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    National Council of Legislators From Gaming States: Summer 2013 Conference Wrap-Up

    Posted by Brad Polizzano June 22, 2013

    In early June, I attended my first National Council of Legislators From Gaming States (“NCLGS”) conference, held at the Water Club in Atlantic City, New Jersey.

    From the beginning, I could tell this conference would offer a different perspective from the other gaming conferences I’ve been a part of. NCLGS organizes two conferences annually for state lawmakers to meet and discuss gaming issues in the United States. In certain instances, NCLGS will advocate for states’ rights issues relating to gaming. Here is one example on iGaming.

    Commentary on Rep. Peter King’s Online Gambling Bill

    Shortly before the conference started, Congressman Peter King (R-NY) introduced the Internet Gambling Regulation, Enforcement, and Consumer Protection Act of 2013. Considering the conference is for an organization of state legislators, there was no shortage of commentary on this bill.

    Here are paraphrased blurbs from a few speakers:

    Jennifer Webb of GamblingCompliance: There is not much appetite for online gaming on Capitol Hill, so this bill should not see much momentum.

    Jason Giles of the National Indian Gaming Association: The NIGA opposes King’s bill for many reasons. One reason is that the bill seeks to create a federal division without any gaming experience to oversee online gaming. Politically, conservative Republicans remain staunchly opposed to any expansion of gaming, so it’s unlikely an online gaming bill will pass in the House anytime soon.

    James Allen of Seminole Hard Rock Entertainment: Most industry folks believe the feds took too long to get involved in internet gaming regardless of Rep. King’s bill, and that iGaming will happen state-by-state.

    Putting together all of the comments, not a single person at the conference seemed optimistic about the bill. At best, lukewarm feelings. At worst, adamant opposition.

    As an aside, Tom McPherson of Boyd Gaming noted that Senator Harry Reid and Senator Dean Heller are working on a poker-only iGaming federal bill. If their bill is even remotely Nevada-centric like the draft Reid-Kyl bill that surfaced last year, it’s difficult to envision enough political support for passage.

    State iGaming Updates

    There is no shortage of states looking to legalize and regulate intrastate internet gaming in the United States. Legislators and industry stakeholders from various states, particularly from the northeast, made remarks related to these efforts.

    Connecticut

    Chuck Bunnell of the Mohegan Tribe claims there has been a “philosophical revolution” in Connecticut as the state is considering iGaming beyond just poker. That said, he did not mention a possible timetable for iGaming legislation in Connecticut.

    Bunnell made it clear that the tribe is “very bullish” on iGaming. At the federal level, the tribe supports poker-only. At the state level, the tribe believes iGaming licenses should be issued only to the tribes in the state, otherwise a tribal compact could be violated. The Mohegans would strongly consider halting payments to the state if the tribe believes the state was in violation of their compact.

    Delaware

    Per Jennifer Webb of GamblingCompliance, house-banked games are expected to go live online in Delaware by September 30. Regarding poker, the state may wait to launch until liquidity agreements of some kind are in place.

    Edward Sutor of Dover Downs went into some background on the iGaming developments, telling attendees that the iGaming legislation was not a slam dunk process. Underage gambling has been a major issue, he noted, with age verification a very involved component. Sutor believes that it is easier to address problem gambling online than in brick and mortar because everything online is closely tracked.

    Sutor emphasized that all three Delaware casinos will have to pool iGaming together, and even that won’t be enough for a profitable market in the state; interstate compacts are crucial. Sutor sees Delaware and Nevada engaging in compact discussions.

    Regarding tax rates, Sutor pointed out that Delaware’s rate for iGaming is the same as that of land-based casinos. He believes the iGaming rate probably needs to be lowered, as there are too many other expenses associated with iGaming to simply apply brick and mortar rates.

    New Jersey

    New Jersey, meanwhile, is still seeking to launch its iGaming sites by November 26, 2013. Currently there is a sixty-day public comment period for its drafted iGaming regulations. I’m running a series of posts to make comments of my own on the proposed regs.

    Gary Ehrlich of Catania Gaming Consultants highlighted three ways to have iGaming geolocation: (1) cell phones; (2) WiFi networks; (3) IP addresses, and four ways to verify a patron’s identification: (1) commercial and government databases; (2) question-based method; (3) hard copies of documents; and (4) face-to-face (e.g. Skype or interview).

    Pennsylvania

    An iGaming bill was introduced by Rep. Tina Davis in April. Word is that this bill is unlikely to gain traction in the house.

    During breakout sessions, I learned from legislators and staffers that another Pennsylvania iGaming bill is in the works. The tentative plan is for the bill to be introduced in the state senate, where it is believed there may be more initial support for an iGaming measure. I also learned that legislators are closely following the iGaming developments ongoing next door in New Jersey with a view towards possibly modeling after the Garden State’s iGaming laws and regulations.

    Online Lotteries

    Patrons in Georgia and Illinois can purchase certain lottery tickets online. Andrew White of the North America State and Provincial Lotteries Association said it’s a little early to assess the success of these online lotteries.

    Cynthia O’Connell of the Florida Lottery was glowing while reminding the audience the winner of the recent $590.5 million Powerball jackpot was from Zephyrhills, FL. Florida is looking very closely at the Georgia and Illinois iLottery programs. O’Connell pointed out that Georgia’s iLottery sales currently account for less than one percent of the State’s lotto sales, as iLottery is not intended to substitute traditional sales. Nevertheless, challenges remain on moving forward with iLottery in Florida, as there is still significant resistance from convenience stores.

    Responsible Gaming

    Keith Whyte of the National Council of Problem Gambling pointed out that Nevada did “literally nothing” to address responsible gaming specifically for online play. Nevada is poker-only for online play, and that may be a part of the reason. In contrast, Whyte noted, New Jersey’s iGaming legislation is the most comprehensive for responsible gaming online.

    To learn more about the National Council of Legislators from Gaming States, visit their website.

    QuadJacks – June 22, 2013

    About Brad Polizzano

    Brad Polizzano is a tax and gaming attorney in New York. He advises clients on tax compliance, with an emphasis on gaming industry issues. He also represents taxpayers in disputes with the Internal Revenue Service and the New York State Department of Taxation and Finance. He blogs about tax and gaming law issues at taxdood.com. Follow him on Twitter @taxdood.

    View all post by Brad Polizzano

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