September 2017 Legal Online Betting News Roundup

Last month’s online betting news roundup covered a lot of legal ground with discussions of legislative developments across a wide swatch of states. Things have not slowed a bit on that end. Just one month later, we have even more developments in New Hampshire, Michigan, New Jersey, Delaware and more.

This month’s online betting roundup covers more legal developments once again, with almost all of it good news for online gamblers in the U.S. Things do move slowly when it comes to entire states actually legalizing real money online gambling, but things are ever so slowly moving in that direction.

Here is what we’ll be discussing today:

  • New Hampshire Authorizes Online Lottery Sales; Massachusetts Braces
  • Michigan Online Gambling Bill is Back in Play
  • New Jersey Formally Legalizes Daily Fantasy Sports
  • Delaware Welcomes Back FanDuel and DraftKings
  • New Hampshire Bill to Legalize Online Gambling is Revived
  • TopBetta Acquires US Betting License

New Hampshire Authorizes Online Lottery Sales; Massachusetts Braces

New Hampshire Governor Chris Sununu signed a bill in late July authorizing the state to sell lottery tickets online and begin offering electronic keno. Meanwhile, neighboring Massachusetts is already bracing for the impact this expansion will have on their own lottery sales.

The legislation passed in New Hampshire will change the state lottery in two ways. First, state residents 18 and older will be able to purchase lottery tickets online from home and via mobile apps.

Customers will first be required to sign up for an online account at a physical lottery retailer and provide identity verification. Once that is completed, residents will be able to buy lotto tickets online any time. Online lottery tickets are expected to go on sale at some point during the first two months of 2018.

The bill (page 111 here) will also require the state to set daily, weekly and monthly wagering limits for each player “consistent with the best practices in addressing problem gambling.”

Electronic keno has also been authorized for establishments such as hotels and bars with liquor licenses. Retailers will be able to obtain keno licenses for an annual $500 fee. Under the licensing conditions, retailers with keno machines will be required to prevent minors from participating and will be permitted to keep 8% of the proceeds from keno games. The remaining 92% will be directed to funding problem gambling and education initiatives.

As good as these developments will be for New Hampshire lottery coffers, Massachusetts Lottery officials are not celebrating. These developments serve as a double-whammy for the Massachusetts lottery.

For one, six of the top ten keno retailers in Massachusetts are located within 10 miles of the New Hampshire border. Cross-border traffic from New Hampshire has undoubtedly helped to feed Massachusetts keno revenues.

Compounding that problem is New Hampshire’s lack of an income tax. New Hampshire Lottery Executive Director Charles McIntyre has already noted that kenos players stand to win 5% more playing in New Hampshire versus playing in Massachusetts due to New Hampshire not having an income tax. McIntyre says they plan to market that benefit in a major way.

Massachusetts Lottery officials have said they feel like “dead ducks,” just sitting here watching their neighbors expand their lottery options. MA Lottery Executive Director Michael Sweeney recently added to that, saying “this is going to be another business pressure that negatively impacts our net sales and our revenue.”

Michigan Online Gambling Bill is Back in Play

A bill introduced by Senator Mike Kowall last year to legalize online gambling and poker in Michigan looked very promising, but that effort seemed all but dead after more than a year of no action.

That bill has since resurfaced. We now have word that Mike Kowall is back in action with a new and improved version of last year’s bill. This one, SB 203, was introduced in March and it too looks promising. Like the previous bill, this one is called the Lawful Internet Gaming Act and it seeks to legalize both online gambling and online poker.

Many elements found in the original bill remain the same this time around. Like the original version, this one will establish the Division of Internet Gaming and task the division to craft online gaming regulations, restrict online gambling to licensed brick-and-mortar casinos in Michigan, establish a minimum age of 21 and allow Michigan to enter compacts with other states and jurisdictions where online gaming is properly regulated.

There are also a couple of noteworthy changes this time around. As Online Poker Report notes, the new bill would give Michigan tribal operators more leeway in forming their own regulations. The new bill also calls for a 12-month moratorium on commercial casinos launching online gambling sites in order to give Michigan tribes time to do their own preparations.

New Jersey Formally Legalizes Daily Fantasy Sports

New Jersey finally gave daily fantasy sports the official “OK” on August 24th after Governor Chris Christie signed into law a bill regulating and taxing fantasy sports. New Jersey was not a problem state for any of the major daily fantasy sites prior to this move, but it does give operators firmer legal footing.

The bill Governor Christie signed into law establishes a 10.5% tax on operators as well as a number of consumer protection regulations such as setting a minimum age of 18 to participate and prohibiting industry insiders / athletes with a financial interest in contests from participating.

The Division of Consumer Affairs will now be responsible for issuing permits to operators. New Jersey estimates that it will collect an additional $6.6 million in tax revenue from taxing the industry.

Delaware Welcomes Back FanDuel and DraftKings

FanDuel and DraftKings are back in business in Delaware. Both fantasy sites were forced to leave Delaware last year after the Delaware Department of Justice issued a legal opinion stating that daily fantasy sports ran afoul of state gambling laws.

FanDuel and DraftKings reluctantly left the state after the DOJ followed up the opinion with cease-and-desist letters addressed to both operators.

They may have been the most polite cease-and-desist letters ever written and were clearly sympathetic to DFS. In part, the letters explained that the DOJ is “certain that many Delaware residents and visitors would enjoy participating in the full array of fantasy sports contests, including those that require payment for participation and have cash awards. But until such contests can be offered legally, the Department of Justice must enforce the law.”

Well, those contests may now be offered legally thanks to legislation signed into law last month by Governor John Carney. The legislation includes a standard assortment of consumer protection measures, establishes a minimum age of 18 for customers and prohibits contests based on college and amateur sports.

While FanDuel and DraftKings expressed support for the bill, smaller operators may not be as excited. The Delaware DFS bill imposes the highest tax rates and fee schedule of any state in the US to date. Operators must now pay a $50,000 licensing fee in addition to submitting to a tax rate of either 15.5% or the highest rate established anywhere else in the US.

New Hampshire Bill to Legalize Online Gambling is Revived

New Hampshire has been busy lately. After authorizing online lottery tickets in July, state lawmakers now have a meeting scheduled to take place on September 6th to discuss an online gambling legalization bill.

But before we get too excited, the bill is extremely vague and has no chance of becoming law in its current form. The full text of HB 562 reads:

This bill exempts gambling done over the Internet from gambling offenses under RSA 647.  The Department of Justice to date has neither investigated nor prosecuted online gaming offenses and therefore does not expect this bill to have any impact on expenditures.

To the extent this bill legalizes a form of gambling, it may have an indeterminable impact on lottery and charitable gaming revenue.  Lottery and charitable gaming revenue is credited to the lottery fund, with net revenues after Lottery Commission expenditures being credited to the state education trust fund.

This looks like more of a wait-and-see thing for now, but it’s worth following just in case this turns out to be the start of a serious legalization effort. Online Poker Report has some interesting theories here regarding how online gambling could look in New Hampshire.

TopBetta Acquires US Betting License

Last month, Australian horse racing betting company TopBetta and its subsidiary The Global Tote acquired licenses to engage in horse racing operations in the United States. This may prove to be a more significant development for US horse racing than it appears at first glance.

TopBetta was founded in 2011 and is licensed in the Northern Territory of Australia to provide horse racing, sports betting and fantasy sports. In 2016, TopBetta launched The Global Tote as a subsidiary company focusing on business-to-business operations.

The Global Tote serves as a tote betting platform which takes a lower take-out percentage than traditional totes while simultaneously working to make international racing pools accessible to domestic operators.

The Global Tote has grown quickly over the last year and is licensed in Australia, the UK and now the United States. What this means for us in the United States is our domestic horse racing sites will be able to plug in to The Global Tote’s pools to bring international racing pools to their customers here in the US, presumably with less take-out.

TopBetta also received an ADW license from the North Dakota Racing Commission. This license would allow TopBetta to interact directly with customers and operate as its own horse racing site in competition with the likes of BetAmerica and TwinSpires.

TopBetta Chief Executive Todd Buckingham said this:

The US market is exciting for both our wholesale and retail divisions, especially as we see it as underdeveloped and with huge potential.

“The Global Tote is also now well positioned to be able to assist with racing bodies globally looking to get access to the US pool of customers.

“Our retail license will allow TopBetta to enter the US market, getting access to both high-end and recreational punters.”

This looks like a very positive development for players. While BetAmerica and TwinSpires are both fine racing betting sites, there aren’t that many options and competition among existing sites is not at all fierce. The competitive landscape took a further hit earlier this year when Churchill Downs (parent company of TwinSpires) bought BetAmerica to effectively put both of our top-rated sites under control of one company.

It’s exciting to see a major international operator call the US market “underdeveloped.” Now that we think about it, what they’re saying does make sense. Online horse racing betting remains a fairly niche activity in the United States and the major players in US horse racing seem pretty comfortable where they are.

If another big competitor wants to move in and shake things up, we’re all for it. Competition tends to bring out the best in operators and result in a better experience for customers.

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