Did I Do That?
I was a guest on Victor Rocha's New Normal webinar series to talk about sports betting tax increases, what happened in Illinois, and the likelihood of it spreading to other states.
The Bulletin Board
VIEWS: Two alternate views on the likelihood of more states increasing sports betting tax rates.
BEYOND the HEADLINE: Will online casino efforts get caught up in the higher tax discussion?
LEGISLATIVE UPDATES: Oklahoma sports betting outlook; Smoking bans lose steam; Kansas woos pro sports teams.
NEWS: A look at the Canadian Gaming Summit, which kicks off today.
AROUND the WATERCOOLER: Men “The Master” does it again, and I don’t mean he won his eighth WSOP bracelet.
STRAY THOUGHTS: The SCOTUS decision, because, of course, I have to mention it.
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Tax Increases: Unique Circumstances or an Emerging Trend
Last week, I was part of an interesting discussion on sports betting tax rates as part of the Indian Gaming Association’s New Normal webinar series.
Victor Rocha, conference chairman of the Indian Gaming Association, and Jason Giles, executive director of the IGA, hosted. Brendan Bussmann, managing partner of B Global, joined me.
While Brendan and I largely agreed, we didn’t see eye-to-eye in several areas.
Bussman believes a wave of tax increases was akin to going to the Golden Goose for more eggs: “The problem is, at some point, the golden goose can only produce so much.”
I would argue that the Golden Goose has placed a flashing neon sign over its own head that reads “Golden Eggs.”
The question everyone seems to have: Is this the beginning of a trend, or are Illinois and Ohio the outliers?
First, any forecast comes with the caveat that we are in unchartered waters. As I noted during the webinar and in this newsletter many times, states reopening their gambling laws is a very new phenomenon. If you had told me in 2018 that states would reopen their gambling laws so soon after passage, I would have packed your bags for a trip to Bananaland.
Two states (Ohio and Illinois) have already visited Bananaland, and several others (New Jersey and Massachusetts) have priced out trips. Two other states, Colorado and Virginia, have visited the border of Bananaland, phasing down and phasing out promotional deductions.
Bussmann doesn’t believe what happened in Illinois is indicative of the future, and while I wouldn’t call it a trend yet, as I mentioned on the webinar, “I would be very concerned if another state were to do this in the near term. Then you might have a trend.”
According to Bussman, these are state-specific actions, and what happens in Illinois stays in Illinois. I would posit that nothing in this space happens in a vacuum. Other states can see what pains operators are willing to undergo. Further, the impetus to turn up the temperature on them already exists, given the current narrative filled with stories about scandals and social harms.
One area in which I agree entirely with Bussman is his proclamation that “Don’t walk into the room, say you’re going to push the nuclear button,” if you’re not going to do it. That is an empty threat that FanDuel and DraftKings intimated was on the table during the Illinois budget process.
Bottom line: It’s unclear how contagious the Illinois sports betting tax increase is, but this is far from the last we’ll hear about it.
Beyond the Headline: What About Online Casino?
Vixio’s Chris Sieroty asked a question during the webinar that deserves a deeper response — this could be its own webinar.
Sieroty asked if the calls for higher sports betting taxes would trickle over to online casino legalization efforts.
I see a clear trend emerging: states taxing different casino games at different rates or adopting an Illinois-style graduated rate, which seems like a good compromise but also splits the industry. So rather than a united front, there are also some voices of support.
I would also add that this wouldn’t be a new phenomenon in the online casino space.
Of the seven online casino states, two tax games at different rates:
Pennsylvania - 54% slots and 16% table games
Rhode Island - 61% slots, 15% table games (must be live dealer in Rhode Island)
Of note: Maryland’s 2024 online casino efforts had a similar tax structure: 55% on slots and table games and 20% on live dealer games.
A third state uses graduated tax rates based on AGR:
Michigan - a graduated tax rate starting at 20% and rising to 28%
A fourth, Delaware, has an astronomically high tax rate: 100% on the first $3.5 million, then 57%.
That leaves three states with moderate online casino taxes:
West Virginia - 15%
New Jersey - 15%, active legislation would increase the rate to 30%
Connecticut - 18% for the first five years, then 20%
Given where the momentum is and the propensity to copy other states (if it’s in their favor), there will be more Pennsylvanias than West Virginias.
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Legislative Updates: OK Sports Betting Outlook; Smoking Bans Lose Steam; KS Woos Pro Sports Teams
Checking in on Oklahoma sports betting: Oklahoma Indian Gaming Association Chairman Matthew Morgan told Play USA the lack of movement in 2024 was, “I think part of that was other tribal-state relations issues took up a lot of oxygen in the room. Legislative leadership never showed any desire to take up sports betting, probably because they knew it would be a lot of work since we didn’t have an agreement in place.” Gov. Kevin Stitt has been at odds with tribes after a 2019 battle over the renewal of gaming compacts.
PA smoking ban rally: Last week, Casino Employees Against Smoking Effects assembled at the state capitol to urge Pennsylvania lawmakers to pass the Protecting Workers from Secondhand Smoke Act. A bill with a promising start has stalled out, but casino workers still hope a legislative solution can be reached. A similar story arc is playing out in neighboring New Jersey, where a lawsuit has been filed, and in other states that still allow smoking in casinos, like Nevada and Rhode Island. Caesars, Bally’s, and Boyd Gaming shareholders have rejected a proposal to study the economics of smoke-free casinos.
Kansas lawmakers try to lure Missouri teams: Kansas City spans two states, Missouri and Kansas, and while the latter is the namesake, the former is home to two of the city’s professional sports teams, The MLB’s Royals and the NFL’s Chiefs. Lawmakers in Kansas are trying to change that. A proposal to raise funding for new stadiums could be discussed during an upcoming special session. Part of the funding would come from sports betting and lottery revenues. “We want to keep two good organizations right here in the Kansas City metropolitan area. We want those teams to know that it may not have worked out on the Missouri side, so we’d like to give you options on the Kansas side,” Kansas City, Kansas Mayor Tyrone Garner said.
All Eyes on Alberta at the Canadian Gaming Summit
The Canadian Gaming Summit kicks off today, and Alberta will be a hot topic of conversation.
Per Gaming News Canada (which has an excellent preview of the conference), “A conversation about regulated gambling in Canada doesn’t happen without mentioning Alberta.”
Three panels will dive headfirst into the topic (and many others will touch on the subject). You can find the complete agenda here.
The first, dubbed Alberta’s iGaming Evolution, takes place on Wednesday. The conversation will look at “how the results in Ontario assisted in the strategy to develop the political support for a similar approach in Alberta and how these results may influence other Canadian provinces to consider a similar regulatory approach.”
On the summit’s final day, Dale Nally, Alberta’s Minister of Service and Red Tape Reduction, will discuss Alberta’s online gambling plans in a session titled Betting on the Alberta Advantage.
Later in the day, during a session titled Alberta: A new gold rush?, a stacked panel will discuss How Alberta might approach regulation given it’s “one of the most penetrated gambling markets on this continent. With a three-decade-old robust VLT market, a highly distributed Casino marketplace… a lottery found both online and in close to 3,000 physical locations, and a provincially operated online gambling site (playalberta.ca), this market is unique and includes a complex labyrinth of stakeholders, including Indigenous partners.”
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Around the Watercooler
Social media conversations, rumors, and gossip.
Men “The Master” Nguyen doesn’t possess the best reputation at the poker tables. The 7-Time WSOP bracelet winner has been at the center of multiple controversies, and he can now add another one to the long list.
The second video shows Men pulling all his chips back (the dealer did not pull in the chips for the side pot). Whether Men was aware of it or not (an argument I guess you could make), he clearly recognized the error when it was brought to everyone’s attention the next hand and decided to keep his mouth shut.
And yes, as some respondents noted, it’s important to protect your hand. The systems in place should be enough, but dealers make mistakes, and the best way to create a firewall is to pay close attention. As I tell my kids, just because you are obeying the rules (crossing in a crosswalk or next to go at a four-way stop) doesn’t mean you shouldn’t be on the lookout for people who aren’t obeying the rules.
Poker.org has more reactions to the hand from social media.
Stray Thoughts
The Supreme Court will not hear the Florida sports betting case (West Flagler vs. DOI).
The decision is a huge win for Florida sports betting and the Seminole Tribe. It could also radically alter the online gambling landscape in the US.
There are more than enough outlets admirably covering the basics of the case (take your pick from Sports Handle, Legal Sports Report, Bonus.com, SBC Americas, or Casino Reports), so I won’t bore you with those details. But this is not a cut-and-dry win-loss, which I’ll explain in an upcoming feature column.