Massachusetts explores iGaming legalization, betting tax increase

Casino gambling and sports betting are widely spread across the United States. Currently, a total of 30 states and Washington DC offer mobile or online sports betting. In contrast, only several states permit online gambling activities such as slots and roulette.

Newly filed proposals call for changes to the gambling sector in Massachusetts

Massachusetts is among the states that offer both online and retail sports betting. While retail wagering on sports was introduced at the end of January 2023, the state's online betting market was launched a couple of months later, on March 10, 2023.

However, unlike nearby New Jersey and Pennsylvania, Massachusetts doesn't offer online casino gambling. This may soon change thanks to a recently filed proposal that calls for the legalization of iGaming across the state. At the same time, lawmakers are proposing changes to the established betting rules, calling for limits to protect the consumers, increasing taxes and setting aside more money for problem gambling treatment.

If the iGaming proposal in Massachusetts is greenlighted, it may put the state next to several other states that currently offer legal online gambling. While online sports betting is available in more than 30 states, legal online gambling is limited to only seven states.

The list where iGaming is legal includes major markets such as New Jersey, Pennsylvania and Michigan. Legal online casino games are also available in West Virginia, Rhode Island, Delaware and Connecticut while Massachusetts seeks to join that list.

Besides exploring options for the legalization of iGaming, a separate bill by lawmakers in the state may change the regulation of sports betting. Offering a potential gambling tax hike, the implementation of affordability checks and limits to in-play betting, as well as daily and monthly spending caps, the proposal, if approved, can significantly affect the state's betting vertical.

Two bills propose online gambling legalization, set out a regulatory framework

Focusing on online gambling, lawmakers in Massachusetts filed a pair of similar bills. While one of the proposals, Bill SD 2240, was filed by Sen. Paul R. Feeney, a twin proposal, Bill HD 4084, was filed by Rep. Daniel Cahill. The two bills propose the legalization of online gambling.

Per the bills, the three land-based casinos in Massachusetts will be permitted to join forces with up to two online gambling operators, referred to as "Internet gaming platform providers." This translates into six licenses that would be up for grabs that are tied to brick-and-mortar casinos. Each such license would be Category 1.

In addition, the bills propose four additional Category 2 licenses to be awarded to online gambling operators. However, those licenses won't be tied to a land-based venue in the state.

Bill SD 2240 explains further: "Each internet gaming platform shall be offered under a single distinct brand, except that each internet gaming platform may use a second distinct brand to offer poker."

Category 1 and Category 2 licenses will be issued by the Massachusetts Gaming Commission. The regulatory watchdog will also be in charge of regulating iGaming activities, ensuring all licensees comply with their obligations and follow the established regulatory framework.

The proposals call for the authorization of a range of online casino games, including but not limited to slots, card games such as blackjack and poker. If the iGaming proposals are approved, they also seek to introduce games such as craps and roulette, among others.

Under the proposed iGaming legislation, operators interested in securing a license would be subject to a $5m license fee. Licenses would be valid for a period of five years. Online gambling would be subject to a 20% tax rate, the same rate that currently applies to online sports betting activities.

Similar to other states where online gambling is legal, the iGaming proposal in Massachusetts calls for the establishment of a responsible gambling framework that would involve activities such as training for employees of operators. iGaming operators would also be required to conduct assessments of the activities of their customers, helping flag potential signs of gambling harm and in cases where necessary, take action such as closing customer accounts to prevent further harm.

The proposals calling for the legalization of online gambling would also authorize the Massachusetts Gaming Commission to revoke, limit or impose license conditions or fines to licensees who fail to meet the established regulatory framework. This will be particularly the case when an "operator knowingly or recklessly fails to exclude any person placed on the list of self-excluded persons."

With that in mind, a list of self-excluded individuals across Massachusetts won't be publicly available but licensees would have permission to access it to prevent individuals on the list from gambling.

iGaming legislation is a hot topic in several other states

Online gambling legislation isn't picking up speed only in Massachusetts. Only recently, lawmakers in several other states filed proposals calling for the legalization of iGaming. The list includes New York, Indiana, as well as Wyoming, where different proposals are undergoing debate.

At the same time, seven states are already benefitting from online gambling. One of the key aspects of the legalization of the activity, which is also a key point in the motives presented by lawmakers who support iGaming legislation, is that a legal market will help protect the consumers.

Even in states where online gambling isn't legal, customers can register an account with an offshore operator or a black-market provider. This puts at risk not only the money a person may consider gambling away, but also their personal information such as name, address, email, phone and even social security number.

In that context, licensed operators would be required to follow the jurisdiction's regulations. Any violations of the rules may result in hefty fines or even license revocation while gamblers can turn to state courts in cases of disputes.

Massachusetts bill calls for higher betting tax, limits and other restrictions

Besides online gambling, another recently filed proposal also calls for changes to the gambling sector in Massachusetts. The proposal, SD 1657, was introduced by Sen. John F. Keenan earlier this month. The bill, described as an "An Act addressing economic, health and social harms caused by sports betting," seeks to implement changes to ensure the protection of customers from excessive betting.

Notably, SD 1657 calls for the implementation of wagering limits applicable to Massachusetts bettors. The limits under the bill would be $1,000 per day and no more than $10,000 per month.

In addition, the proposal reads: "Operators, directors, officers, owners, employees, affiliates and subcontractors of the operator or sports wagering operator shall receive no compensation for any percentage of wagers or deposits placed by a customer of the operator or sports wagering operator."

Besides the daily and monthly limits applicable to bettors in Massachusetts, the proposal seeks to introduce a significant increase in the tax rate for the activity, while at the same time increasing the funding for responsible gambling.

Under Sen. Keenan's bill, betting operators would be subject to a 51% tax, replacing the existing rate of 20%. While the Senator proposed a similar tax increase last year, the bill was ultimately shot down.

The existing betting regulations require $1m to be dedicated to responsible gambling. However, under Sen. Keenan's SD 1657, the proceeds to responsible gambling would double to $2m.

The fate of online gambling and changes to betting is in the hands of the lawmakers

In case lawmakers approve the proposed changes to the betting sector and legalize online gambling, the gambling market in Massachusetts will significantly change. However, considering that a betting tax hike didn't pick up speed last year, the future of SD 1657 remains uncertain.

In that line of thought, the chances of the state legalizing iGaming may be greater, considering that the activity will generate additional tax revenue. Across the country, gambling activities help fund vital programs, including supporting budgets for education and public services.

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