An ad hoc commission tasked by the legislature with recommending an omnibus bill that would encompass all possible forms of online gaming in Massachusetts except the lottery is close to releasing its findings. It has been studying the issue since last year.
The commission was created last year after the issue of daily fantasy sports (DFS) rose to prominence. Lawmakers legalized and assigned regulations to DFS on a temporary basis, but as part of the bill created the commission, which has until this summer to make its report. The nine-member commission includes legislators, industry experts, and appointees from the governor, attorney general and gaming commission. It has conducted several hearings.
The Massachusetts Gaming Commission, whose chairman Stephen Crosby serves on the legislative commission, has said repeatedly that legalizing online gaming would help the Bay State to regulate and tax existing websites and burnish the state’s reputation as a technology leader.
He recently told lawmakers that online gambling technology “could become another modest but real economic engine.” He added, “Whether online gaming will come to dominate the overall gaming industry remains to be seen, but it’s certainly a significant part of the industry. It’s already here.”
The state’s first casino out of a planned four, Plainridge Park, opened two years ago.
The Boston Globe recently quoted state Senator Jennifer Flanagan as saying that online gaming is moving target. “It’s constantly changing with new products and new technology. We’re trying to stay on top of it. But it isn’t easy,” she said.
She added, “I think there’s a lot of merit to the idea of encouraging developers to come to Massachusetts to create the next big thing.”
State Treasurer Deborah Goldberg has been pressing for several years to be able to sell online lottery tickets. She argues that mobile sales are critical to attracting the younger generation. Although the Bay State lottery made a record $989.4 million last year, Goldberg is projecting that it will begin to fall from that peak.
If Massachusetts acts to legalize online gaming it would be the fourth state to do so. Pennsylvania, California and New York are also exploring online options. Operators of the state’s casinos, including ones that are coming on line now, are expected to oppose such an expansion.
“We need to protect our businesses,” declared Eric Schippers, senior vice president for public affairs for Penn National, which operates Plainridge Park recently. “We can’t have offshore operators coming in and poaching our business.”
Noting that his company paid millions of dollars for a casino license that, he says, was supposed to protect Penn Nation for more competition, added, “We paid dearly. And the limitation on the number of casinos was supposed to make us comfortable investing huge amounts of money. The state can’t now make a fundamental change in the deal we made.”
Crosby tends to agree with that point of view: “Our position is that it wouldn’t be fair to the casinos if we were to dramatically change the gambling economy without paying attention to the casino guys who are spending $4 billion in the state,” he said recently.
Flanagan is not so sure. “The casinos absolutely have to protect their investment, and limiting online gambling to the existing casinos is worthy of exploring,” she said. “But there may be other possibilities, too.”
Goldberg reacted to Crosby’s comments by observing, “It’s interesting. You’re hearing about the Gaming Commission saying they want online gambling, and then the comment that I read in the paper was that there are only so many entertainment dollars,” Goldberg said. ‘So literally … if they get online gambling and we do not get iLottery, they would be trying to capture our money that goes to cities and towns for the profit of a profitable entity, like Wynn or MGM.”
Lottery Commissioner Thomas Stack added, “As the apolitical and independent comptroller of Massachusetts, I have to tell you that that’s enormously disturbing to me, from the standpoint that you have the most successful lottery in the nation, and what you’re really doing is not only kneecapping it from the standpoint of not allowing it to participate in any kind of online way, but also you’re literally, as the treasurer said, handing the keys over to private industry.”
Crosby clarified that he thinks the decision should be left up to the legislature. He told a radio show last week, “The Gaming Commission has been absolutely emphatic that there is a two-step process here. One is, should online gaming be legal in Massachusetts? That’s not up to us, that’s up to the legislature, pure and simple,” adding, “If it is legal, then we definitely have opinions on how it should be done and we’ve made recommendations. But we’re not lobbying in favor, nor are we against it. That’s not a decision for us to make.”
MGM Resorts International and Wynn Resorts are building casino resorts at Springfield and Everett (across the Mystic River from Boston) respectively. MGM’s is a $950 million facility and Wynn recently upped the price tag for its casino resort to $2.4 billion.
Massachusetts Council on Compulsive Gambling says it is “highly concerned” about online gaming and wants to see strong consumer protections. They are particularly worried about the fact that such sites operate 24/7.
For many years, online gaming was considered illegal due to the Interstate Wire Act of 1961 that bans “transmission in interstate or foreign commerce of bets or wagers,” however in 2011 the U.S. Justice Department issued the opinion that the law did not prohibit “intrastate” online gaming, as long as it was conducted entirely within a state’s boundaries. In rapid succession Nevada, New Jersey and Delaware took advantage of that ruling.
