Zona de Azar USA – Group of Legislators Suggests 15%-25% Tax for Expanding iGaming

USA.- december 3, 2024 www.zonadeazar.com The National Council of Legislators from Gaming States (NCLGS) has created a proposed legislative framework to assist states contemplating the legalization of online gaming. The NCLGS recommends establishing tax rates between 15% and 25% and advocates for a ban on sweepstakes.

The organization released the draft ahead of its winter meeting Dec. 12-15 in New Orleans.

Developed over several months by the select Committee on Model Internet Gaming Legislation, the draft, known as “The Model Internet Gaming Act,” suggests a wide range of policies for state legislators, regulators, and other stakeholders to consider. The draft will be open for public comment through Dec. 31.

“The objectives of this model legislation are to establish an effective, comprehensive, and efficient regulatory framework consistent with public policy that will foster public confidence and trust in the integrity of the regulatory process and the fairness of internet gaming operations,” NCLGS said in a statement. “The regulatory provisions are intended to extend strict regulation and oversight over all aspects of internet gaming operations.”

In crafting the document, NCLGS’s committee members said they realize that each state “has a unique gaming sector with disparate interests and concerns. Nonetheless, we believe the regulatory framework set forth herein may be a useful tool for consideration as states embrace the vast potential of internet gaming.”

The model legislation is meant to be an important internet gaming complement that doesn’t adversely impact casino and racino facilities in the states. It also calls for cracking down on illegal wagering in the states, including sweepstakes.

“The objective is to attain public confidence, while shrinking illegal gaming activities and increasing new revenue to the states,” the report said.

The draft calls for the creation of a Gaming Regulatory Authority to regulate internet-gaming operations. If a state already has a gaming regulator, internet gaming should be overseen by that agency.

It calls for establishing a tax rate between 15% and 25% for internet gaming that will maximize revenue and allow for competitiveness with other gaming jurisdictions.

“A competitive tax rate also allows competitive technological growth without creating a barrier of entry for future market participation,” the draft said.

Casino industry consultant Brendan Busssman, managing partner of B Global who’s attending the New Orleans conference, criticized the draft for setting a floor of 15% when other states such as Nevada have lower rates and would never consider a rate so high.

“I have argued that anything above 15% becomes problematic,” Bussmann said. “They just set a floor in some states like Iowa and Indiana (that are below 15%). Why put in a threshold in which you are competing against yourself? You want to figure out a way to bring them into the market. Gaming policy should be on a state-by-state basis and whatever that state feels is necessary is much more prudent. High rates stifle innovation and stifles the ability to reinvest in the customer. Profit is not a four-letter word.”

Taking on illegal gambling, the draft says “Any game, contest, or promotion in which a prize is awarded based on chance, that is available on the internet and accessible on a mobile phone, computer terminal, or similar access device, that utilizes a dual-currency system of payment allowing the player to exchange the currency for any prize or award or cash or cash equivalents, and simulates casino-style gaming, including but not limited to, slot machines, video poker, and table games, lottery games, and sports wagering.”

It calls for making it unlawful for any person or entity to operate, conduct, or promote sweepstakes games within a state. Any person or entity found in violation would be subject to a fine of not less than $10,000 and not more than $100,000 for each violation and subject to potential loss of gaming license.

Repeat offenders would be subject to increased fines, potential loss of gaming license, and potential imprisonment of up to two years, according to the draft. The Gaming Regulatory Authority may conduct investigations, hold hearings, and issue subpoenas to ensure compliance.

“Sweepstakes should be banned today,” Bussmann said. “They’re skirting the system. Gaming should be regulated and taxed at a fair rate.”

NCLGS said nothing in the draft is intended to regulate tribal gaming, which is governed exclusively by the Indian Gaming Regulatory Act and individual state compacts.

The draft said operators are required to promote responsible-gaming practices. In addition, the Regulatory Authority is tasked with implementing responsible-gaming standards and working with jurisdictions to establish best practices across state lines.

Since the country emerged from the pandemic, there’s been hope that igaming would continue to expand beyond the seven states where it’s legal – New Jersey, Pennsylvania, Michigan, Connecticut, Delaware, West Virginia, and Rhode Island. Nevada allows online play for poker only.

Industry observers have long suggested that igaming- expansion legislation prospects inclue New York, Indiana, Illinois, and Iowa at the front end and Maryland, Ohio, Colorado, Louisiana, and Kansas as well.

The igaming proponents have faced obstacles, mainly lawmaker concerns about cannibalization from land-based casinos costing workers their jobs and worries about addiction, two points the gaming industry and its supporters said have been debunked.

The last obstacle is how state governments have been flush with cash due to the pandemic. That obstacle may be easing with more state governments trying to cover deficits instead of dealing with surpluses.

Bussmann said states are facing budget challenges in 2025.

“The free money that the feds gave us is all gone,” Bussmann said. “You look at a state like Maryland. I think it will have a budget crunch. New York is complex, but they’re going to have a budget crunch. Colorado or Louisiana would be good prospects along the way. Maybe in some form or fashion would be Illinois, but that’s as complex as New York is.”

Edited by: @MaiaDigital www.zonadeazar.com