New Rule
The Department of Interior made significant changes to federal regulations governing gambling compacts. Here's what you need to know.
The Bulletin Board
NEWS: What the Department of Interior’s new tribal gambling rules do and don’t allow.
QUICK HITTER: Virginia and North Carolina consider legalizing “skill games.”
BEYOND the HEADLINE: Former Louisiana regulator Ronnie Jones lobbies against skill games in Virginia.
NEWS: Sports betting tax rates are ticking up.
VIEWS: Maryland online casino: Things will get worse before they get better.
AROUND the WATERCOOLER: Chris Grove discusses the hottest topics on the Lawyers, Lines, and Money podcast.
STRAY THOUGHTS: Educating others and unsolicited advice.
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A Look at the New DOI Tribal Gaming Rules
Last week, The Department of the Interior (DOI) revealed its final rules for federal regulations regarding Class III Indian gaming compacts.
One significant change is to the land-in-trust process, which has been streamlined and structured to support rather than oppose a land-in-trust request. That process has been anything but smooth over the years.
More pertinent to STTP readers, the new rules would expressly authorize Florida-style compacts that allow tribes to offer online gambling statewide, provided it is authorized by the state and the person is not located on another tribe’s lands without that tribe’s consent.
“The Department proposed a new §293.22, clarifying that a compact may include provisions that are directly related to the operation of gaming activities. Congress… provided that a compact may include provisions relating to any other subjects that are directly related to the operation of gaming activities, including activities occurring off Indian lands.”
“… Accordingly, provided that a player is not physically located on another Tribe’s Indian lands, a Tribe should have the opportunity to engage in this type of gaming pursuant to a Tribal-State gaming compact. The Department notes that the ultimate legality of gaming activity occurring off Indian lands remains a question of State law, notwithstanding that a compact discusses the activity.”
Not making the cut was a proposed rule that would have required states that offer any form of Class III gaming to negotiate “in good faith” with tribes over all forms of Class III gaming.
After considering comments, “the Department declines to adopt proposed §293.27 in the final rule.” As such, tribes can only negotiate over forms of gambling expressly authorized in the state.
Several reasons were given for abandoning §293.27, as commenters successfully argued the proposed rule:
“Would take away states’ power to limit class III gaming… Commenters argued that a state’s allowance of charitable casino nights should not necessarily result in full-blown casino gambling under IGRA.”
“Conflicts with some caselaw, citing Rumsey Indian Rancheria of Wintun Indians v. Wilson, 64 F. 3d 1250 (9th Cir. 1994) and Cheyenne River Sioux Tribe v. South Dakota, 3 F. 3d 273 (8th Cir. 1993).”
“Impermissibly expands the scope of the Secretary’s review of a compact to include the compact negotiation process.”
Once officially published, the rules will go into effect in 30 days. Of course, there is always the possibility of a legal challenge, and the Florida-style compact is currently awaiting its fate at the Supreme Court.
Quick Hitter: VGTs and VLTs on the Table in VA and NC
A conference committee will try to find a compromise between the House and Senate bills that would legalize and regulate skill games (VGTs/VLTs) in Virginia - Virginia banned the games in 2020, and the law was recently upheld in court.
Among the differences that need to be ironed out are the tax rate and licensing fees for the machines, as well as the possibility for locales to opt out, which Del. Jeremy McPike said would be needed for a piece of legislation to come out of the conference committee, according to the Richmond Times-Dispatch.
A similar scenario is happening on Virginia’s southern border in North Carolina. According to WRAL News, “State House Speaker Tim Moore and Senate leader Phil Berger told reporters Wednesday there’s interest within their respective GOP caucuses in legalizing video slot-machine gambling under the state lottery.”
Beyond the Headline: From Louisiana to Virginia
A familiar name has entered the conversation in Virginia: former Louisiana regulator Ronnie Jones. Jones, who now lives in Virginia, has created (with assistance from the AGA) a 30-second ad and sent a letter to every general assembly member.
The letter (which can be found here) reads in part:
“Make no mistake, the General Assembly made the right decision to ban these machines in 2020, and they must reject efforts in the current legislative session to legalize them… I believe legalized gambling is only appropriate when it serves the public interest and when it promotes economic development.
“Virginia would be wise to learn from Louisiana’s mistake. Skill games should be kept out of the commonwealth, but if their reentry is inevitable, it must come with a local referendum requirement, stringent licensing and regulation requirements, and consumer protections that put them in parity with existing forms of gaming in Virginia.”
States Ask for More When They Legalize Sports Betting
Sports betting tax rates are on the rise.
Since the dawn of the post-PASPA sports betting era, no less than three states have legalized mobile betting each year. Tax rates are quite divergent, with some states in the single digits and others over 50%. That said, the average tax rate has been relatively consistent (in the mid-teens)… until 2023.
Also, consider that Ohio doubled its tax rate from 10% to 20% in 2023, and Illinois is considering an even larger increase, going from 15% to 35% in 2024.
The top contenders in 2024 have tax rates on the high end of the historical average: 15% (Minnesota), 17% (Alabama), 20% (Oklahoma), and 20% (Georgia).
This is something to keep an eye on as states’ raison d'être to legalize online gambling swings more and more towards the financial.
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Maryland Online Casino Hearing Highlights Divide
As evidenced by the contentious debates in Maryland, online casino legalization is a far messier affair than sports betting.
Battle lines were drawn during a Monday hearing on Del. Vanessa Atterbeary’s HB1319, a bill seeking to legalize online casinos. During the hearing, (most of) the industry lined up on one side and organized labor and problem gambling advocates on the other.
Online gambling is still a divisive issue in the industry, which is also a point of confusion, or as Steve Bittenbender said, “This Maryland Ways & Means Committee hearing on iGaming, as it approaches its third hour, is officially drunk.”
Randall Conroy, general manager of Horseshoe Baltimore, told the committee, “I would not be up here if I had thought there (would be) job loss.” Instead, Conroy said he expects online casino legalization to increase employment.
Bobby Jones, the general manager of Ocean Downs Casino and Racetrack pointed to Pennsylvania as a cautionary tale, saying its parent company, Churchill Downs, experienced a 15% decline in revenue and a 45% decline in its workforce at Presque Isle Downs because of online gambling.
Also on the nay side was executive vice president and general counsel at The Cordish Companies Mark Stewart, who said thousands of jobs would be lost and “even more employees could be impacted by the tightening of wages and reduced benefits.”
If the casino industry is splintered over online gambling, workers are not. As I recently wrote, labor is proving to be one of the most challenging obstacles to online casinos in Maryland and New York.
Labor was out in full force at the Maryland hearing, per reporting by Matthew Kredell at Play USA.
“We believe Maryland should not take a risky bet on internet gaming,” Maryland AFL-CIO President Donna Edwards said at the hearing. “The job losses, unstable revenue, and definitely the damage to public health are not worth the risk.”
Richard Wildt of the United Food and Commercial Workers Union told the committee nearly 2,000 casino workers have lost their jobs in Pennsylvania since the onset of online gambling.
“It is pretty well accepted that iGaming will significantly reduce visits in traditional brick-and-mortar casinos,” Wildt said. “When, not if, the volume is reduced in gaming properties, it will adversely affect our members and the prospects of job security for those remaining.”
Now, toss in dueling studies by the state’s fiscal office, TIG, Eilers & Krejcik Gaming (a newsletter sponsor), and the Sage Policy Group that all skew in different directions: Slightly positive (TIG), very positive (EKG), slightly negative (the fiscal report), and very negative (Sage) - the Sage report commissioned by the Anne Arundel Chamber of Commerce concluded online casinos would result in 1,200 and 2,700 fewer jobs and a 26% reduction in land-based casino revenue.
So we have two narratives, one pointing to growth and one to woe, which has me pessimistic that anything can get done in Maryland this year - not to mention the industry doesn’t support the hefty 55% tax rate the state is considering.
Around the Watercooler
Social media conversations, rumors, and gossip.
I highly recommend this recent episode of the Lawyers, Lines, and Money podcast, where Chris Grove talks about three hot topics in the industry with hosts Daniel Wallach and Justin Mader.
The topics are:
ESPNBet’s entrance into New York
DFS 2.0
DraftKings’ recent acquisition of Jackpocket
And if podcasts are your thing, the first episode of Straight to the Point’s Talking Shop podcast will be available this weekend (paid subscribers will have access later today).
I contributed a few thoughts on the Shane Gillis Saturday Night Live sports betting skit to an SBC Americas column, and let’s just say that the LinkedIn conversation on the two-minute sketch runs the gamut.
Stray Thoughts
There is a lot of chatter about the need for education. In gambling, that is educating bettors about odds or responsible gambling tools. But it’s not gambling-specific.
As JJ Reddick recently said, it’s the commentator’s job to educate people on basketball, but noted that breakdowns get 54,000 views and calling out a coach gets millions, prompting Reddick to ask, “Do fans actually want to be educated or not?”
I can help answer that. Most people aren’t listening to learn. Curious people (few and far between in my experience) will educate themselves and seek out your opinions and advice. Those are the people education efforts can help.
The people you are trying to reach… well, I bookmarked this tweet from author Rob Henderson a long time ago, as it perfectly sums up my feelings on the topic, which took a long time, a wife, and two kids to arrive at. “Don’t give unsolicited advice. Advice-giving inherently implies unequal status. Unless people explicitly relinquish claims to equal status by asking for advice, offering it will cultivate resentment.”
In a separate tweet, Henderson reframes it as “Listeners unconsciously sense that dominance is the goal of the unsolicited advice-giver. And then feel resentment toward them. This feeling might surface in the listener’s mind as something like, ‘Why is this person trying to tell me what to do?’”
And that is why nobody cares about your bona fides, data, and well-crafted arguments.