THE FIGHT: Massachusetts Flirts with Online Gaming – Again

Massachusetts welcomes youThe World Series of Poker starts in five days and will sap the attention of the entire poker community for seven weeks. While all the hoopla happens in Las Vegas, lobbyists and industry executives are still taking THE FIGHT to statehouses around the country — including Massachusetts.

About a month ago I mentioned that a Massachusetts House budget proposal was amended to include a section providing authorizing online gaming and allocating revenue derived from it. The amendment envisioned three licenses that would be available only to companies that never accepted wagers in the U.S. after October 13, 2006, the date the Unlawful Internet Gambling Enforcement Act was signed into law. Licenses would have cost $10 million to obtain, with monthly upkeep fees required, and would have been valid for 10 years.

That provision never made it into the final version of the House budget. But this week a Massachusetts newspaper reported that a similar provision could back to life in a Massachusetts Senate budget proposal – and it has the support of several prominent Republicans, traditional opponents to online gaming.

State Senate Minority Leader Bruce Tarr told the Taunton Daily Gazette that the amendment is being considered alongside other proposals that could boost the economy and state revenue. To date, no other mainstream media outlet has picked up the story, nor has the proposal yet been attached to the budget bill.

Is the report accurate? Almost certainly a proposal is “being considered”. In politics, though, “being considered” doesn’t mean much. The proof is in the pudding. Attaching the proposal to the budget bill would go a long way toward showing how serious Massachusetts Republican Senators really are about online gaming.

As long as the story is in play, we may as well consider the reported provisions of the online gaming proposal. The initial licensing fee, which in the House version of the bill would have been $10 million, has been dropped to a paltry $300,000, although annual renewal fees of $150,000 make the 10-year cost of a license $1.15 million. Licenses would only be available to the state’s three licensed casinos and certain slot parlor licensees. Online gaming revenue would be taxed at 20%.

To be honest, this one seems like a bit of wishful thinking. It’s hard to imagine an online gaming proposal with a licensing fee as low as $300,000, even if the 20% tax rate puts the proposal in the middle of the road among online gaming proposals being considered across the country.

What’s more, the chances of success of the Senate proposal are hard to gauge. The House proposal didn’t stay attached to the budget bill for more than two weeks before meeting a quiet death. The House version of the budget was passed without the amendment that authorized online gaming.

Thus if the version in the Senate has any hope of success, not only does it need to make it onto the budget bill and then out of the Senate but it also will need to face up to opposition in the House for a second time. The issue is further complicated by opposition to existing proposals to expand gambling in the state and from state lottery officials, who fear erosion of their revenues.

In some ways then, the current Massachusetts Senate proposal is a bit like those weekend warriors who will head out to the WSOP this summer with dreams of winning a gold bracelet. It’s unlikely to happen, but you just never know.

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Kevin McGrady

Legislative and Politics Beat Writer: Kevin McGrady practiced corporate law in New York City for eight years before moving to Las Vegas in 2008 to join the gaming industry. Kevin is a graduate of New York University and Columbia University School of Law.
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