The Special Commission On Online Gaming, Fantasy Sports Gaming And Daily Fantasy Sports “appears poised to recommend a broad brush approach to regulating the industry,” according to the Massachusetts Statehouse News Service (paywall).
This news comes on the heels of the commission’s most recent meeting on Tuesday.
At Tuesday’s hearing, the nine-member commission met “to get a sense of where its members stand on issues discussed during public hearings,” according to Statehouse News.
Most members favor the omnibus approach to iGaming
Based on the statements from commissioners who spoke at the hearing, it appears the majority of the commission is leaning toward an omnibus approach first broached by Massachusetts Gaming Commission Chairman Stephen Crosby.
The omnibus approach would broadly legalize online gambling. It would also give the MGC the ability to craft rules and regulations for new products that will undoubtedly emerge. More from Statehouse News:
“Our view is that the Legislature’s job is to determine whether or not we want gambling online to be legal, and if the answer to that is yes, which it sort of presumptively appears to be, then come up with a regulatory environment that can deal with all of these things as they come down the pike and not have to try to be in a reactive mode,” Crosby said.
Hirak Shah, who was appointed to the commission by Senate Minority Leader Bruce Tarr, said the senator agreed. Tarr is the sponsor of an active online gambling bill.
A third commission member and the driving force behind Massachusetts’ efforts to legalize online lottery, Sen. Jennifer Flanagan, was also on board with the omnibus approach.
As a result, it’s fair to guess this approach is the most likely recommendation.
What happens next for Massachusetts online gambling?
The co-chairs have asked for each member to submit their individual recommendations by June 16.
The commission will then hold another public hearing to review its draft recommendations. That comes before submitting a report to the legislature prior to a July 31 deadline.
Unfortunately, by the time the recommendations are submitted, there may not be enough time for the legislature to act in 2017.
Still, as Chris Grove noted in Tuesday’s Grove Report:
“Most observers believe it is unlikely that Massachusetts will take legislative action this year, but a clear path articulated by the commission could in theory accelerate the process.”
The commission consists of:
- Joseph Wagner, co-chair of the commission
- Eileen Donoghue, co-chair of the commission
- MGC Chairman Steve Crosby (appointed by the Gaming Commission)
- Sen. Jennifer Flanagan (appointed by Senate President Stanley Rosenberg)
- Rep. James Kelcourse (appointed by House Minority Leader Brad Jones)
- Assistant Attorney General Dan Krockmalnic (appointed by Attorney General Maura Healey)
- Fantasy Sports Trade Association Chairman Peter Schoenke (appointed by Gov. Charlie Baker)
- Rep. Mark Cusack (appointed by House Speaker Robert DeLeo)
- Hirak Shah (legal counsel to and appointed by Senate Minority Leader Bruce Tarr)
With online lottery legalization being a possibility in the future in Massachusetts, an AstroTurf group has ramped up its lobbying efforts against it in the state.
In a press release dated May 16 and picked up by several local news outlets, including the Boston Globe, a group fighting against online lottery in Massachusetts stated this:
“Massachusetts voters are overwhelmingly opposed to expanding the Massachusetts Lottery to include internet games according to a state-wide poll sponsored by the Save Our Neighborhood Stores Coalition.”
The Save Our Neighborhood Stores Coalition represents:
- New England Convenience Store & Energy Marketers Association
- Retailers Association of Massachusetts
- Massachusetts Package Store Association
- New England Service Station & Auto Repair Association
- Boston Convenience Store Owners Association
- Massachusetts Food Association
Although legal Massachusetts online lottery and gambling appear to be off the table until next year, the group and its claims still warrant a closer look.
Polling results too good to be true
The group listed the following polling results to emphasize its point:
- 95 percent view local retail businesses as being important to the Massachusetts economy.
- 80 percent oppose expanding the Massachusetts Lottery to the internet. They believe that people who want to play currently have enough access.
- Of the 20 percent who support expansion, 80 percent change their view if expansion to the internet would negatively impact their neighborhood store.
- 90 percent oppose allowing people to pay for internet games with their credit cards or via direct electronic transfers from a personal bank account.
- 65 percent believe internet lottery would be less effective in safeguarding against youth access to gambling compared to the current age verification checks conducted by brick-and-mortar retailers.
- 55 percent believe the Massachusetts gambling market is already over-saturated. Further expansion would have a negative impact on businesses, jobs and revenue supported by the current market.
Missing from the press release is any sort of methodology or the precise phrasing of the questions, which can be used to influence the results. Requests for additional information and further comment from the group have gone unanswered.
In addition to suspect polling, there are a few dubious claims in the press release.
Claim No. 1: Online will cannibalize lottery retailers
The press release focuses on what has become a common refrain for online gambling opponents: cannibalization.
“Massachusetts has the most successful lottery in the country, thanks in large part to the 7,500 local businesses who partner with the lottery to sell its products,” said coalition member Jon Hurst, president of the Retailers Association of Massachusetts. “Abandoning the current system for a model which has yet to be proven successful anywhere in the country is simply bad policy.”
First of all, the idea that online lottery is untested or “yet to be proven” is an alternative fact. Georgia, Illinois, Michigan, and Kentucky sell various lottery products online. Illinois and Georgia have for several years.
So far the sky hasn’t fallen in any of those four states. To the contrary, they have found the situation on the ground to be the opposite of the coalition’s concerns.
“There is no indication that the online games are affecting sales at our 11,000 retailers,” Jeff Holyfield, the director of public relations for the Michigan Lottery told Online Poker Report in 2015. “In fact, we continue to see sales growing in all channels.”
What Holyfield is saying is something the casino industry has known for several years. The customers who purchase tickets online and the customers who purchase tickets at retail locations are simply different. Where there is overlap, existing customers tend to become more engaged, playing on both channels.
In a 2015 Boston Globe column, Holyfield took these comments a step further, saying, “There is zero indication that the online games have taken away sales from others. The indication is that it’s exactly the opposite.”
Fears of cannibalization are commonplace in gambling. Even online lottery advocate State Treasurer Deb Goldberg has cited concerns that non-lottery online gambling will cannibalize the lottery.
Thanks to the results in the four states with legal online lottery sales, and in New Jersey where lottery sales have increased every year since the introduction of legal online gambling, we can basically put these cannibalization fears to bed.
Claim No. 2: Online will lead to an increase in underage access
The press release’s second unsubstantiated claim has to do with another common talking point: underage access.
“Respondents also fear that Internet Lottery will make it easier for underage children to gamble,” the release says, “with 65 percent of respondents stating that age verification checks by brick-and-mortar retailers under the current system is the safest way to protect children from illegal gambling.”
Again, this fear has never become a reality.
Online gambling and online lottery sites use stringent player verification processes. The verification process requires a Social Security number. Players’ identities are cross-checked with public and private databases. Online lotteries also require players to claim larger prizes in person. So if a minor did gamble, they would have a hard time collecting their winnings.
The only potential concern would be an adult registering an account and handing it off to a minor. This also exists offline, as minors use “buyers” to procure everything from cigarettes to alcohol to scratch tickets.
To date, there hasn’t been a single documented case of underage access in any state with legal online gambling or online lottery. The same cannot be said for casinos or lottery retailers.
Claim No. 3: Use of credit cards will lead to personal debt
The final claim from the poll: Credit cards could lead people going into debt playing the lottery.
According to the press release: “Youth access as well as personal debt concerns also resulted in 90 percent of respondents opposing the use of credit cards and direct electronic transfers from bank accounts as payment methods for online lottery games.”
The idea that online lottery would lead to more personal debt is nonsensical.
People may not be able to buy lottery tickets with a credit card at retail locations in Massachusetts. But most of these stores do have ATM machines, or one is not too far away. Basically, anyone could take a cash advance from one of these machines and buy lottery tickets. And usually, credit card cash advances have higher interest rates than charges for POS transactions.
Another reason this argument doesn’t hold water is because online lotteries put strict deposit limits in place. Massachusetts’ bill calls for both deposit and play limits.
Per the Massachusetts online lottery bill:
“… establish maximum limits for account deposits and transactions of lottery tickets, games or shares conducted online, over the internet or through the use of a mobile application and allow players to reduce their own deposit or transaction limit at any time;”
Retail shops do not employ these types of limits. Anyone can walk in and buy scratch cards to their heart’s content.
Pointing to retail locations disallowing credit cards for lottery transactions is a bogeyman argument.
The use or prohibition of credit cards is nothing more than a “feel-good” regulation that does little to nothing to curtail problem gambling.
Image credit: Icatnews / Shutterstock.com
Editor’s note: This is the second in a series of articles on the prospects for online gambling around the US. (Part one here.)
US Poker has selected its five best candidates for online gaming legalization in 2017.
They are (in no particular order):
In this series, we’ll look at each state one by one:
- How it got to this point
- Break down the current legislation in consideration
- Handicap the chances of online gambling passing in 2017
Next up is Massachusetts, where a serious push to authorize the sale of online lottery products is afoot, as well as a growing effort to legalize online gambling.
Top-line diagnosis for Massachusetts online gaming
Once seen as one of the most anti-gambling states in the country Massachusetts has been able to flip the script. The state legalized casinos in 2011. Now, it’s now seen as one of the more progressive states when it comes to legalizing and regulating emergent gaming products.
Massachusetts’ new role as a first-mover on gaming is evidenced by the state being one of the first to address daily fantasy sports, which it legalized and regulated in 2016.
Massachusetts also came close to authorizing lottery sales in 2016 when an online lottery bill passed the Senate before running out of time in the House.
But that doesn’t mean observers should expect Massachusetts to tackle online gaming willy-nilly.
Old habits die hard, and Massachusetts tends to take a careful and deliberate approach to issues like gambling. That being said, there is a real push by lawmakers, elected officials and the state’s gaming commission to act on online gambling (poker, casino and lottery) sooner rather than later.
A short history of online gaming efforts in Massachusetts
Massachusetts started flirting with online gambling legalization soon after passing its casino bill in 2011. But for the most part, the state was content with stealing a few furtive glances from behind a book rather than any overt courtship.
That started to change a few years ago.
In 2014, the state held a day-long online gaming forum that firmly established the state as “one to watch” moving forward. Since then, multiple online gambling bills have been proposed and introduced in the Bay State.
Because of the publicity for DFS, efforts really picked up in 2016.
First, the state was quick to respond to the daily fantasy sports issue that arose in late 2015. Even before the legislature passed last year’s DFS law, state Attorney General Maura Healey deemed DFS not gambling and issued regulations to oversee the industry.
Second, legislation to authorize an online lottery made a late-session push, before failing to reach the finish line.
There was also some progress on the online poker and online casino fronts. That was thanks in large part to the state’s DFS action.
When Massachusetts legalized daily fantasy sports in 2016, it also mandated a study panel to explore DFS and online gambling regulation. The 2016 DFS bill uses temporary regulations that sunset after two years.
Massachusetts’s current online gambling legislation
The study panel has been assembled and will submit its findings and recommendations for DFS and online gambling regulations on or before July 31.
Online lottery is also being revisited. Sen. Jennifer Flanagan renewed her efforts to authorize the sale of lottery products this year, a move being backed by State Treasurer Deborah Goldberg.
Additionally, Senate Minority Leader Bruce Tarr introduced an online gambling bill in January, but it’s unlikely to gain much traction until the study panel submits its findings. Tarr was one of the people tasked with appointing a member of the study panel. Tarr chose his legal counsel, Hirak Shah.
Generally speaking, gaming proposals progress along a linear path. That means online lottery legalization is more probable than not in Massachusetts.
However, online gambling legalization will likely require a number of other pieces to fall into place to pass this year.
The findings and recommendations of the study panel will be an important component. But because of the late deadline, even a favorable report might not be acted upon until 2018. (The panel needs to report to the legislature by the end of July, and the legislature usually adjourns by August.)
Online gambling could be prodded along by action in other states. No matter what, it seems Massachusetts no longer wants to be among the final arrivals on gaming issues.
On Nov. 22, the Massachusetts Gaming Commission submitted its fifth annual report to the state government. The report covered a wide range of topics from legislative recommendations, to updates on the MGM Springfield and Wynn Everett projects, to an ombudsman report.
Here’s a look at the key findings from the 31-page report.
10 key achievements
The report highlighted 10 undertakings the commission completed in 2016:
- Oversaw the first full year of operations of Plainridge Park Casino (PPC). As of June 30, 2016, gross gaming revenues totaled $166 million, resulting in a gaming tax of $81.3 million.
- Concluded the review and evaluation of the remaining applicant for a Region C Category 1 license: Mass Gaming & Entertainment’s proposal for a casino at the Brockton Fairgrounds. The commission decided not to award a license to the applicant.
- Hired Edward R. Bedrosian Jr. as its new executive director. In December 2015, MGC’s five commissioners voted unanimously to approve the hire of Bedrosian, who brings more than two decades of experience as a public sector manager: first, as a deputy district attorney in the Middlesex District Attorney’s Office and then as the first assistant attorney general in the Massachusetts Attorney General’s Office.
- Promulgated 13 sets of regulations that govern many important aspects of gaming operations, including: gaming devices and electronic gaming equipment, voluntary self-exclusion, licensing, standards of accounting procedures and internal controls, persons required to be qualified, and horse racing.
- Released important reports as part of the comprehensive research agenda to study the social and economic impacts of expanded gaming, including a six-month review of crime activity in the Plainville area and an economic analysis of the construction of Plainridge Park Casino.
- Implemented two major responsible gaming initiatives: (1) To staff and operate a GameSense Info Center at Plainridge Park Casino, and (2) To deploy PlayMyWay, a voluntary budgeting tool for slot players. These programs are the first of their kind in the US.
- Continued to oversee and regulate the racing and simulcasting operations in the Commonwealth, including disbursements for the benefit of horsemen and breeders associations for a total of $17.4 million ($11.4 million to Standardbred and $6 million to Thoroughbred).
- Held 37 public meetings of the MGC and an additional 14 public hearings. The commission streams all its public meetings live via the MGC website and transcribes the meetings and hearings in full. Further, there were 23 additional open meetings (Access and Opportunity Committee, Public Trust Fund Executive Committee, Horse Racing Committee, and more).
- Researched and authored a “White Paper on Daily Fantasy Sports,” with recommendations for the legislature on the rapidly evolving arena of online gambling.
- Continued attendance by commissioners and other staff at numerous speaking engagements across the state through the commission’s successful Speakers Bureau Program.
Goals for 2017
The report also looked ahead to 2017 and listed several milestones to meet next year.
- The second full year of operations of Plainridge Park Casino will conclude on June 30, 2017.
- MGC will continue to evaluate and improve on its responsible gaming initiatives.
- MGC will continue to work to maximize the economic benefits from casinos.
- MGC will continue to make significant administrative progress in the implementation and staffing of additional functions.
- MGC will continue to implement rules and procedures to ensure the integrity of games.
- MGC will constantly monitor developments that affect the gaming industry to make policy recommendations.
Research on gambling rates in Massachusetts
When Massachusetts legalized casino gambling, the state set up an extensive, multi-year study to measure and track everything from property values, to gambling data, to crime rates near casinos.
Here’s a look at the gambling participation rates of adults in Massachusetts during the past year:
- 72 percent of respondents gambled in the previous year.
- 59 percent of respondents purchased lottery tickets, drawings or instant.
- 22 percent of respondents gambled at a casino.
- 13 percent of respondents bet on sports; sports betting is illegal in Massachusetts.
- Three percent of respondents wagered on horse racing.
- Two percent of respondents gambled online; online gambling is also illegal in Massachusetts.
The report goes on to discuss problem gambling and provides research data on problem gambling rates in the Bay State.
According to the report, the problem gambling rate in Massachusetts is 1.7 percent, later adjusted up to two percent. A further 7.5 percent of the population were deemed “at-risk” gamblers. This was also later revised upward, to 8.4 percent.
More than 63 percent of the population was classified as recreational gamblers, with 27.5 percent of Massachusetts residents designated as non-gamblers.
Problem gambling breakdowns
For the first time, the MGC report took a deep dive into the small subset of problem gamblers in Massachusetts. The data comes from the University of Massachusetts Amherst’s multi-year “Social and Economic Impacts of Gambling in Massachusetts” (SEIGMA) study.
Per the report:
“As part of the ongoing baseline research efforts, this year the research team released a Problem Gambling Online Panel Survey Report (n=5,046). This study contained an enriched sample of problem gamblers to provide greater understanding of 1) negative personal impacts of gambling, 2) impacts of different forms of gambling on gambling-related problems and 3) prevention awareness and treatment-seeking behavior of problem gamblers.”
According to the SEIGMA data, “54% of problem gamblers experience financial problems because of gambling, but only 5% have filed for bankruptcy.”
Additionally, “50% of problem gamblers have experience health or stress problems because of gambling, but less than 9% have sought medical or psychological help.”
One of the more interesting data points was that 23 percent of problem gamblers reported Instant Lottery Tickets contribute more to their problems. Nineteen percent reported slot machines as a contributor. The full SEIGMA has yet to be released (it will be located here), but it will be intriguing to see where other games and platforms rank on this list.
Responsible gaming initiatives in Massachusetts
Leading on responsible gaming programs and initiatives is a major part of Massachusetts’ mission statement when it comes to gambling. The report details several of these initiatives and how they’ve fared to date.
The voluntary self-exclusion program
- Self-exclusion programs are nothing new, but Massachusetts has put its own twist on it.
- Players can self-exclude from Massachusetts gaming venues for six months, one year, three years, five years or a lifetime.
- Self-exclusion can be done through the GameSense Info Center in the Plainridge Park Casino, the Massachusetts Council on Compulsive Gambling, or the Massachusetts Gaming Commission.
- There are currently 147 people enrolled in the voluntary self-exclusion program.
GameSense info centers
GameSense is an outreach program designed to “provide judgment-free gambling education to help patrons make informed, responsible decisions about when to gamble, when to stop, and how much to spend.”
The GameSense Info Center at Plainridge Casino is the only such facility in the United States. However, each casino in Massachusetts will have a GameSense info center when it opens. GameSense advisors are trained in responsible gaming procedures and operate independently of the casino.
Based on the information provided in the MGC report, GameSense has been well-received by Plainridge customers.
- GameSense advisors are on site 16 hours per day and are able to build customer relationships by walking around the floor.
- 87.7 percent of survey respondents said that their primary concern was resolved by visiting the GameSense Info Center or speaking with a GameSense advisor.
- 82 percent of survey respondents said they would visit the GameSense Info Center again.
GameSense isn’t the only responsible gaming pilot program Massachusetts has implemented.
In June, the MGC launched PlayMyWay, a pre-commitment program that allows patrons to set daily, weekly, or monthly non-binding gambling limits and track their play.
People enrolled in the program — according to the MGC report, there are currently more than 5,000 Plainridge customers using PlayMyWay — receive automatic notifications when they reach 50 percent and 75 percent of their pre-set gambling limit.
When they reach 100 percent, the machine will inform them and ask them if they would like to continue gambling. From there, notifications continue at 25 percent intervals.
Updated overview of the Wynn Everett project
- Conditional Award of the License: September 2014
- Projected Opening Date: June 2019
- Gaming Space: 190,461 square feet
- Total Investment Amount: $2.1 billion
- Slots: 2,574
- Table Games: 141 gaming tables, 91 poker tables
- Other Amenities: 5-star hotel (671 rooms), 56,602 square feet of retail space, ten outlets of food and beverage, multipurpose venue, spa/gym, convention space, outdoor space, indoor garden
- Parking: 2,931 underground on site, 800 offsite
- Total Employment: 4,000 permanent jobs (projected)
- Tax on Gross Gaming Revenues: 25 percent
What really caught my eye was the 91-table poker room. This is quite large by East Coast standards. Borgata has 79 poker tables, and Foxwoods has 97.
Updated overview of the MGM Springfield project
- Conditional Award of the License: June 2014
- Projected Opening Date: September 2018
- Gaming Space: 126,262 square feet
- Total Gross Area: 759,157 square feet
- Total Investment Amount: $950 million
- Slots: 3,000
- Table Games: 100
- Other Amenities: 4-star hotel (250 rooms) eight outlets for food and beverage, 26,000 square feet of retail space, bowling alley, cinema and 54 residential units
- Parking: 3,375 covered on site
- Total Employment: 2,000 permanent jobs (projected)
- Tax on Gross Gaming Revenues: 25 percent
The most interesting tidbit in the MGM overview is the 54 residential units built into the casino property.
Online gambling chatter has ramped in recent days in both Massachusetts and Michigan.
What’s going on in Massachusetts on iGaming?
The Massachusetts Gaming Commission is planning to meet on Thursday. On the agenda: iGaming.
— Sara Friedman (@SaraEFriedman) November 30, 2016
The discussion might just be an update on where things stand in the state.
The state is not actively considering legislation, but the MGC has been thinking about the topic for some time. A law enacted earlier this year created the Massachusetts Special Commission on Online Gaming, Fantasy Sports Gaming and Daily Fantasy Sports.
MGC Chairman Steve Crosby serves on the body and is responsible for providing the update on online gambling on Thursday. What he will say of substance — if anything — is unknown.
Regardless, Massachusetts is definitely on the watch list possibly to act on iGaming in 2017.
What’s going on in Michigan on iGaming?
It’s not actually clear if anything tangible is occurring behind the scenes in Michigan, where online gambling talks materialized almost out of nowhere in the legislature earlier this year.
A bill reached the full Senate in June, but progress on the legislation stalled.
Nevertheless, the statehouse is in session now, with at least a chance online gambling is considered.
Michigan could vote on iPoker bill tomorrow. Please urge the MI Senate to support ASAP https://t.co/Cong5XKkS7
— PokerPlayersAlliance (@ppapoker) November 30, 2016
Despite that tweet from the PPA, there’s not much evidence of a real push for iGaming taking place in Michigan in December. The safer money is for a renewed effort in 2017.
Everywhere else on hiatus
While there are chances of action in Massachusetts and Michigan, nothing is likely to occur in other states until next year:
- After substantial momentum in Pennsylvania this year, an online gambling bill is on hiatus.
- A New York online poker bill passed the Senate this year but stalled in the Assembly. Nothing is likely to occur until sometime next year.
- Discussions on iPoker legislation continued in California, with uncertain prospects for next year.
Still, there are more states with a real possibility of passing iGaming legislation than at almost any point in US history.
Massachusetts has long been flirting with the idea of tackling online gambling and/or poker.
So far, those flirtations haven’t gotten past the chatting stage. But things are ramping up with the first meeting of a new commission this week meant to take a closer look at online gambling and daily fantasy sports.
The latest from Massachusetts
Massachusetts formally legalized daily fantasy sports in the commonwealth in the context of an economic development law enacted earlier this year.
That same law created the Massachusetts Special Commission on Online Gaming, Fantasy Sports Gaming and Daily Fantasy Sports. That body got together for its initial meeting on Monday.
The impetus for the commission has to do more with DFS than online gambling, despite the latter’s prominence in the commission’s name. The legality and regulation of DFS in Massachusetts has been a point of focus there for more than a year.
The focus was made clear by comments from members of the commission, who were mostly eager to talk about the subject of fantasy sports. More from Rep. Joseph Wagner, a member of the commission, via the State House News Service:
“We codified statutorily the standing of daily fantasy sports operations as legal entities but with a sunset provision,” Wagner said. “It’s the hope that the work of this commission and whatever product, and perhaps legislative product, may come from it will provide guidance going forward.
But still, online gambling is going to be considered in tandem with DFS, even though they come from the vastly different starting points of being illegal and legal, respectively, in Massachusetts.
Massachusetts’ history with online gambling
This is far from the first time that the Bay State will consider online gambling:
- In 2013, lawmakers attempted to attach online poker to budget and expenditure measures.
- The state hosted an internet gambling forum in 2014.
- Throughout 2016, the Massachusetts Gaming Commission studied online gambling and suggested an “omnibus” approach to regulate forms of internet gaming, including DFS.
What’s next in the state
The commission has until July to meet — which it plans to do regularly — and deliver its findings to the legislature.
We can expect to get an indication of what the commission will end up recommending to the statehouse over the course of those meetings. Will it focus on DFS, and punt on online gambling? Or will the rubber finally meet the road for Massachusetts and iGaming?
Given the time and effort being put into the commission — and the important government officials that are a part of it — the commission’s findings should be taken seriously.
So if online gambling is deemed viable and important to legalize and regulate by this panel, expect it to crop up in legislation.
Still, the window might stretch into the following year; the DFS law remains in effect until the summer of 2018, lessening the need for quick action. But 2017 could be the most interesting year yet in Massachusetts for proponents who would like to see online gambling progress — or perhaps even legalization.
Massachusetts Gaming Commission Chairman Stephen Crosby has been a staunch advocate of taking an omnibus approach to online gambling in the Bay State.
Crosby’s ideal online gambling scenario is for Massachusetts to legalize most forms of gambling, and install a comprehensive set of regulations that cover all of the current products that exist. Those regulations would be flexible enough to deal with any new products that emerge.
The omnibus approach being proposed in Massachusetts has been lauded — New Jersey Division of Gaming Enforcement Director David Rebuck called it “a good step for us [regulators] to look at.”
But it’s not without its issues, and how it would be implemented is still unclear.
Omnibus approach explained
The omnibus approach — which has been floated elsewhere, too — goes well beyond legalizing multiple forms of online gambling at the same time.
The omnibus model that Crosby would like to see in place would also fundamentally change how Massachusetts deals with new products that emerge, both legislatively and from a regulatory standpoint.
The basic goal is to create a broader definition of what constitutes gambling, and to create an adaptive framework of regulations that provide the proper oversight to current and future products. Such a framework would create a bit of wiggle room that allows regulators to tailor regulations to each product, as needed.
The omnibus approach would exponentially increase the number of games and contests that fit inside the gambling box. (At the same time it would make most of these games expressly legal.) It would also allow regulators to deal with any new products that fall into this larger box in a more timely and efficient manner.
Crosby laid out the three principles an omnibus approach would be based on during a panel discussion at Global Gaming Expo (G2E) 2016.
- Don’t prohibit something people want to do.
- The need for gaming regulations to be malleable because the industry changes so rapidly.
- The creation of a clear definition gambling.
The benefits of the omnibus model
If Massachusetts ends up taking the extraordinary step of implementing an omnibus approach with nimble regulations, it would have a number of benefits.
First, by empowering regulators to deal with new products as they appear(Crosby noted reporting and monitoring protocols would be put in place), it would eliminate the current cycle where each new product is discussed by the legislature in a vacuum. They could avoid debating the same concepts over and over while lobbyists on both sides make their case.
The omnibus model would bypass this step, as it would largely be up to regulators to determine if a game is or isn’t legal, and if it’s capable of being regulated under the baseline model in place.
According to Crosby, this base regulatory model would include:
- Know your customer and geolocation checks;
- Financial regulations – player funds are segregated and anti-money laundering procedures;
- Game integrity policies.
It would also put an end to the ongoing and costly debate over what is and isn’t gambling. As Crosby has said on several occasions, “Let’s just call it all gambling and be done with it.”
“What difference does it make as a matter of public policy whether you gamble on the throw of dice or the throw of a darts?,” Crosby rhetorically asked. Both have the same core elements: some amount of chance and a wager on a future event.
The omnibus approach Crosby would like to see in place would make the skillfulness argument disappear by legalizing and regulating all contests and games of this sort. If there is a wager, and even a minute amount of chance or randomness, it’s gambling.
Crosby’s point of view is gambling shouldn’t need to cross a chance vs. skill threshold. If the stigma of gambling was ignored in favor of public policy, we would choose regulation and consumer protections over prohibition.
If this argument over when a game crosses some arbitrary line and ceases to be gambling were put to bed once and for all it would end a lot of legislative gridlock, and keep the industry and the state from racking up completely unnecessary legal costs as each side bickers over the gambling and skill elements of a specific game; a debate that often ends up in the courts.
Potential problems with the omnibus model
The omnibus approach Massachusetts is considering would solve a number of problems, but it’s not without issues.
Power struggle with the legislature
As nice as it would be to have consistent gaming laws and a streamlined approach to regulation, one has to wonder if an omnibus model with nimble regulations put too much power in the hands of regulators.
As Crosby said at G2E, “we could have a whole conference on how much regulation is too much.”
This raises the question, would a legislature be okay with ceding control of crafting regulations for new “gambling” products to regulators?
Legalization, regulation, and… taxation
The regulations governing most of the products that would fall under the now-wider umbrella of gambling would possess a significant amount of overlap. On the other hand, the business structure and potential revenue and profits vary tremendously.
On this front, can the tax rates and licensing fees be crafted so to be fair for everyone? Will they be reasonable and apropos to both a small upstart daily fantasy sports company and a casino corporation interested in launching an online gambling site?
The regulations may be very similar, but the way these different industries are taxed and licensed need to be looked at individually.
Crosby offered one potential solution to this dilemma: Tax rates and licensing fees could be based on some predetermined table of revenue/profits.
Another way to resolve this issue would be to keep taxation and licensing fees in the hands of the legislature. The problem with this is it would lead to a situation of putting the cart before the horse, with the licensing process occurring after the product has been deemed legal and regulations have already been applied.
How licensing and taxation fits into the omnibus approach will be the most difficult logistical hurdle to overcome if Massachusetts, or another state, moves forward with some form of an omnibus model.
With the 2016 session coming to a close, the Massachusetts legislature managed to pass a bill that ostensibly legalizes daily fantasy sports and calls for the creation of a commission to study DFS and online lottery.
A late push to authorize online lottery sales was removed from the bill in the House after passing the Senate.
H 4569 only ostensibly legalizes DFS because the bill is more or less a two-year placeholder that allows DFS sites to continue operating in the Bay State until July 31, 2018. They can take users in the state as long as they abide by the regulations created by Attorney General Maura Healey.
The two-year window allows the yet-to-be created DFS commission to perform its due diligence and report on its findings. The expectation is the bill will have already been replaced when it sunsets in 2018.
Of course, the bill needs to be signed into law by Gov. Charlie Baker.
Are DFS and iLottery legislation the key to online gambling?
With several nearby states all exploring online gambling (and Pennsylvania on the verge of passing an online gambling bill this year), Massachusetts was already a leading candidate for online gambling expansion.
This late-session progress on DFS and online lottery might further open the door for renewed online gambling discussions in the commonwealth.
Massachusetts has a history with online gambling
Massachusetts was among the first states to take a serious look at online gambling legalization beginning in 2013. The state even flirted with an online prohibition in early versions of the state’s casino expansion bill that passed in 2011.
Suffice it to say, online gambling is not a new topic in Massachusetts.
Following early prohibitive efforts, the legislature and other officials have explored online gambling and online lottery several times.
With the passage of online gambling bills in Delaware and New Jersey in early 2013, the Massachusetts legislature took three cracks at passing its own online gambling bill the same year.
Later in the session, not dissimilar to how DFS just passed, State Senator Bruce Tarr tried to add online gambling legalization to a transportation bill. This attempt also failed.
The Internet Gambling Forum
These 2013 efforts were followed by even more activity in 2014. In February, the Massachusetts Gaming Commission announced it would hold a daylong Internet Gambling Forum in March. At the same time, the State Lottery Commission proposed legislation that would legalize online gambling.
However, at the same time, lawmakers and members of the MGC were making it clear that the state should get its land-based casino off the ground before moving on to online gambling.
Despite having taken place over two years ago, I still consider the Massachusetts Internet Gambling Forum the best example of educating lawmakers and making the case for legalized online gambling we’ve seen in the US.
You can read my recaps of the forum here:
- Massachusetts Internet Gambling Forum: Panels 1 & 2
- Massachusetts Internet Gambling Forum: Panel 3
- Massachusetts Internet Gambling Forum: Panel 4
- Massachusetts Internet Gambling Forum: Panel 5
Despite the optimism expressed during the forum, it seems as though the “let’s wait for land-based first” crowd won, as online gambling fell by the wayside in 2014 and 2015.
One reason for the state’s regression was because of a political change.
State Treasurer Steve Grossman had been one of the leading advocates for online gambling expansion (in Massachusetts the treasurer oversees the lottery). But he failed in his bid to become governor, and was replaced by what was thought to be an anti-online gambling treasurer, Deborah Goldberg.
But Goldberg has surprised everyone with her recent proclamations that Massachusetts needs to take its lottery online, telling the Boston Globe last month:
“The only way to reach the younger market is via online lottery games,” said state Treasurer Deb Goldberg, who oversees the Lottery Commission. “It’s the future and we need to face it.”
This is a good sign for the future.
What 2017 might hold for Massachusetts
With Goldberg ringing the bell for online lottery, coupled with the flurry of activity in 2016 on daily fantasy sports and online lottery, 2017 could be an interesting year in the Bay State on the online gambling front.
With DFS passing, and online lottery coming awfully close, we might see a renewed push for online gambling legalization in 2017, as it would help Plainridge Park Casino and the under-construction casinos build valuable databases:
- Penn National’s Plainridge Park Casino = Open
- Mashpee Wampanoag’s First Light Casino = Opening fall of 2017
- MGM Springfield = Opening fall of 2018
- Wynn Everett = Opening spring 2019
In June 2014, MGM received one of three coveted casino licenses from the Massachusetts Gaming Commission. But it wasn’t until May 12 of this year that the company officially broke ground on its billion-dollar casino project.
Delays for Mass. casinos
The opening of the slots parlor at Plainridge Park in Plainville, Massachusetts, was on time and went off without a hitch. But MGM and Wynn Resorts have been plagued by delays.
For Wynn, it’s local politics that have kept it from beginning construction on its proposed casino project, while MGM’s delays are more self-inflicted.
A failed ballot referendum in 2014 would have overturned the state’s 2011 casino law and delayed construction efforts across the board. Then MGM’s groundbreaking in Springfield hit a snag when the project started running way over budget, necessitating a last-minute redesign.
“The redesign, which included the removal of a 26-story hotel tower in favor a low-rise six-story building and a reduction in the project’s overall footprint, sparked months of controversy and discussion over whether the company was maintaining its full investment in the city.”
The redesign was approved by the MGC on May 12, and the casino is now expected to open in late 2018. The seven-year timeline is almost absurd, considering Massachusetts legalized casinos in 2011.
One casino’s loss is another casino’s gain
These delays have opened the door for a third casino, the First Light Casino currently being erected in Taunton by the Mashpee Wampanoag Tribe.
Because of the 1988 Indian Gaming Regulatory Act, the tribe can sidestep the regulatory restraints imposed on commercial casinos, eliminating many of the hurdles that have stalled the other casino projects in the Bay State.
The Wampanoag’s decision to break ground on the First Light Casino with or without the state’s blessing also torpedoed Rush Street Gaming’s proposed casino in nearby Brockton.
Instead of three commercial casinos, a slots parlor and a tribal casino all competing for business, the MGC has decided to limit the number of commercial casino licenses to two. That leaves the third in its back pocket for the time being.
Despite being the newest casino project in Massachusetts, the First Light Casino will be the first one (not including the Plainridge Racino) to open its doors. The casino portion of the project is expected to be completed sometime in 2017, with a hotel to follow in 2018.
Other problems brought on by casino delays
The delays could also prove detrimental to Massachusetts in another way. The construction delays are providing Connecticut’s two tribal casinos, Mohegan Sun and Foxwoods with a chance to limit the impact of the new casinos to the north.
The erection of the casinos in Massachusetts is expected to create a choke point, blocking off most of Foxwoods’ and Mohegan Sun’s northern customers , That is a historically important customer base for the Connecticut casinos, particularly the number of patrons from Massachusetts they attracted.
Had the Massachusetts casinos been erected in a timely fashion, it could have been a crushing blow for Foxwoods and Mohegan Sun. The respite caused by construction delays could give them enough time to implement contingency plans.
With daily fantasy sports now on the radars of lawmakers, there is a movement afoot in statehouses across the country to pass comprehensive online gaming reform packages.
California is the latest state to switch to this comprehensive approach, instead of the piecemeal approach states have previously adopted, and it looks like Pennsylvania will be doing the same in early 2016.
Yet another state that appears to be taking this approach is Massachusetts.
Massachusetts has been flirting with online poker, online casino, and online lottery expansion for several years, but these efforts haven’t progressed much beyond the talking phase, with only a handful of bills (none of which were acted upon), and a couple of informal hearings to show for their efforts.
However, now that the state is leading the way on daily fantasy sports regulation, some of the pro-online gaming forces in the state are trying to roll DFS, iGaming and iLottery into one neat package and kill two, or maybe three, birds with one stone.
“Would it make sense for the Legislature to try to craft an omnibus regulatory bill for all of these new electronic gaming technologies – because there’s so many of them?” Massachusetts Gaming Commission Chairman Stephen Crosby at a December forum. “If they could craft a bill, which incorporated regulatory priorities, fundamental values, whatever, that could be applied to all of these games – e-sports, [daily fantasy sports], online poker, whatever all the new ones are – maybe then they could give it to some agency to implement, and the agency does the grunt work every six months making it apply to whatever the new technology is.”
What could be tackled by the Massachusetts legislature in 2016
DFS is already on the agenda, and regulations should be crafted and ready to go sooner rather than later. Attorney General Maura Healey’s proposed regulations provide a solid regulatory framework, but the finished product will require input from the DFS industry, as well as considering the findings of the Massachusetts Gaming Commission’s white paper authorized in 2015, which expected to be submitted in early 2016.
Unlike the efforts in Pennsylvania and California, and despite Crosby’s thoughts on an omnibus package that includes DFS, because it’s nearing the finish line, it’s likely DFS will be handled individually in Massachusetts. Any other gaming expansion efforts the state considers could be combined into an omnibus package and piggyback off of DFS’s progress.
Online poker and casino games
With the attention DFS is now receiving, there has been a renewed push by State Senator Bruce Tarr to introduce legislation that would allow the state’s three casinos (two of which are still in the construction phase) to offer online poker and online casino games.
Tarr is still in the preliminary phase of floating the legislation around the statehouse in order to gauge its potential level of support. But with DFS regulations in the pipeline, and the lottery making a serious push to take some of its offerings online, the timing could be perfect for Tarr’s bill to finally move past the talking stage.
The lottery’s omnibus approach
As noted above, the idea of an omnibus style bill was first raised by Chairman Stephen Crosby at a DFS educational forum hosted by the Massachusetts Gaming Commission in December. The chatter has only increased since then, culminating with the state lottery commission soliciting proposals from iLottery providers last week.
According to a report in the Lowell Sun, the Massachusetts Lottery Commission formally requested potential applicants to, “submit proposals for the development, implementation, operational support, and maintenance of a Massachusetts Lottery iLottery System … and the development and integration of digital versions of existing and new lottery games (‘Lottery Games’), including but not limited to social gaming and daily fantasy sports options.”
The Lowell Sun is also reporting that the request is looking for, “gaming systems that allow for cross-pollination between online applications and physical retailer space and any other progressive gaming opportunities that may be available.”
Earlier in December the MLC proposed adding a daily fantasy sports-style game to its offerings, as MLC Executive Director Michael Sweeney called DFS, the “biggest current challenge” the lottery is facing.
This is a pretty dramatic shift from previous positions and concerns held by Massachusetts lawmakers and many at the MLC that online would have a cannibalistic effect on the state’s brick & mortar lottery retailers. State Treasurer Deb Goldberg, whose office oversees the lottery, has warned lawmakers that the current level of lottery sales (particularly keno and scratch tickets) is unlikely to last if the lottery doesn’t adapt to the changing landscape and bring in younger players.