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The 7 States Most Likely to Legalize Online Gambling in 2017

We’re just three-and-a-half months into 2017 and already gambling legislation is being considered in seven different states. These efforts are all in various degrees of progress and there are no guarantees, but it is promising to see so much activity given where we were just a few years back.

To date, only New Jersey and Delaware have legalized online gambling and poker while Nevada has legalized online poker. The seven states that are now in the process of at least considering legalization of one or more forms of gambling include:

In today’s post, I will provide an overview of the bills that are under consideration in each state and explain where they are in the legislative process. Where possible, I will offer predictions of the likelihood of each bill making significant progress and possibly even becoming law. Also, kudos are due to Online Poker Report for keeping an up-to-date bill tracker on which I partially relied to conduct research for this post.

Online Poker in California

This one is no surprise. Lawmakers have been debating online poker in California for several years now. Although California already has a very poker-friendly culture, differing visions of what legalization would entail along with competing tribal interests, card room operators, offshore poker sites and others have all combined to stall progress.

Occupying one front in the battle are the lawmakers tasked with drafting the actual legislation. On another front are the casino tribes that want a piece of the action and who have considerable legal sway as it relates to gambling in California. However, even the tribes do not present a unified front as the various tribes remain unable to reach a consensus on the proper approach to legalization.

On yet another front we have existing online poker operators such as PokerStars eyeing the California market and putting up compelling arguments as to why they are uniquely qualified to run online poker games in the US. Some tribes are interested in partnering with experienced operators while other tribes demand “bad actor” clauses that would keep sites that once served the US market out of a legalized California market.

Add to that no shortage of lobbyists taking money and throwing money at legislators, an assortment of anti-gaming groups opposed to all forms of gaming and divided public opinion and you get all the ingredients needed for stalemate.

The one thing all interested parties (minus anti-gaming groups) can agree on is that online poker should be addressed in California. Various proposals have been offered and bills have been introduced over the years, but none have yet to please everyone.

AB 1677: Latest Gaming Bill in California

The latest move towards regulation of online poker in California occurred in February with the introduction of AB 1677 by assemblyman Reginald Jones-Sawyer. The bill, titled “the Internet Poker Consumer Protection Act of 2016,” has so far been described as a starting point rather than an effort at pushing through legislation this year. According to Reginald, the bill is intended to generate discussion and begin negotiations between the various competing interests in California.

AB 1677 seeks to authorize “eligible entities” to offer online poker in California under 7-year licenses that would come with a one-time fee of $12.5 million and then pay taxes ranging from 8.87% to 15% based on annual revenue.

The proposal defines “eligible entities” as existing card rooms and federally recognized California Indian tribes. Both must be in good standing and have operated land-based gaming facilities for at least five years prior to seeking a license.

The bill also calls on the California Gambling Control Commission and the Department of Justice to draft regulations to address a wide scope of issues, some of which include:

  • Preventing underage gambling and addressing problem gambling
  • Resolution of player disputes and complaints
  • Hardware and software standards and compliance
  • Approval of poker game rules and authorizing poker gaming activities

The same Online Poker Report post linked-to above also notes that the bill does not include a bad actor clause. This means sites such as PokerStars that did business in the US after the passage of the federal Unlawful Internet Gambling Enforcement Act would still be able to join the action.

The definition of eligible entitles does not include offshore poker sites, but some tribal groups have indicated an interest in teaming up with PokerStars for technical assistance and brand name recognition.

Likelihood of this bill becoming law in 2017: very low

AB 1667 was purposely drafted as a starting point to resume negotiations between the various competing interests in California. The likelihood that this exact bill goes into law is almost zero. This bill is open to negotiation and will see significant changes over its lifetime. If this bill does end up being the magical starting point for successful negotiations, it will likely be shelved to make way for more finalized legislation.

This does not mean online poker will never get done in California. It may seem that way, but progress has been made in important areas. As Steven Ruddock noted over at USPoker.com, California’s racetracks presented a major hurdle as they held exclusivity rights to online gambling in California until recently.

Last year, the state struck a deal with tracks last year to grant a $60-million-per-year subsidy to California horse racing if online poker is ever legalized. The agreement didn’t just remove one of the most significant roadblocks in poker legalization; it also showed that deals can be made to move forward on this issue.

California is getting there one step at a time, but getting all remaining interested parties on board and then crafting legislation to suitable to everyone before the end of 2017 is a long shot proposition.

Legal Online Gambling in Massachusetts

After Governor Deval Patrick signed the Expanded Gaming Act into law in 2011 to authorize a slots parlor and up to 3 land-based casinos in Massachusetts, our view on the likelihood of Massachusetts joining the online betting bandwagon changed for the better.

Although that bill only dealt with land-based casinos, it represented a change of attitudes towards gambling that we believe make further legalization measures likelier. We also figure that once the state got a taste of that gambling money and people see that legalization of brick-and-mortar casinos has not yet caused the sky to fall, lawmakers and residents will be slightly more open to the idea of online gambling in Massachusetts.

So far, the logic seems to be holding true. It wasn’t long after the 2011 bill went into law that Massachusetts lawmakers began holding meetings to discuss getting into online gambling. The general consensus back around that time was that it would be best to wait for the land-based casino industry to establish itself and then take it from there.

Now we fast forward to the current year with the slots parlor up and running and two major resort-casinos under constructions. The brick-and-mortar industry is just barely getting off the ground, but the operators of all three casino projects seem open to the idea.

It bodes well for the future of online gaming that MGM, Wynn and Penn National are all mostly in agreement on this issue. MGM in particular has firsthand experience to draw on with active online poker operations in Nevada and plans to enter the online market in New Jersey. In short, the operators like the idea of online gambling and at least one has some experience in the sector. Wynn appeared the most reluctant of the bunch, but did concede that if Massachusetts does legalize online casinos, it should restrict licenses to established brick-and-mortar operators.

The Massachusetts Gaming Commission met in February for early discussions related to how they would regulate and license online casinos if legislation is passed in the state. Already, the Gaming Commission chair has already expressed support for online gambling in Massachusetts. The Commission should be releasing a final report on their discussions any day now.

The odds of favorable online betting legislation being passed in Massachusetts go up dramatically with none of the state’s three major casino operators or the Gaming Commission expressing outright disapproval. Convincing other lawmakers and the public at large to also support the idea may bring yet-unforeseen challenges, but right now Massachusetts is certainly moving in a pro-online gambling direction.

SD 618: Active Online Gaming Bill in Massachusetts

Senate Minority Leader Bruce Tarr submitted a brief bill in January hoping to open the state to online gambling. The 3-paragraph bill is lacking is specifics at the moment, but clearly calls for the law to be amended to allow currently-licensed operators to offer their games online provided they acquire online gaming licenses.

SD 618 offers no specifics regarding taxes, fees, regulations or even how licenses would be awarded. This bill for now serves more as a placeholder than an actual attempt to legalize online casinos in Massachusetts as the state waits for the Gaming Commission to publish a report detailing the findings and recommendations from its February meeting.

Likelihood of this Bill Becoming Law in 2017: Very Low

SD 618 is not a completed bill and much work needs to be done before Massachusetts has everything in place needed to properly regulate online gaming. Progress is definitely being made, but we’ll have to wait for the Commission’s report before we can even begin to visualize what regulated online gambling would look like in Massachusetts.

Online Gambling Efforts in Michigan

Michigan is a state that is friendly to gambling with more than two dozen brick-and-mortar casinos as well as legal online horse racing betting, fantasy sports and skill games. However, the state also has a mix of competing interests that make it difficult to craft legislation that would satisfy all gaming stakeholders in the state.

Even so, a series of bills have been introduced in Michigan so far in 2017. Senate Bills 202, 204 and 205 deal with amending existing law to decriminalize online gambling while SB 203 actually lays out a regulatory framework for legal online casinos in Michigan.

Senate Bill 203

The most important bill to watch in Michigan this year is SB 203 introduced by Senator Mike Kowall on March 1st. The bill calls itself the “Lawful Internet Gaming Act” and it seeks to allow licensed brick-and-mortar casinos to offer online casino games and poker. Interestingly, the bill also appears to require all licensed online operators offer online poker at a minimum; licensed operators would not be able to offer internet casino games without also offering online poker.

Under the proposal, Michigan casinos would be able to apply for five-year licenses with a licensing fee of $200,000 for the first year and $100,000 per year for each year after. The bill also calls for a reasonable 10% tax on gross revenues.

Casino sites would also be required to put in place mechanisms to enforce a minimum age of 21 for all customers and Michigan would be permitted to enter interstate gaming compacts. Overall, this bill is similar to the bill put forth by Mike Kowall last year.

SB 203 passed its first hurdle after a successful 7-1 vote in the Senate Committee on Regulator Reform in March. This vote was expected as the bill introduced last year also cleared the first vote. SB 203 will now need action in the full Senate as well as the House before it has a chance of becoming law.

Likelihood of this Bill Becoming Law in 2017: Low

While it is promising to see interest in online gaming among lawmakers, the gaming landscape in Michigan is complicated due to state and federal tribal agreements and little support from the gaming industry. As Calvin Ayre noted at the time, Detroit’s three commercial casino operators remain neutral on the expansion of online gaming while four of Michigan’s twelve gaming tribes expressed opposition.

This bill will need some serious help in its current form to receive votes in the House and Senate and satisfy the state’s gaming tribes and commercial operators. Altogether, these issues create significant challenges to overcome by the end of the year.

Online Poker in New York

One of the states most likely to pass online gaming legislation this year is New York. A pair of companion bills introduced in the Assembly and Senate earlier this year seeking to legalize, tax and regulate online poker remain viable to this day. Poker legislation currently has two paths to become law this year.

First, online poker may be addressed via the 2017-2018 budget. The Assembly, Senate and governor have drafted their own budget proposals, and all three are set to begin talks on Monday, March 20th to haggle out their differences and iron out a final budget to present to the governor by the start of the new fiscal year on April 1st.

Sara Friedman of Gambling Compliance first reported on March 15th that the senate version of the budget does include online poker language. That is a good start, but budget negotiations could still strip poker from the final proposal. The Senate’s 2016 budget proposal also included poker language that was eventually stripped from the final budget.

If online poker does not survive the budget process, the other option is for lawmakers to pass a poker bill by itself before the end of the current legislative session this June. Both the Senate and Assembly both seem keen to pass the bill, but the Cuomo administration has yet to take a stance on either side of the issue.

The legislative option also looks viable. A similar bill passed the Senate by a 53-5 vote last year and should pass there again this year if brought to a vote. The bill then died in the Assembly after the bill’s sponsor, Gary Pretlow, failed to bring his own bill to a vote in the Assembly. His reasons for doing so alternated between being unsure if poker is a game of skill to feeling that the bill didn’t have sufficient support in the Assembly.

Whatever the problem was last year, Pretlow sounds much more confident in getting his bill through the Assembly. If the Senate and Assembly both pass the bill, the last step would be getting the blessing of Governor Cuomo. His stance on online poker remains unclear.

S03898 and A05250: The Current Poker Bills in New York

Senate bill S03898 and Assembly bill A05250 are identical online poker legislation bills that are being discussed in New York this year. If those bills become law, it would allow New York to issue up to eleven 10-year poker licenses at a cost of $10 million each to operators. That’s an expensive proposition, but the legislation lightens the burden somewhat by allowing the licensing fee to be used to offset taxes for up to five years.

Likelihood of this Bill Becoming Law in 2017: Fair

Online poker has a decent chance to become a reality in New York this year. There’s no way I could offer an intelligent estimation of this bill’s chances in percentage format without speaking to Governor Cuomo myself, but the fact that the bill has two paths to get through to the governor’s desk is promising.

There are two big caveats here. First, a similar bill made it into the Senate’s budget in 2016 and still didn’t make it into law. Second, we don’t know the administration’s stance on internet poker. What’s promising, however, is the bill appears to have the full support of the Assembly this time around. If the bill doesn’t make it through the budget process, it has a realistic chance of making it through the legislative process.

New Hampshire Bill to Decriminalize Online Gambling

Three lawmakers in New Hampshire introduced a simple bill in January of 2017 seeking to decriminalize online gambling. Representatives Eric Schleien, Nick Zaricki and Robert Fisher are taking the unique approach of decriminalizing online gambling and doing absolutely nothing else.

Their bill offers no regulations, seeks no government oversight, does not mention licenses and does not call for any new taxes. It simply seeks to amend New Hampshire law with a single line of text that would exclude “gambling done over an Internet connection on a website on the Internet” from a list of offenses in New Hampshire.

Presumably, the law would allow residents of New Hampshire to join the rest of the world in playing on international betting sites such as Bet365 and poker sites such as PokerStars. Those same sites would be able to freely accept residents of New Hampshire without worry of state lawmakers taking action against those sites.

This is a unique approach because states typically want a cut of the action and to implement their own regulations. In a way, this bill does make sense given New Hampshire’s small population of just 1.3 million people. Traditional regulation requiring licenses and expensive fees would have a hard time attracting operators without the state also entering into interstate compacts with other states to share player pools. This bill sidesteps those drawbacks by simply decriminalizing online gambling across the state.

HB 562: Legalizing Online Gambling

HB 562 is the simplest, most straightforward gambling bill yet to be introduced anywhere in the United States. It is aptly titled “An Act Allowing Online Gambling” and the full text clocks in at a succinct 3 lines of text:

1  New Subparagraph; Online Gambling.  Amend RSA 647:2,V by inserting after subparagraph (c) the following new subparagraph:

(d)  Gambling done over an Internet connection on a website on the Internet. 

2  Effective Date.  This act shall take effect January 1, 2018.

Likelihood of this Bill Becoming Law in 2017: Very low

HB 562 appears unlikely to gain much traction given the lack of regulations, licensing fees and tax proposals. Lawmakers have traditionally proven quite keen on taxing new industries to ensure the state gets a piece of the action. Without these benefits to the state, lawmakers will likely be very hesitant to take up an issue as controversial as legalizing online gambling.

The bill was last seen at a public hearing on January 31st in the Ways and Means Committee, but the results of that hearing have not been published online. The bill’s current status is listed as “retained in committee.” This means the bill hasn’t been killed outright, but also won’t be advancing beyond the committee phase any time soon.

Pennsylvania Gambling Bills and Discussions

Pennsylvania has quite a bit going on regarding online gambling at the moment. It is difficult to offer up predictions at the moment with so many interested parties offering differing input, but it looks like we should be getting more answers soon.

In short, Pennsylvania has two bills on the table right now and state lawmakers just wrapped up a round of hearings to discuss online and land-based gambling opportunities. In the first week of March, a joint hearing involving the House Gaming Oversight Committee and the Senate Community, Economic & Recreational Development Committee discussed a range of gambling issues.

Triblive.com provides a comprehensive summary of the discussions here. The condensed version is this: some lawmakers (including the Pennsylvania Gaming Control Board Executive Director) argued in favor of online gaming and others expressed concerns. Concerns voiced by the opponents of online gambling mostly involved the fear of online casinos cannibalizing revenue from existing land-based casinos and issues surrounding tax rates.

Proponents of online betting legalization in Pennsylvania argued that online gambling would provide significant revenues to the state via taxes and licensing fees. One witness projected new annual tax revenues in the range of $60 million per year in addition to another $110 million in the first year from licensing fees.

SB 477 and HB 392: Active Online Gambling Bills in Pennsylvania

In the background of all these discussions is a pair of identical bills (SB 477 and HB 392) put forth by the House and Senate. Both bills are identical and seek to legalize and regulate online gambling and fantasy sports.

The bills call for an $8 million licensing fee with a $250,000 annual renewal fee for online casinos, a $2 million licensing fee with a $100,000 annual renewal fee for technology providers and a total of 16% in taxes on gaming revenues. The twin bills also include 200+ pages of proposals related to all forms of gambling in Pennsylvania.

Likelihood of these Bills Becoming Law in 2017: Fair

Back in January, state lawmakers expressed confidence that they had the support to get “something done and passed in the House and Senate.” Support in both houses plus the support of the Gaming Control Board bode well for the bills’ chances. On top of that, the majority of Pennsylvania’s casinos are in favor of legalization. That’s a strong coalition that could very well get something done this year.

The effort does still have powerful opponents, however. Sheldon Adelson (owner of Sands Bethlehem) and Anthony Ricci (CEO of Parx Casino) are staunchly opposed to the expansion of gambling in Pennsylvania. Sheldon Adelson has been a particularly thorny opponent who once vowed to spend “whatever it takes” to prevent the spread of online gambling in the US. Those opponents combined with the concerns raised by some lawmakers in the March hearing could be enough to derail the effort for another year.

Online Gambling Bill Introduced in West Virginia

West Virginia became the latest state to seek online gambling legalization with a bill introduced on March 14th. Five Democratic delegates introduced the bill which seeks to authorize the existing gaming operators to offer their games online. Judging from the text of the bill, the primary motivation of the bill is to raise revenue for the state with consumer protection being a secondary motivator.

HB 3067: A Look Inside

HB 3067 was introduced in the House of Delegates and if passed would allow gambling providers currently licensed in Pennsylvania to take their games online. This early version of online gaming legislation calls for a reasonable licensing fee of $50,000 and a tax rate of 14% on gross gaming revenue.

The bill calls on the Lottery Commission to establish regulations to govern online gaming, but it does outline a number of basic guidelines:

  • The state may enter interstate gaming compacts (i.e. sharing of poker player pools between states)
  • Gaming facilities whose licenses to offer video lottery games and table games are in good standing may be issued licenses
  • Gambling sites must take reasonable steps to ensure they are only accessible to state residents who are 21 or older
  • Gambling sites must take reasonable steps to protect the privacy and online security of customers and to ensure the games are fair and safe
  • Licensed gambling sites must keep players’ funds segregated from operational funds
  • Licensees may team up with third party technology providers, but all online operations must operate under the licensees’ brand names, not the brand names of the technology providers

Likelihood of this Bill Becoming Law in 2017: Very low

Gaming legislation typically takes a very long time to work its way through the system to become law and this bill has only been in play since March 14th of 2017. Additionally, this is the first online gaming bill to ever be introduced in West Virginia. Lawmakers, casino operators and other stakeholders will all have to wrap their head around this bill, form opinions and then hash out their differences before this bill has a realistic chance of becoming law.

Over the longer term, the bill’s chances are good. In its post on the topic, CalvinAyre.com notes that the state’s racetrack-casinos have been complaining about falling revenue for years. The state lottery has also expressed an interest in legalizing and regulating online gambling. If these interests can get state politicians on board, internet gaming could become a reality in West Virginia in the not-too-distant future.

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