News In Brief: May 20-May 24, 2024

May 24, 2024
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Massachusetts rejects gambling tax hike, Fanatics fined over college football wager and Betr approved in Maryland.
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Massachusetts Senate Rejects Sports-Betting Tax Rate Increase
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Massachusetts lawmakers quickly rejected a proposal Thursday (May 23) that would have made the state one of the highest taxed sports-betting jurisdictions in the United States.

Senator John Keenan, a Democrat, proposed an amendment to the state’s annual budget bill that would have increased the tax rate on mobile sports betting from its current 20 percent of adjusted gross revenue to 51 percent, which would have tied the state for the highest sports-betting tax in the U.S.

The proposal was one of about 1,100 amendments from individual legislators to add to the budget, and after a brief argument by Keenan on the Senate floor Thursday, senators immediately voted down the amendment by a voice vote.

Proposed increases to sports-betting tax rates have become more common over the last year, led by Ohio doubling the state’s tax rate from 10 to 20 percent in its state budget last summer.

Illinois lawmakers are currently weighing a proposal from Democratic Governor J.B. Pritzker to increase the sports-betting tax from 15 percent to 35 percent as part of the state budget that could be voted on in the coming days.

“Most of the pushback, of course, is by the sportsbook companies that have made literally tens of millions of dollars from the state of Illinois,” Pritzker said during a press conference Thursday. “All we’re asking is that they pay a little more of their fair share.”

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Fanatics Fined $10,000 For Bets On Massachusetts Colleges
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Fanatics Betting and Gaming has been fined $10,000 as part of a settlement agreement over accepting a wager on a college football game involving a Massachusetts university.

The Massachusetts Gaming Commission voted 4-0 Thursday (May 23) to impose the fine on Fanatics, which accepted a $50 futures bet on December 5, 2023, on the Fenway Bowl played by Boston College and Southern Methodist University in December. 

Then on December 6, Fanatics noticed the error, canceled the wager, and refunded the customer's money. The bet was placed well in advance of the December 28 football game.

Massachusetts gaming regulations do not allow a wager on in-state colleges unless they are participating in a tournament with four or more teams.

“The goal of the commission … was to make sure we set the goal posts and once the goalposts were set that it was followed,” said MGC interim chair Jordan Maynard. “I see that here. I think it was great work.”

Prior to the vote, commissioner Nakisha Skinner requested a complete copy of Fanatics permissible market policy be included in the record, “especially since they have listed it as a remedial measure that they’ve taken.” 

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Betr Receives Initial Approval For Maryland License
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Betr Holdings received initial approval Thursday (May 23) from the Maryland Lottery & Gaming Control Commission for sports-betting license, with final license approval required from the Sports Wagering Application Review Commission.

In presenting Betr’s application to the commission, John Mooney, the managing director of the lottery’s regulatory oversight division, described the company’s financial performance during its brig history as “poor.” He noted that Betr has incurred significant operating losses in its start-up phase while generating limited revenue. 

In 2023, Betr reported revenue of $23.2m, and a net loss of $32m driven by increased marketing and promotional incentives. Currently, Betr operates in Ohio and Virginia, but the company did exit Massachusetts earlier this year.

Mooney said Betr executives expected to report a loss this year before reaching profitability in 2025. Betr also reported $34.8m in cash reserves, which gave regulators confidence they could “fund their operations for the foreseeable future.”

Commissioner Harold Hodges asked how Mooney could give them a positive opinion when Betr exhibited such a poor performance financially. 

“They have financial backers that are willing to put the money in,” Mooney said. “It is not uncommon for any business … but particularly in the sports wagering field that companies will lose significant amounts of money for a period of time.”

He cited DraftKings and FanDuel, which both operate in Maryland, as examples of companies that took years to report profits but had financial backing to reach profitability.

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Pennsylvania Fines Casino $125,000 For Underage Gambling
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The Pennsylvania Gaming Control Board (PGCB) approved a consent agreement Thursday (May 22) with Wind Creek Bethlehem that included a $125,000 fine for underage access to the casino floor, with the board chair telling company executives that she will see them again next month.

“I will tell you; you are having a licensing renewal hearing next month,” said PGCB chair Denise Smyler. “We will probably be revisiting this issue at that time.” 

The ten incidents, which occurred between November 26, 2021 and September 24, 2023, involved 11 individuals between the ages of 18 and 20, who gained access to the casino floor and were seen gambling or drinking alcohol. 

One of the incidents highlighted in the consent agreement involved an underage patron presenting an identification to security personnel that was scanned but was allowed access after state police did not respond to a request to validate the license. 

A 19-year-old female who was with a group of three other patrons used a legitimate identification from a 41-year-old individual to gain access to the casino for more than an hour before being approached by security.

Commissioner Shawn Dillion asked Wind Creek executives if there had been any more incidents since the violations mentioned in the consent agreement dated March 28, 2024.

“We are aware of aware of minors on the floor since that time, however, there were no incidents where minors were gaming or drinking since that time,” said Glen Granitez, director of security with Wind Creek Bethlehem.

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Pennsylvania Gaming Regulators Approve GAN Merger
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GAN Ltd’s merger with Sega Sammy Creation, a subsidiary of Sega Sammy Holdings, received unanimous approval Thursday (May 22) from the Pennsylvania Gaming Control Board (PGCB).

Sega Sammy Creation is currently an applicant for a slot machine manufacturer license in Pennsylvania, while GAN, a wholly-owned subsidiary of GAN UK Ltd, is licensed as both a gaming and sports wagering manufacturer in the state. 

GAN will survive the merger as a wholly-owned subsidiary of Sega Sammy Creation. No closing date has yet to be scheduled but the companies expect it to close either in late 2024 or early 2025.

GAN has partnerships with Encore Boston Harbor, owned by Wynn Resorts, Island View Casino Resort in Mississippi, and Oaklawn Racing Casino Resort in Arkansas.

In October, Nevada gaming regulators signed off on a conditional two-year license for GAN that allows them to replace the sports-betting platform used by Red Rock Resorts’ southern Nevada sportsbooks. The software is expected to gain final approval by Gaming Laboratories International in early November and then it will be submitted to Nevada for testing.

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Louisiana Seeks To Remove Ban On Casino Campaign Contributions
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A prohibition on casino campaign contributions to Louisiana lawmakers dates back almost three decades and was put in place to prevent possible corruption, but an amendment added to House Bill 906 would lift that ban. 

The Senate Finance Committee voted 5-4 on Monday (May 20) to approve the amended bill and sent it to the legislative bureau. If approved by the Senate, the measure would be sent to the House for their approval. 

“I believe we are at the point where we need to correct that unconstitutional legislation,” said Republican state senator Thomas Pressly, who authored the amendment and is a member of the Finance Committee.

When the prohibition was put in place, Pressly said, there were concerns that casinos would come in and try to overwhelm the legislature and their actions.

“It is time to move past that,” Pressly said. “We certainly haven’t seen that. It would put them in line with every other entity in the state and allow them to participate in the political process.”

Republican Representative Mark Wright, who introduced the bill that revises the state’s Campaign Finance Disclosure Act, said he would not oppose the amendment because it was up to the committee to decide whether to amend his legislation.

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Ukraine Issues Fine For Gambling Advertising Violation
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Ukraine’s Commission for the Regulation of Gambling and Lotteries (KRAIL) has fined Sports Club Poltava LLC UAH2.4m (€55,500) for projecting a gambling logo onto the facade of a building in Kyiv. 

KRAIL announced the fine on May 20 after reviewing the case.

The company must pay the fine within three months and notify KRAIL of its voluntary implementation of the decision or its appeal. 

The business must also stop distributing gambling advertising and inform KRAIL within 30 days of its decision.

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Bill To Double Credit Limit At Rhode Island Casino On Hold
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A bill co-sponsored by Senate President Dominick Ruggerio, a Democrat, which proposes to double the gaming credit limit to $100,000 at Rhode Island’s two casinos, operated on behalf of the state by Bally’s Corp., has been set aside in committee for further study. 

Senate Bill 3040 was introduced on May 2 and referred to the Senate Special Legislation and Veterans Affairs Committee for consideration. 

Senator Walter Felag Jr., a Democrat and chair of the committee, was able to put the bill on hold at a hearing last week so members could have additional time to study proposed changes in the legislation on how leverage ratio and promotional points are calculated by Bally’s.

As of Tuesday (May 21), the committee has not scheduled another hearing on SB 3040. 

Elizabeth Suever, vice president of government relations at Bally’s, said the credit increase would make sure they are competitive with casinos in Connecticut and Massachusetts. Casinos in Massachusetts have no limits placed on the gaming credit they issue, while figures for the two tribal casinos in Connecticut were not available. 

“It’s not something we advertise,” Suever said. “It really is for a very limited group of players."

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Voters To Decide If Gaming Revenue To Fund Colorado Water Projects
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When Colorado voters approved Proposition DD legalizing sports betting in 2019 the state was allowed to keep up to $29m in tax revenue to support water projects, with any excess revenue refunded to casinos and online sportsbooks. 

The state has yet to surpass $29m, but annual estimates expect profits to reach $31.8m this fiscal year and $36.2m in fiscal year 2026. 

“We’re asking for a reaffirmed commitment from Colorado voters to fund our water conservation projects by keeping excess revenue from Colorado’s sports betting tax,” House Speaker Julie McCluskie, a Democrat, said in a statement. 

Colorado Governor Jared Polis, a Democrat, signed House Bill 1436 that would allow the state to keep and spend all sports-betting tax revenue to fund conservation and protection projects.

Sports-betting revenue is taxed at 10 percent; however, operators in Colorado are permitted to deduct free bets, payments to players, as well as the 0.25 federal excise tax on sports bets.

The issue will be decided when voters go to the polls on November 5. If voters decide against transferring all the tax revenue to the Water Plan Implementation Cash Fun, the excess revenue will go back to the operators.

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New York Lawmakers Seek To Speed Up Downstate Casino Licenses
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Two lawmakers have filed bills to speed up the process of licensing three downstate New York casinos.

Senator Joseph Addabbo and Assemblyman Gary Pretlow, both Democrats, introduced legislation that would require bids to be submitted by July 31 and the New York State Gaming Commission to approve the three licenses by March 31, 2025. 

The commission recently confirmed that the licenses would not be awarded until December 31, 2025. 

Addabbo noted that the legislation authorizing up to three licenses was established with the aim of bolstering economic growth in the gaming sector.

“Recognizing the need to maintain momentum and ensure that the state sees revenue in a reasonable period, this legislation would enforce timely actions and decisions,” Addabbo wrote. “This amendment aims to address these delays by setting fixed deadlines for each step of the licensing process.”

Both Senate Bill 9673 and Assembly Bill 10338 are designed to prevent stagnation and ensure the licensing process moves forward effectively, supporting the state’s goals of economic enhancement through the gaming industry.

“This change is not only vital for meeting the state's developmental timelines but also crucial for maintaining investor confidence and community engagement in the planned gaming projects,” Addabbo wrote.

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IRS Council Recommends Increase In Jackpot Withholding
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The IRS Advisory Council (IRSAC) has recommended increasing the tax reporting threshold for US slot machine jackpots to $5,800 from $1,200, according to a report obtained Monday (May 20) by Vixio GamblingCompliance. 

The current threshold for reporting to the IRS was set at $1,200 in 1977, but inflation has decreased the value of that threshold resulting in an increased number of W-2G reports filed annually.

“Failure to index this reporting threshold has placed an unnecessary compliance burden on the player (taxpayer), increased administrative costs for tribal (and commercial) casinos, and creates paperwork backlogs and operational burdens at the IRS.”

When accounting for inflation, the report suggests a comparable jackpot reporting threshold in 2024 is estimated to be approximately $5,800. 

“The IRSAC recommends raising the reporting threshold and subsequently increasing it based on inflation cost-of-living-adjustments each year.” 

In the alternative, the report suggests the IRS should consider incrementally increasing the threshold over three to five years or until the threshold meets an inflation-adjusted amount equal to the threshold established in 1977.

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Northern Ireland Minister Questioned On Banning Sports Gambling Ads
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Gordon Lyons, Northern Ireland’s minister for communities, is expected to respond to a question about the benefits of banning gambling advertising in sports later this month. 

The All Party Group for Reducing Harm Related to Gambling (APG) tabled a written question to Lyons asking for his assessment on May 13.

The question will be answered by May 29, according to the APG.

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Virginia Lottery Fines Rivers Casino Portsmouth $505,000
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The Virginia Lottery has fined Rivers Casino Portsmouth $505,000 for a series of regulatory violations over the last two years, including allowing a voluntarily excluded person on the gaming floor.

In a settlement agreement released Friday (May 17), an investigation by the Virginia Lottery found the presence of underage persons on the gaming floor at Rivers Casino in Portsmouth in December 2023 and January 2024. Also in January, regulators noted the presence of a voluntarily-excluded person on the casino floor.

Regulators also noted a lack of control over accounting and surveillance operations in June and July 2023, as well as in February 2024. There was also a lack of control over revenue reporting and table game operations between September 2023 and January 2024.

According to the three-page settlement agreement, Rivers will continue to take the appropriate measures to ensure future compliance with the state’s 2020 casino law and its related regulations.

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Florida Regulation On Cardroom Employees Upheld
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An appeals court on Friday (May 17) ruled in favor of the Florida Gaming Control Commission in a dispute over whether regulators could prohibit cardroom employees from playing poker while at work.

The 5th District Court of Appeals upheld a decision by Administrative Law Judge G.W. Chisenhall in a case filed by Oxford Downs cardroom and employee Darold Connelly.

The lawsuit alleged that the rule “exceeds the commission’s grant of rulemaking authority and that it enlarges, modifies, or contravenes the specific provisions of the law that it implements”.

But Chisenhall and the three-judge appeals court disagreed.

“Whatever the reach of the Commission’s duty and power to regulate cardroom operations, surely it includes the questions whether cardroom personnel may participate in authorized cardroom games at their place of employment, and under what circumstances they may participate,” said the ten-page ruling.

The ruling in favor of the commission was written by Judge Jordan Pratt and joined by Judges F. Rand Wallis and Paige Kilbane. 

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Colombian Regulator Proposes Regional Cooperation
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The president of Colombian gambling regulator Coljuegos has proposed a lottery that would fund efforts to combat climate change.

Marco Emilio Hincapié made the proposal at the Ibero-American Gaming Summit in Puerto Rico last week. 

He said “in our region we have areas like the Amazon and the Orinoquía that we must protect due to their environmental wealth”.

The lottery would be a cooperative effort among multiple countries in the region. 

Hincapié has in the past proposed other cooperative efforts. At the GAT Expo in Cartagena in early April he called for a pan-Latin American gaming authority. He characterised the idea as an international “group of regulators from the continent to unify criteria regarding the updating of regulations, and to understand the deficiencies of some countries that  do not have constitutional support”.

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Chow Tai Fook Wins Injunction On Alvin Chau Link
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Hong Kong-based jewellery and gambling giant Chow Tai Fook has secured an injunction against publication of details from an external report on its ties to jailed junket boss Alvin Chau that was commissioned by the Queensland state government.

Claiming “confidential and highly sensitive content”, Chow Tai Fook took out the injunction in the state’s Supreme Court late on Thursday (May 16) against Nine Newspapers after the media group obtained and began probing the withheld report. 

The injunction is in effect until this Thursday evening.

Chow Tai Fook is partnering with struggling casino operator The Star Entertainment Group to develop the A$4bn ($2.7bn) Queens Wharf integrated resort and recreation precinct in Brisbane.

Queensland attorney-general Yvette D’ath said earlier this month that the report established a link between Chow Tai Fook and Chau, the ex-boss of the Suncity gambling and hospitality empire, but did not impact its suitability.

Nine Newspapers reported on Friday that the Queensland Office of Liquor and Gaming Regulation informed Chow Tai Fook that the Herald had secured a copy of the report, triggering the injunction application, and that “the government provided a copy of the report to [Chow Tai Fook’s] lawyers”.

Also on Friday, Queensland announced an extension of the deferral of Star’s casino licence suspension until December 20, in anticipation of the report of the second Bell Inquiry into Star’s suitability in New South Wales state.

The Queens Wharf precinct is set to open in August, meaning the initial operation of the casino will continue to be under the government-appointed special manager.

That appointment followed the release of an external review that found Star’s conduct to be “inconsistent” with gambling legislation.

On Monday (May 20), Star also confirmed in an Australian Securities Exchange filing that it received “inbound interest” in “potential transactions” from a Hard Rock-linked company.

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Massachusetts rejects gambling tax hike, Fanatics fined over college football wager and Betr approved in Maryland.

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