Just as the growth of fantasy sports, sweepstakes and online poker were curtailed by the reach of gambling laws, the latest trends in the $138 billion video gaming industry are attracting an increasing level of unsolicited attention from gambling regulators across the globe. Much of this attention is focused on “loot boxes”.
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interplay of federal and state laws in the United States related to regulating gambling and how many of these laws are outdated.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.
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.