News In Brief: January 9-January 13, 2023

January 13, 2023
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Another German state says no to online casino licensing, Austrian ministry claims it is still working on a new regulator and Argentina's Supreme Court rules against casino owners in tax case.

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German State Shuns Online Casino Games

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The German state of Mecklenburg-Western Pomerania has decided against allowing online casino games such as roulette and blackjack, according to reports.

The state currently “sees no need for the introduction of online casino games”, although it is monitoring policies in other states, a member of the state parliament was told by the Ministry of the Interior, according to media reports.

The information came in a question by Free Democratic Party parliament member Rene Domke, who called for a debate.

"Just keeping an eye out doesn't solve the problem," Domke said, according to the Schweriner Volkszeitung.

“One cannot pretend that online gambling does not take place in the state just because it has not been regulated in Mecklenburg-Western Pomerania,” he said. “Rather, players would look for other ways. The game is shifting and eludes control."

Online slots and poker licences are nationwide, but individual German states can decide whether to allow online casino games, either through a monopoly or licensing programme.

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Austrian Ministry Has No Timeline For Gambling Changes

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Citing “ongoing negotiations”, an Austrian finance ministry spokesman could give no date for the debut of a delayed draft gambling reform bill that may include creation of an independent regulator.

This March, it will have been two years since a previous finance minister promised a new gambling regulator by January 1, 2022.

That 2021 announcement followed pressure for the ministry, which is part owner of online casino monopoly Casinos Austria, to separate itself from regulation, plus tackle such issues as a nationwide gambling self-exclusion list, website blocking and proposals to cancel three unused land-based casino licences.

Due to the negotiations, “we are unable to provide any details at this time”, the ministry spokesman said.

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Argentine Supreme Court Rules Heavy Casino Tax Constitutional

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The Argentine Supreme Court has ruled against casino and bingo hall business investors who wanted a tax on them declared unconstitutional.

In a win for the tax authority, the Federal Administration of Public Revenues (AFIP), the court declared that the tax itself was not unconstitutional and that business owners would need to bring forward cases for them to be judged on an individual basis.

The Argentine Union of Entertainment Entrepreneurs (UADEE) had rallied against a law that would increase income tax on games of chance in casinos to 41.5 percent.

The UADEE had previously asked for a measure that would alleviate any immediate fallout from the law and its subsequent regulatory decree, which was at first granted, but then ruled against in a court of appeals.

The Supreme Court, which issued the ruling on December 21, ultimately favoured the AFIP on what seems to be a technicality in layman’s terms.

According to Argentine law, there is case precedent addressing collective legitimacy, which defines rights as falling into three categories: individuals; of collective incidence which have collective assets as their objects; and of collective incidence referring to homogeneous individual interests.

This case was filed on behalf of the individual rights and differing interests of the UADEE's members, but is not of homogenous collective incidence. This leaves the defeated business leaders the option of filing anew and separately in the future.

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Gibraltar Penalises Licensee For Crime Proceeds Failings

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Gibraltar’s Gambling Commissioner has agreed a regulatory settlement of £5,250 with an unnamed licensee for failings in reporting requirements that are part of the Proceeds of Crime Act.

The settlement also relates to requirements to offer training in anti-money laundering (AML), counter-terrorist financing and proliferation rules, the Gambling Division said.

A regulatory settlement was offered due to “the limited nature of the failings, the fact that the licensee had already remediated the issue and the generally satisfactory state” of the licence holder’s AML systems and controls, the division said.

The settlement comes as the British Overseas Territory and online gambling hub is on the Financial Action Task Force’s greylist in connection with its AML rules and policies surrounding online gambling.

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Malta Regulator's Interim Report Outlines Enforcement, Cooperation Action

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The Malta Gaming Authority (MGA) has released its Interim Performance Report, revealing a host of varying enforcement and safeguarding actions.

The report covers the period between January and June 2022, during which the MGA conducted 16 compliance audits with 114 desktop reviews and seven anti-money laundering/counter-terrorism financing compliance examinations on behalf of the Financial Intelligence Analysis Unit (FIAU).

This led to a total of seven administrative penalties, as well as two regulatory settlements, with a collective total financial penalty of €85,000.

Enforcement measures were also issued by the FIAU to an additional four licensees. These included penalties that amounted to more than €386,567.

When it comes to national cooperation, the MGA sent the sector 122 alerts on suspicious betting, while “enforcement agencies, sports governing bodies, integrity units, and other regulatory authorities made a total of 23 requests for information, specifically in relation to the manipulation of sporting events or violations of sporting regulations”.

National cooperation efforts resulted in the MGA receiving just over 100 requests for information from other local regulating authorities and governing bodies.

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Former Louisiana State Senator Sentenced To 22 Months In Prison

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Karen Carter Peterson, who resigned from the Louisiana Senate last April before pleading guilty in August to stealing more than $140,000 from the state Democratic Party and her own campaign account to fund her gambling addiction, received a 22-month prison sentence on Wednesday (January 11) in New Orleans.

Peterson's lawyers implored U.S. District Judge Sarah Vance to consider probation or home confinement, arguing Peterson's gambling addiction resulted in "diminished mental capacity."

The judge rejected those arguments, but refrained from imposing a maximum sentence of 51 months in prison.

Peterson, 53, removed Ronnie Jones as chairman of the Louisiana Gaming Control Board in June 2020 after news leaked that she had violated a self-imposed ban from casinos in the Bayou State.

Jones denied being the source of the leak but said Peterson refused to discuss the issue with him.

Peterson was ordered to surrender to the federal Bureau of Prisons on March 6.

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NFT Racehorses To Go On Sale In France

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French horse race betting operator Pari Mutuel Urbain (PMU) is to offer non-fungible tokens (NFTs) linked to real race horses as part of a new online game.

Players will be able to buy digital models whose performance in virtual contests is connected to their performance in the real world, the operator said.

The new platform, called Stables, is expected to launch in the coming weeks.

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Massachusetts Shows Its Hand On Advertising Plans

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The Massachusetts Gaming Commission will discuss draft regulations for sports wagering advertising during its January 12 public meeting, according to a meeting agenda and materials published on Tuesday (January 10).

The state’s sports-betting law empowers the commission to adopt broad restrictions on advertising, although the proposed rules due to be discussed this week fall some way short of more onerous proposals floated by some Massachusetts lawmakers last year.

Among other things, the proposed regulations include various provisions to prohibit misleading ads, as well as those aimed at persons aged under 21 or vulnerable persons.

The draft rules would also prohibit any advertising on college campuses or “at a sports event with such intensity and frequency that they represent saturation of that medium or become excessive.”

Another provision would ban operators or their vendors from encouraging players “to place a specific wager of any specific type, kind, subject, or amount.”

The five-member commission should also discuss approval on Thursday of a catalog of approved sports wagering events ahead of the anticipated launch of retail sportsbooks later this month.

Commissioners are further scheduled to adopt other rules related to enforcement and vote on whether to allow licensed operators to advertise and pre-register accounts prior to launch of mobile sports betting.

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Lithuania Supreme Court Upholds Unlicensed Lottery Fine

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The Supreme Court of Lithuania upheld a decision on December 29, 2022 to fine the unnamed organiser of a radio station competition after it ruled that a game it was offering met the characteristics of a lottery.

In September 2021, the Gambling Supervision Service under the Ministry of Finance issued the €900 fine after several months of investigating the competition that ran from February to March of the same year, according to an update on the regulator's website on January 6, 2023.

The game was played on a live radio station and required participants to identify music and send a €1 text message while it was playing (or no more than 60 seconds after it ended), after which they were registered in the system as participants of this game and gained the right to win a prize of €30, €300 or €3,000. The total prize fund of the game was €30,000.

This meant the game met three main legal criteria of being a lottery under the country’s gambling law: players could buy tickets; participate in a game of chance; and have a chance to win money.

Despite players having to have a certain amount of knowledge to play, these actions were only deemed the initial conditions to purchase a ticket in the game and claim the prize.

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Bet365 Inks Pennsylvania Market-Access Agreement

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Bet365 will partner with Churchill Downs’ Presque Isle Downs casino to enter Pennsylvania’s online casino and sports-betting market, according to an announcement on Monday (January 9).

The market-access deal, which remains subject to regulatory approvals, highlights the Stoke-based online betting giant’s accelerating U.S. expansion plans.

After initially launching only in New Jersey, bet365 went live in Ohio this month after also entering Colorado last September. The operator also has a temporary license in Virginia and a market-access partnership in Iowa.

Monday’s deal also confirms Churchill Downs’ strategy to sell market access to online gambling through its land-based casino licenses after the company shuttered its own TwinSpires online sportsbook and casino offering last year.

Churchill Downs has since inked horseracing-related partnerships with DraftKings and FanDuel. It is also expanding into the historical horseracing (HHR) market, announcing a $250m deal on December 19 to acquire HHR platform provide Exacta Systems.

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Hawaii Sports Betting, Cardroom Bill Introduced

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Representative John Mizuno, a Democrat, introduced a measure Monday (January 9) to allow for a single, standalone sportsbook and cardroom to be licensed for ten years on the island of Oahu, which is home to the state capital, Honolulu.

“With Hawaii residents dropping a billion dollars to Las Vegas every year, I think a sports and card gaming bill warrants at least a discussion,” Mizuno said. “I feel it is important to discuss options to keep local money in the economy.”

Hawaii is among the few U.S. states without any form of legal gambling. In February 2022, Mizuno introduced House Bill 1815 that along with House Bill 1973 would have legalized sports betting but neither piece of legislation ever received a committee hearing.

Opponents have successfully argued that legalizing gambling in Hawaii would create crime, increase personal bankruptcy and rates of problem gambling. The Hawaii legislature is set to convene on January 18 and adjourn on May 4.

According to Mizuno’s latest proposal, customers would only be allowed to enter the sportsbook and cardroom after registering with the establishment and paying a daily entry fee.

“As responsible residents of Hawaii, we are sensitive to social concerns that have been raised in the past about gambling, but we believe this legislation addresses those concerns,” said Representative Daniel Holt, a Democrat and chair of the House Committee on Economic Development.

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VICI Properties Closes Las Vegas Deal, Expands Into Canada

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VICI Properties said Monday (January 9) it had closed the acquisition of the remaining 49.9 percent stake in the joint venture that owns MGM Grand and Mandalay Bay Resort from Blackstone Real Estate Income Trust for $1.27bn.

The deal includes the assumption of Blackstone’s existing property-level debt that has a principal balance of $3bn.

VICI said the lease remains unchanged and was valued at $310m upon the commencement of the next increase on March 1, 2023. The initial lease term expires in 2050, with two ten-year tenant renewal options.

VICI on Monday also announced it had entered the Canadian market with the acquisition of four casinos in the province of Alberta in a sale-leaseback transaction with PURE Canadian Gaming for $200.8m (C$271.9m).

In a research note, Barry Jonas, a gaming analyst with Truist Securities, said the deal further diversifies VICI’s portfolio with an additional tenant, and “proves they’ll continue to execute accretive mergers and acquisitions despite a challenging environment.”

The company simultaneously leased the properties to PURE under a master lease that has an initial total annual rent of $16.1m (C$21.8m). VICI financed the transaction with a combination of cash and from drawing down funds under its existing revolving credit facility in Canadian dollars.

The deal represents an implied acquisition capitalization rate of 8 percent, and with an initial lease term of 25 years, with four five-year tenant renewal options. The portfolio includes two PURE casinos in Edmonton, one in Calgary and another in Lethbridge.

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Kentucky Considers Sports Betting, Online Poker, Fantasy Sports

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Last year, a sports-betting bill cleared the House of Representatives in Kentucky only to be blocked by Republicans in the Senate, but supporters of wagering on games have introduced another bill this session that also includes online poker and daily fantasy sports.

House Bill 106 would tax retail sports betting at 9.75 percent and online wagering at 14.25 percent. The proposal allows for two off-track retail locations, and a track can partner with an operator to offer betting at the racetrack and a single mobile app tethered to that racing licensee.

Similar to previous bills, the Kentucky Racing Commission will regulate sports betting. There would be an application fee of $500,000 for a sports-betting license, with an annual renewal fee of $50,000.

Governor Andy Beshear, a Democrat, supports legalizing sports betting, while Republicans have been split when it comes to expanding gaming in Kentucky.

“A thing Kentuckians overwhelmingly want and that should be enough,” Beshear said during his state-of-the-state speech on Wednesday (January 4).

Senate President Robert Stivers, a Republican, told reporters Wednesday he does not think sports betting is a big issue in the state.

“It’s not going to generate a lot of money,” Stivers said.

Kentucky’s legislature, which convened on Tuesday (January 3), wrapped up its last day of the regulator session Friday (January 6) before taking a break. The session will reconvene on February 7, with the final day of the 2023 session set for March 30.

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Another German state says no to online casino licensing, Austrian ministry claims it is still working on a new regulator and Argentina's Supreme Court rules against casino owners in tax case.

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