Lawmakers from across the U.S. gathered last week at Rivers Casino Pittsburgh to discuss the issues that are shaping the spread of gaming at the Summer Meeting of the National Council of Legislators from Gaming States (NCLGS).
NCLGS President and West Virginia Del. Shawn Fluharty welcomed colleagues from gaming states, previewing a conference that was to highlight issues being debated in legislative chambers everywhere.
One of those issues, the spread of unregulated so-called “skill games,” was tackled in the first panel discussion of the conference, titled “Committee on Emerging Forms of Gaming: Time to Regulate?”
The fact the conference was held in Pennsylvania was significant, since some estimates have the number of the slot-like machines topping 100,000, placed not only in bars and clubs but in gas stations, convenience stores and other locations accessible to anyone, including children.
Moderated by Oklahoma state Rep. Chris Kannady, the panel included:
- Anthony Gaud, co-CEO, Gaud-Hammer Gaming Group (G3);
- Matt Hortenstine, general counsel, J&J Ventures;
- Jeff Morris, vice president of public affairs, Penn Entertainment;
- Kurt Steinkamp, chief of staff of the Michigan Gaming Control Board
- Eric Weiss, managing director, North America for compliance solutions provider IC360; and
- Michael Pollock, senior policy adviser for Spectrum Gaming Group.
Hortenstine and Weiss commented that, since hundreds of thousands of skill games are already in the field, it is unrealistic that they can be shut down and banned. Weiss noted that efforts so far in places like Pennsylvania, where machines have been seized by police only to be returned to the owners after court decisions in favor of the skill game providers, amount to a game of “whack-a-mole” in which new game locations pop up when one is shut down.
The answer, said Michigan’s Steinkamp, is to act quickly to regulate and tax the machines.
Pollock, who has testified as an expert witness in skill-game court cases, said the games should be shut down, period. He noted that since gaming first ventured outside of Nevada, a gaming license has amounted to a privilege that is earned by manufacturers and operators who have undergone considerable scrutiny to prove their integrity. They have played by the rules, without expecting them to change. Licensing skill games amounts to changing the rules of operation, he said.
Penn’s Morris noted that skill-game manufacturers have flouted those rules, and have done nothing to prove their integrity. He also noted that licensed operators are losing millions in potential revenue to the games, and the state is getting zero in the way of revenue.
All on the panel agreed on one point: there must be a “level playing field” in any jurisdiction that chooses to regulate and tax skill games—in other words, skill games must be subject to the same scrutiny, the same player protections, the same responsible gaming safeguards, and the same tax rate as casino slot machines.
Also early in the conference was a panel called “State and Federal Committee: ‘Just the facts, ma’am,” which rolled out compelling statistics showing how gaming in all its forms has delivered on its promise to provide revenue to the states; and “Responsible Gaming Committee,” which examined how various states implement player protection measures for brick-and-mortar casinos, and how player data and artificial intelligence are providing effective detection and prevention of problem gambling issues online.
Model iGaming Legislation
One of the highlights of the conference was a two-part session chaired by former Florida state Senator Steve Geller, founder and general counsel of NCLGS, on efforts to forge model legislation for the legalization of internet gaming.
Fluharty has launched an initiative to provide NCLGS members with a framework for an iGaming bill that can be used in 2025 and going forward.
“We’re trying to have a foundation that will work in most any state,” Fluharty told iGaming Business after the session. The goal, Fluharty said, is to release a draft of the legislation to NCLGS membership by August 1. It will then be open for public comment for 30 days. From there, lawmakers will consider comments and redraft as needed, presenting a final “bill” at the December NCLGS Winter Meeting in New Orleans.
When the calendar turns in January, lawmakers, in theory, will have a universal framework they can build out to suit their state. Geller commented that the average tax on iGaming in the seven legal U.S. states is 19 percent. Because of that, the draft calls for a tax rate of between 15 percent and 25 percent.
Beyond that, Geller said, the proposed legislation aims to cover seven key areas:
- Revenue generation
- Responsible gaming
- The cannibalization question
- Advertising guidelines
- Licensing
- Age limits
- Data sharing
Though the details of the proposed bill are still a work in progress, Geller, head of the iGaming Committee, said that lawmakers are slimming down the current 100-page draft, and will separate out legislative suggestions and regulatory suggestions.
The panel of regulators included David Rebuck, considered by most the dean of regulators. The former director of the New Jersey Division of Gaming Enforcement supports the idea of a separate regulatory playbook.
“It has to be broad enough to encompass the goals of what you want the legislation to do,” he said, “but broad enough .. so the regulator and the public who respond to regulations can put it together.”
Maryland state Senator Ronald Watson, who spearheaded an ultimately unsuccessful attempt to legalize iGaming in his state this year, said the road to legal online gambling must be paved with education—both of lawmakers and the public.
Betting Collegiate Sports
Other highlights of the conference included a look at how the National Collegiate Athletic Association (NCAA) and NCLGS are working together to afford collegiate athletes safety in the new world of sports betting.
The dangers range from integrity issues for college contests to the illegal betting market to physical danger to athletes from bettors who lose prop bets involving individual players.
The NCAA and NCLGS have formed a Special Committee on Education to create draft legislation that can address these issues, according to Clint Hangebrauck, managing director of enterprise risk management for the NCAA.
“We have drafted a model legislative framework that starts with really enforcing the unregulated market,” Hangebrauck said, noting that the current situation presents a “clear and present danger to the safety and well-being of our student athletes.”
He added that the NCAA also is working with the American Gaming Association, “making sure the NCAA has a seat at the table in creating frameworks for sports betting.”
According to panelists including Hangebrauck; Wayne Kimmel, managing partner of SeventySix Capital; Todd Sandstedt, a sports consultant and former FBI agent; and AGA Senior Director of Government Affairs Tres York, student athletes have been dealing with harassment from disgruntled bettors.
Lawmakers in several states, including West Virginia, Ohio and New Mexico, have already begun dealing with the problem, passing laws that ban anyone found to make such threats from betting in those states.
Hangebrauck said the new committee also is working on ways sportsbooks can reduce player-specific prop betting, which he said is like “putting a target on backs of athletes.”
The AGA’s York said the association has focused on preventing harassment of college athletes based on player-specific prop bets and easy accessibility to the illegal wagering market.
“When you have a legal, regulated market, the data and transparency and visibility it gives allows you to look for not only nefarious betting patterns, but to corroborate harassment,” York said.
The Bettor’s Perspective
Another highlight session, titled “Living Off the Odds,” examined concerns about whether the current sports wagering model is sustainable for the long term.
The session featured views on the subject from professional sports bettors Billy Walters and Gadoon “Spanky” Kyrollos. Both the legendary Walters, 78, and Kyrollos said sustainability depends on treating the bettors fairly.
That, they said, means an equal playing field for all customers.
The discussion was aided by Richard Scheutz, a veteran casino executive, regulator and onetime Las Vegas sportsbook operator, who hosted Walters when he ran the sportsbook at the Stardust.
One problem threatening the long-term sustainability of legal sports betting, panelists said, is a lack of knowledgeable operators. “The (Iegal) industry is new in this country, and no one with knowledge of betting was involved in this process,” Walters said. “(The bettors) need to have a voice.”
Among the concerns, he said, is transparency with respect to the odds. Also of concern is the practice of adjusting limits for individual bettors who want to bet big but are obviously not well schooled in the art of sports betting.
“If you qualify for a sports betting account, you should be treated equally,” Walters said. “And we need transparency; you’re entitled to it. What are the minimum and maximum bets? What are the true odds? Almost everyone will tell you 11-10. People are laying 2-1 on some of these prop bets. You’re entitled to know the true odds of the bet you’re making.”
He estimated that 95 percent of legal books are losing bettors because they don’t adjust their betting lines in reaction to unexpected events like player injuries.
Kyrollos commented that the problem with many operators is that they always want to win, noting a “ban or bankrupt” attitude he said is sometimes prevalent in European sportsbooks, but is now seen in the US on a continuing basis.
The term refers to the practice of banning knowledgeable bettors and exploiting novice bettors by manipulating the limits. “They’ll either limit the player severely or increase the limit according to their sophistication,” Kyrollos said.
“As a player, you want to be treated fairly. Some operators have teams focused on who they’re going to kick out or limit… Operators feel they have to beat everyone. It’s a lazy bookmaker mentality. You have to have winners, and you have to have knowledgeable people in moving the line.”
“Las Vegas is built on people believing they can win,” added Walters.
Walters said long-term sustainability for the legal sports betting market depends on treating everyone equally. “I want to see states realize income, sportsbooks be successful,” he said. “It’s not about me, it’s about the other 40 million to 50 million people out there betting sports.
“There should be posted limits, treating everyone equally. In this country, we all have the right to be treated equally as long as we’re all playing by the rules. If you don’t have the expertise to treat everyone equally, maybe you shouldn’t be operating a sportsbook.”
