantic City casino owners will be given an exclusive period of 60 days to submit bids for the two North Jersey casino licenses before bidding is opened up broadly.  Current owners of Atlantic City casinos may partner with other investors/developers to submit a bid for a North Jersey casino license.

If New Jersey voters pass the referendum in November, the legislature will then need to adopt enabling legislation.  This legislation will provide the details for the bidding process and the tax rate for North Jersey casinos.  Atlantic City casinos currently pay an effective tax rate of 9.25% on gross gaming revenue.  North Jersey casinos likely will be required to pay a significantly higher rate, perhaps in excess of 50%.

We will provide updates as developments occur.

Pennsylvania Considering Video Gaming Machines Again?

On February 12, 2014, the Pennsylvania House of Representatives’ Gaming Oversight Committee held a hearing to receive testimony regarding the prospects of legalizing electronic gaming devices, i.e video gaming machines, in the Commonwealth. The hearing focused on gaming along the lines of what was raised in a prior session’s bill, (2014 House Bill No 1932), which sought to legalize video gaming machines for bingo, keno, blackjack and other games for use in establishments with valid liquor licenses, such as restaurants, bars, taverns, hotels and clubs.

With a looming budgetary deficit Pennsylvania legislators are exploring various ways to increase gaming related tax revenue, including potentially moving forward with internet gaming through its existing bricks and mortar casinos. This recent Gaming Oversight Committee hearing revisiting the video gaming machines issue would be another means through which to generate gaming based tax revenue. The hearing’s witnesses touted the jobs and tax revenues generated by Illinois which implemented video gaming machines in bars, restaurants, taverns and truck stops several years ago – (projected IL tax revenues in excess of $250 million in 2015). While Illinois has had success generating tax revenue and producing jobs with its video gaming machine roll out, the machines do compete, on a low end basis with the states’ existing casinos. While local municipalities in Illinois can opt out of the video gaming program that option may not exist in a Pennsylvania bill and opposition from Pennsylvania’s casino industry remains to be seen.

Also, if considering video gaming at bars and taverns Pennsylvania may be well served to learn from some of the mistakes made with the passage of last year’s Tavern games legislation. Tavern games, with its gaming regulatory scrutiny focused on the bars/tavern owners, rather than through the games’ owners and route operators, lead to cost issues and a reluctance to move forward which hampered widespread implementation of tavern gaming. In addition, while Illinois has had relative success with its multi-tiered system of manufacturers, distributors, operators and establishments, that system has one too many layers to operate as effectively as it otherwise could. Few recall Pennsylvania’s short-lived requirement of local suppliers of slot machines layered between the industry’s manufacturers and end user casinos. The removal of the local supplier requirement opened the way to the implementation of Pennsylvania casinos in 2006. Finally the Pennsylvania Gaming Control Board and its agencies are more than capable of regulating and rolling out video gaming should it become law. Bringing in other, less experienced state agencies, such as Liquor Control or the Department of Revenue would only further complicate and delay implementation should the law pass.

Bill Restricting Casino Gaming Operations in Pennsylvania Goes to Committee

Last week, a Pennsylvania bill, which would restrict the hours of operation of Pennsylvania casinos, was referred to the House Committee on Gaming Oversight. Specifically, House Bill Number 165 would require casinos in the Commonwealth to close between the hours of 2 a.m. and 6 a.m. In a memorandum accompanying the legislation, State Representative Will Tallman, a co-sponsor of the bill, suggested that closing the casinos for a couple hours each day would reduce the prevalence of problem gambling.

If this legislation were to pass, Pennsylvania would be an outlier in the region as casinos in neighboring states – including New Jersey, Delaware, Ohio and Maryland – maintain 24 hour gaming operations. Additionally, New York recently selected three upstate applicants to develop full-scale resort casino facilities, which are expected to open in the next couple years. Once open, each of these facilities will offer 24-hour gaming to patrons.

It will be interesting to see if the Pennsylvania House committee charged with overseeing the Commonwealth’s gaming industry will support this legislation – and add another hurdle to a casino industry that is already struggling to keep gaming dollars away from rival gaming markets – or if the committee will determine that the existing regulatory safeguards to prevent problem gambling are sufficient. Stay tuned for updates on this and other legislation affecting the Pennsylvania gaming industry.