This year has already seen major developments in sports wagering and internet gaming in states around the US as the industry expands, changes and faces legal challenges. As these trends take shape, those in the industry – operators, software suppliers, data suppliers marketing affiliates and others – should keep a close eye on both the sports wagering and internet gaming advancements defining the industry’s future, from existing regulatory bodies as well as state legislatures. In the past few months alone, New Hampshire, Florida and New Jersey saw significant advancements in their legislative and regulatory frameworks. Here’s what the industry should keep in mind as it prepares for 2024 and beyond.
Vermont enters the market with an emphasis on responsible gaming
Vermont catapulted into the sports wagering spotlight earlier this year when Governor Phil Scott signed legislation authorisingsports wagering, making it the 38th state (plus Washington DC and Puerto Rico) to do so. As the Vermont Department of Liquorand Lottery reviews proposals to select between two and six sports wagering operators for the state, concerns over responsible gaming may play a large role in the process.
Vermont’s Request for Proposal designates its “responsible gaming” criteria as a top selection priority, tied for point allocations with critical elements like the strength of the betting hardware and software, as well as the strength of sports betting services.Priority responsible gaming requirements for the state include, but are not limited to:
- Voluntary self-exclusion programmes
- Resources made available to educate players about problem gambling, addiction and compulsive behaviour
- Deposit limits
- Employee training programmes
- Advertising limitations and prohibitions (no depictions of, endorsements by, or participation by underage persons and no promotional activities on college campuses).
Vermont is not alone in its emphasis on responsible gaming, which has been a focal point for sports wagering regulatoryagencies since the beginning of this year. The industry has seen new state entrants take a more aggressive approach toensuring high levels of player protection – by way of amended regulations and regulatory fines, to name a few.
Once all proposals are reviewed and Sports Wagering Operator applicants are selected, Vermont expects to “go live” by late2023 or early 2024. Sports wagering operators around the country should maintain a watchful eye on Vermont’s approach toresponsible gaming programmes and obligations, as other states may follow a similar approach.
Deeming wagers to occur in a specific location of a state is not uncommon in gaming law, especially with the proliferation of mobile sports betting platforms
Florida sports wagering takes a big step forward
On June 30 2023, the United States Court of Appeals for the District of Columbia paved the way for a tribal monopoly on sports betting in the Sunshine State. The decision in West Flagler v. Haaland, 1:21-CV-02192, reversed the lower court’s decision and issued a favourable opinion to the Department of the Interior, joined by the State of Florida and the Seminole Tribe of Florida as amici. For context, under the federal Indian Gaming Regulatory Act (IGRA), Indian Tribes may offer Class III gaming, colloquially known as “Vegas gaming,” which includes house-banked table games (black jack, craps and roulette), slot machines and sports wagering. tribes may conduct Class III gaming only on “Indian lands” under the terms of a tribal state compact, which is a contract setting forth the procedures governing such gaming.
However, in 2021, Florida and the Seminoles suddenly announced a landmark compact providing the Seminoles with amonopoly on sports betting operations in the state. The most contentious provision of the compact – colloquially known as the“deeming” language – provides that wagers that occur in the state of Florida are “deemed” to occur on Indian lands.
Deeming wagers to occur in a specific location of a state is not uncommon in gaming law, especially with the proliferation ofmobile sports betting platforms. To maintain compliance with state and federal law, sports betting operators generally need toensure that online wagers are placed within the boundary of the state in which they are licensed. States often employ statutesthat provide that a wager is “deemed” to occur at a licensed gaming establishment, provided it is within the geographic boundary of the state.
Conversely, the Florida compact is likely the first time that a state statute has provided that wagers occurring within a state aredeemed to occur on Indian lands instead. Some states provide the exact opposite, in fact, to separate gaming occurring on triballands (controlled by IGRA) and state lands (controlled by state law). Here, however, Florida and the Seminoles took a novel approach to provide the tribe a monopoly on sports wagering in Florida.
The compact, however, drew the ire of Florida’s pari-mutuel facilities. The state’s pari-mutuel facilities and tribal casinos aresome of the only locations where authorised wagering can occur in-person in Florida, so the pari-mutuel facilities challenged theSecretary of the Interior’s decision to approve the compact by operation of law, alleging that the language of the compactviolated IGRA.
Specifically, the pari-mutuel facilities contended the inclusion of the deeming language authorised gaming off Indian lands. The Department of the Interior disputed this assertion, countering the compact did not authorise gaming off Indian lands because the statute did – and the court agreed and opined that the allocation of jurisdiction for gaming activity off Indian lands was lawful under IGRA. If the decision stands, sports wagering in Florida may soon be a reality.
New Jersey's iGaming legislation reauthorised – for a shorter term
As New Jersey’s iGaming 10-year authorisation sunset provision approached its November 2023 expiration date, New Jerseylawmakers reached a bipartisan (37-0) consensus to continue offering iGaming in the Garden State through November 2028.
The impact of the shortened five-year authorisation period has yet to materialise, but speculation as to its consequencescommenced, before the bill was even enacted into law. Certain legislators, industry leaders and business people believe thisfive-year iGaming extension is too short, while others argue it’s too long. Commentators questioned whether tax rates will increase with respect to either player or operator earnings, along with how the flow of business investments into the iGaming and overall casino industry will be impacted if state legislators set a precedent of contentious political debates impacting iGaming authorisation periods. Investors are looking for assurances that iGaming will remain authorised for definitive periods of time – without the looming threat of ancillary policy provisions finding their way into enacted legislation.
While such questions remain unanswered, and downstream effects are still highly speculative, the New Jersey iGaming market has been put on notice that all industry players should keep a watchful eye on legislative trends and prepare for a widevariety of possible outcomes before November 2028.
Investors are looking for assurances that iGaming will remain authorised for definitive periods of time – without the looming threat of ancillary policy provisions finding their way into enacted legislation
Conclusion
Those that are in tune with current and anticipated changes to the US sports wagering and iGaming markets will be able toadapt, innovate superior products and services, and maintain a strong presence in existing and forthcoming jurisdictions aroundthe country. The key is to always be ready for what comes next.
