By the Way, Maryland’s General Assembly Also Passed Fantasy Competitions

Much has been written about the Maryland General Assembly’s April 12 passage of sports betting legislation that, upon signature of the governor, will authorize up to 60 mobile licenses and more than 40 retail licenses here. The fact that the same piece of legislation – House Bill 940 – will also legalize, regulate, and tax fantasy competitions seems to have gotten lost in all the excitement. Would-be fantasy operators should note the following features of the law.

HB 940 legalizes and expressly exempts fantasy competitions from criminal laws against betting, wagering and gambling. It is fair to glean from the carve-out from criminal law, the title of the act (“Regulation of Fantasy Gaming Competitions”), and the invitation to the Lottery and Gaming Control Commission to establish a voluntary exclusion list for fantasy players that the General Assembly considered fantasy competitions gambling.
Continue reading “By the Way, Maryland’s General Assembly Also Passed Fantasy Competitions”

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.

New York Mobile Sports Betting Approved in Fiscal Year 2022 State Budget

New York Governor Cuomo and state legislative leaders have reached a tentative agreement on the Fiscal Year 2022 New York State budget paving a way for mobile sports betting in the Empire State.  here is a link to the Senate Bill 2509  .  The General Assembly must now vote to accept the budget and additional changes may be forthcoming.

In summary, the New York State Gaming Commission plans to issue a Request  or Proposal (“RFP”) by July 1, 2021, to select up to two providers to offer mobile sports wagering.  According to the April 6, 2021 revised Budget Bill, a “platform provider” is defined as “an entity selected by the [New York State Gaming Commission] to conduct mobile sports wagering pursuant to a competitive bidding process.”  The operators selected during in the RFP process would then be able to subcontract mobile betting contracts, also known as “skins”, to other providers.  The operators submitting proposals are required to house their mobile sports wagering platform provider server and other equipment with a licensed casino facility.  Based on existing publicly reported agreements and/or affiliations with upstate casinos,  FanDuel,  DraftKings, Bet365, and BetRivers may have such agreements in place.  However, as noted in the “platform provider” definition, any operator that has an agreement with an upstate casino is eligible, and therefore, already existing sportsbooks are not the only potential applicants.

The selected operators must offer at least four skins combined, but according to New York State Senator Joseph Addabo Jr. and chair of the State Assembly Racing and Wagering Committee, J. Gary Pretlow, there is no ceiling on the amount of skins available, but instead, what the “market can bear.”  The selected providers will pay a $25 million licensing fee and pursuant to a revenue-sharing agreement between New York and selected providers, New York is estimated to receive a minimum of 50% of gross gaming revenues.  Finally, the New York State Gaming Commission may select more providers if it determines additional licenses “are in the best interest of the state.”

Key Components

  • Two platform providers will be selected through a RFP process
  • “Platform Provider” is broadly defined in the law
  • The New York State Gaming Commission must issue a RFP no later than July 1, with a 30 day application window following the RFP
  • The New York State Gaming Commission has 150 days after the final application is received to select the providers
  • $25 million one-time licensing fee for each selected platform provider
  • Applicant must include its proposed skins in the application
  • Selected providers must combine for a minimum of four total skins
  • New York to receive a minimum of 50% of gross gaming revenue from the selected providers
  • Providers must have server located in land-based casino and will pay $5 million annually to the land-based casino to house the server, unless the provider is already affiliated with a land-based casino
  • No mandate on official league data, but there will be a preference for use of such data in the bidding process

Tribes, Racetracks, and OTBs Left Out of the Deal

Indian tribes located in New York were effectively left out of the bill besides a provision that rewards applicants additional points in the RFP selection process if they have a revenue sharing agreement with an Indian gaming operator.  The Onedia Indian Nation released a statement following the release of the agreement noting the mobile sports legislation would result in a breach of its ten-county gaming exclusivity zone and threatened to withhold $70 million in annual revenue sharing to the state as a result.  In addition, racetracks and off-track betting (“OTB”) locations were not included in the agreement, although previously proposed legislation would have allowed these operators to offer mobile betting.

If you have any questions about this please contact Frank A. DiGiacomo, Adam BergerJoseph F. Caputi, or any of the attorneys in our Gaming Industry Group.

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?”

Pennsylvania Assembly Passes Sweeping Expansion of Gambling

On June 22, 2016 the Pennsylvania General Assembly passed a sweeping expansion of gambling .   The bill, which must be passed by the state’s Senate and signed by the Governor, would allow for internet based gambling, daily fantasy sports, slot machines at off-track betting parlors (“OTBs”), slot machines at airports and even paves the way for legalized sports betting, if, and when that is allowed under federal law.

Internet Gambling

  • Pennsylvania would be the fourth state to allow legal internet gambling (Internet gambling is currently legal in New Jersey, Delaware and Nevada);
  • Internet gambling would be offered through the Commonwealth’s current, licensed casinos with each casino paying an $8 million license fee to offer internet gaming;
  • Age and geo-location controls will be required – players must open an account, be 21 or over and must be located within PA while participating in internet gambling;
  • The tax rate on internet gambling revenue would total 16%;
  • Participating casinos would not be allowed to reduce their number of slots machines their existing b casinos

Daily Fantasy Sports

  • Bill allows current DFA operators like FanDuel and Draft Kings to obtain a license to offer DFS without partnering with a PA casino; DFS operators would pay 5% of its revenues ( after player payouts) to the state;
  • DFS players must be 18 yo or older;

Slots at OTBs

  • PA’s 5 racetrack casinos would each be permitted to have up to 4 off-track betting parlors with up to 250 slot machines per OTB;
  • Each such OTB must be outside a 50 mile radius of an established PA casino;
  • There is a $5 million licensee fee for each OTB with slots;

Slots at Airports

  • Casinos can seek permission to install slot machines at airports; the PA Gaming Control Bd can set limits on the number of slot machines l allowed;
  • License fees for such operations would be $5 million in Philadelphia; $2.5 million in Pittsburgh; and $1 million a each at the four other international airports in PA;

Expansion of Current Resort Casinos

  • Current Category III casinos in PA can expand their max slot machines counts from 600 to 850 and table games from 50 to 65;
  • There is also a relaxation in the requirement that casino patrons be customers of other amenities;
  • If a current Category III casino and all three changes it so would requires $4.5 million is additional license fees.

Sports Wagering

  • The bill instructs the PA Gaming Control Bd to develop regulations to allow for sports wagering if, and when the federal government permits such sport betting

New Jersey Legislature Takes First Step To Authorize North Jersey Casinos

A Proposed Amendment to the New Jersey State Constitution will authorize two additional casinos in the State. The details of the Proposed Amendment are as follows:

  • No more than 2 casinos, each one to be located in different counties in State
  • New casinos must be located  outside a 75 mile radius from Atlantic City.
  • Eligibility for the license is limited to:
    • (1) a currently licensed Atlantic City casino operating as of December 11, 2015; or
    • or (2 ) any person licensed as a principal owner (yet undefined) of a holder of a New Jersey casino license that was operating a casino which was conducting gambling on December 11, 2015 if that principal owner also holds a valid license to own and operate a casino in another jurisdiction with licensing standards similar to those in New Jersey
  • Tax rate to be determined in subsequent legislation. 49% of such tax revenue for 15 years is dedicated for recovery , stabilization or improvement of Atlantic City.  2% of tax revenue dedicated to thoroughbred and standardbred  horsemen.
  • The Resolution has to be approved with 3/5 votes by both houses of the NJ Legislature or majority votes twice over two years. The votes have to be completed at least 90 days before going on the ballot of a state-wide referendum to amend the NJ State Constitution.

A copy of the proposed amendment can be read here: SCR 185.

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.