Sports Wagering and Expanded Gaming Headed to Florida

On April 23, 2021, Florida Governor Ron DeSantis signed a thirty-year gaming compact with the Seminole Tribe of Florida (the “Tribe”) that is intended to bring sports wagering, craps, and roulette to the Sunshine State.  The compact, which the Governor’s office hailed as, “Larger and more expansive than any other gaming compact in U.S. history,” is projected to bring Florida over six billion dollars in revenue over the next decade.

The compact will permit the Tribe to offer sports wagering directly at its seven casinos and through a mobile platform.  Moreover, the Tribe may also offer branded sports wagering through the kiosks or mobile applications of partnering Qualified Pari-mutuel Permit Holders, which include horse tracks, jai-alai frontons, former dog tracks, cardrooms, and slot machine facilities.  Further, the compact permits Qualified Pari-mutuel Permit Holders to relocate, although the Tribe must approve certain moves.  However, by requiring that all sports wagering servers be on tribal land, all retail and mobile wagering will be deemed to be conducted by the Tribe at tribal facilities.

Continue reading “Sports Wagering and Expanded Gaming Headed to Florida”

Maryland Legislature Passes Sports Wagering Bill with Expansive Licensing Opportunities and Targeted Support for Women and Minorities

The number of sports wagering licenses in Maryland may ultimately reach the triple digits after  House Bill 940 was overwhelmingly approved by both chambers of the legislature on the last day of the state’s 2021 legislative session.  Surrounded by four states and the District of Columbia, which all offer live wagering, the legislature continued its game of catchup by passing the bill as an emergency bill, which will allow it to take immediate effect upon the signature of Governor Larry Hogan.  With a House vote of 122-16 and a Senate vote of 47-0, the expansive legislation creates opportunities for land-based licenses at in-state casinos, racetracks, professional sports stadiums, State Fairgrounds, simulcast betting facilities, bars, and restaurants and also for mobile licenses. Continue reading “Maryland Legislature Passes Sports Wagering Bill with Expansive Licensing Opportunities and Targeted Support for Women and Minorities”

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.

Massachusetts Sports Wagering Bill Expected to Be Approved by July

From the spate of competing sports betting bills filed since 2019, House Bill 4559 has emerged as the frontrunner and is poised for passage. On March 12, 2020, the Joint Committee on Economic Development and Emerging Technologies submitted H.4559, as amended, to the House Ways and Means Committee with its recommendation for approval. Massachusetts Governor Charlie Baker has expressly supported the authorization of sports betting, which now is expected to pass during the current legislative session.

To read the full text of this Duane Morris Alert, please visit the firm website.

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.

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.

FinCEN Director Addresses Gaming Industry

On August 13, Financial Crimes Enforcement Network (“FinCEN”) Director Kenneth Blanco addressed the 12th Annual Las Vegas Anti-Money Laundering Conference and provided insights on his agency’s expectations for the ever-evolving gaming industry.

The following are some key takeaways:

Cost Cutting Poses National Security Threat. Director Blanco stressed that reports of compliance budget cuts by casinos looking to trim costs and retain gamblers is seen by FinCEN as a national security issue and not something the agency takes lightly. Further, despite FinCEN not publicizing any enforcement actions against a casino during the last year, it is continually looking at compliance across all financial institutions and will not hesitate to act if it identifies violations of the Bank Secrecy Act (“BSA”). It is also important to note that not all enforcement actions are public—FinCEN often closes cases with warning letters sent to financial institutions or refers cases to our delegated examiners for additional review.

Casino Industry Trends. In terms of suspicious activity being reported in 2019, Minimal Gaming with Large Transactions is the highest reported activity with more than 5,000 Suspicious Activity Reports (“SAR”) reflecting this activity. Reports of Chip Walking have dramatically increased since this was added to the SAR form in the summer of 2018. Chip Walking is now the second most selected suspicious activity on the SAR form, with more than 4,400 reports being cited this year to date.

The other frequently cited suspicious activities include:

  • Transactions below CTR Threshold
  • Unknown Source of Chips
  • Two or More Individuals Working Together
  • Alteration or Cancelation of Transactions to Avoid CTR Requirement
  • Suspicion Concerns on the Source of Funds

Additional analysis of trends reported by casinos checking the “other” box on the SAR form includes reports of suspicious activity involving sports betting, abandoned jackpot, and bill stuffing.

Sports Betting and Mobile Gaming. Casinos and card clubs must integrate sports betting and mobile gaming products into their existing AML programs. FinCEN expects casinos and card clubs to collect cyber-related indicators through their mobile gaming or betting applications in order to monitor and report potentially suspicious activity. Examples of such cyber-indicators include: source and destination information, file information, subject user names, system modifications, and account information.

Relevance of Convertible Virtual Currency (CVC) Advisory to Casinos. There are generally two areas where CVC will intersect with casinos and card clubs: so-called CVC casinos on the internet, and physical casinos and card clubs that accept CVC for gaming.

As FinCEN’s CVC guidance points out, internet gaming sites that operate online without licensure from a state or tribal gaming regulator are not “casinos” for purposes of regulations implementing the BSA. However, they are likely operating as money transmitters. Money transmitters have their own obligations under the BSA and its implementing regulations, which includes a formal registration with FinCEN.

Casinos and card clubs that accept CVC from customers either on location or through mobile applications, need to ensure that CVCs are accounted for in policies, procedures, internal controls and risk assessments. This includes developing processes for reviewing and conducting due diligence on transactions in CVC, for conducting blockchain analytics to determine the source of the CVC, and incorporating CVC-related indicators into SAR filings.

Culture of Compliance. Critical to fostering a culture of compliance is utilizing enterprise-wide information and ensuring such information gets into the hands of compliance personnel. For example, information developed by casinos for business and marketing, as wells as information developed by casino security departments for combating and preventing fraud should be used by casino compliance personnel to monitor customers for suspicious activity. Similarly, a casino’s legal department should alert compliance personnel when a subpoena is received as it could trigger reviews of customer risk ratings and account activity. Moreover, larger casinos may have multiple affiliated casinos that could benefit from the sharing of information across the organization.

Innovation and BSA Value. In January 2019, FinCEN began an ambitious project to catalogue the value of BSA reporting across the entire value chain of its creation and use. The project will result in a comprehensive and quantitative understanding of the broad value of BSA reporting and other BSA information to all types of consumers of that information.

As an example, given the current state of the opioid epidemic, something a minor as the mobile phone number of a suspect from a casino SAR could be vitally important to a DEA agent since the suspect would provide a real phone number to ensure he is called when his winnings are wired out to a bank account. Using that mobile number, the agent can build out a communication tree and identify new individuals, entities, addresses or accounts. A DEA agent can also use this information to seek legal approval to wiretap or track the movement of the phone, identify potential informants, and build out a network of associates.

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.

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.