A group of US lawmakers have come together to craft model igaming legislation in the hopes of helping their peers push through bills in 2025. The proposal bans sweepstakes, funding accounts with credit cards and sets the wagering age at 21. It also suggests that states should limit the number of operators in a state and have the power to set bet limits.
The National Council of Legislators from Gaming States (NCLGS) started the public process of developing a template for igaming legislation at its annual convention in July. At that time, former Florida state senator Steve Geller led the conversation. He laid out seven pillars that model legislation should include:
- Revenue generation
- Responsible gaming
- The cannibalisation question
- Advertising guidelines
- Licensing
- Age limits
- Data sharing
The current proposed model igaming legislation touches on all seven themes. It also calls for lawmakers to keep tax rates between 15%-25% of gross gaming revenue. Regulators are given critical powers – including setting application and renewal fees – that in many legal betting states are determined by the legislature. The draft model is open for public comment until 31 December, at which point a NCLGS committee will refine it and share it with lawmakers.
Legalising igaming isn’t easy
No US state legalised igaming in 2024. Lawmakers in Maryland held discussions, hearings and votes, but could not get the issue to the governor’s desk. A legal igaming bill was filed in Ohio in September and lawmakers in several other states say they will tackle the issue. Igaming is legal in seven US states – Connecticut, Delaware, Michigan, New Jersey, Pennsylvania, Rhode Island and West Virginia. Michigan, New Jersey and Pennsylvania are the only three of the 10 biggest legal sports betting states to offer it.
The NCLGS proposed model igaming legislation wasn’t easy to come by. Council president Shawn Fluharty had hoped to have it ready by the start of August. But sources say coordinating state lawmakers across the country and trying to gain consensus on certain issues was tougher than expected.
Igaming, in general, has been a tough sell. Some lawmakers see it as just another pathway to problem gambling while others, like former Michigan state representative Brandt Iden, see it as a cash cow. Iden, now the head of government affairs for Fanatics Betting and Gaming, enthusiastically outlined the benefits of legalisation during a G2E panel.
Template would allow regulators latitude
It seems clear that passing igaming legislation will be more difficult than legalising sports betting. Education and the proper political and economic climates will be critical to success. Iden suggested that 2025 might not be the year – many states don’t need the money, yet. But 2026 could be a watershed year. By then, federal Covid relief funds will have definitively run dry. When states were considering legalising sports betting, the need for funding – whether to funnel money to state pension funds, education or water projects – was a key driver.
The model igaming legislation has many of the standards found in legal sports betting laws. For example, it sets the minimum gambling age at 21, requires funding for responsible gambling and some advertising guidelines. In some states, operators or even lawmakers may push back on the legal age. In Kentucky, for example, the legal age for pari-mutuel sports betting is 18. The proposal also does not lay out or suggest a range for application fees.
In addition, lawmakers included a section that calls for a state to create a gambling-specific regulator. In some states, legal sports betting and igaming are currently regulated by the lottery or a horse racing commission.
Politics are fickle
Lawmakers included a section about reciprocity between states. This language is a clear indication that online gambling laws should allow for interstate poker play. The proposal also explicitly bans “internet cafes” for “dues-paying members” or that are otherwise restricted. Such cafes are defined as places where “computer terminals or similar access devices are advertised and made available to be used principally for purposes of accessing authorised internet games”.
But politics and politicians are fickle. While the group of lawmakers writing the proposal were thoughtful and tried consider all angles, the sports betting legalisation process has revealed that all US states have their own idiosyncrasies. And in many cases, those don’t show up until the process is under way. The model is comprehensive, but in some spots is vague or soft.
Below is a look at some of the key points in the proposal. In addition, there is analysis of why parts of the proposal may not make it into final laws.
No sweepstakes
This issue did not come up, at least not in any meaningful way, at the July meeting. But in the last three months, concern from the legal betting industry about the rise of unregulated, untaxed games has jumped up the priority list.
In response, NCLGS included a full section about banning sweepstakes, including this definition of what constitutes a sweepstakes game:
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 utilises 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.
The model legislation would prohibit such games. But the fines suggested in the proposal – $10,000-$100,000 for any group offering sweepstakes – feels like a slap on the wrist when many in the industry say sweepstakes is already a multibillion-dollar business. The draft calls for increased fines, a loss of licence and up to two years in prison for repeat offenders.
Lots of limits
The Massachusetts Gaming Commission (MGC) has been entertaining the subject of bet limits for months. The subject is so sensitive, though, that every operator live in the state initially declined to attend a meeting on the subject. No state law or regulator currently imposes bet limits for wagering, although operators can do so at their discretion.
In the model igaming legislation, Section 3-F(2) allows for a state regulatory body to set “maximum wagers” that operators can take either per person or per game. If Massachusetts is any example, operators will fight the inclusion of bet limits during the legislative process. It should be noted that the UK igaming industry will soon face limits on slot wagers of £2 per spin for players aged 18-24 and £5 a spin for over-25s, a move that has been very controversial since it was announced earlier this year.
In Section 4 of the proposal, NCLGS lawmakers clearly suggest that states should have the power to limit the number of licences and skins available. It also calls for a competitive bid process. They suggest that states consider limiting licensees to casino, racino and sports betting operators already in a state. There appears to be no option for a stand-alone digital online casino licence. In addition, there appears to be no way for a new platform to enter a state.
Also around licensing, the model legislation would allow for an “expedited” application process for existing sportsbook operators, but does not have the same guidance for existing land-based casinos.
Money, money, money
Section 13 of the model legislation addresses account funding and deposit limits. As is standard in many US jurisdictions for digital sports betting, the model legislation omits credit cards as a way to fund accounts. It also goes on to specify that prepaid cards and digital wallets are acceptable ways to fund accounts as long as the initial deposit did not come from a credit card.
DraftKings has struggled with this issue in Massachusetts, where funding an account with a credit card is not permitted. The company, on multiple occasions, allowed consumers to use funds from digital wallets that were funded with credit cards in other states. For companies with nationwide digital wallets, the credit card issue is sticky and requires another layer of technology and review.
In addition, Section 13-D suggests a cap of $20,000 (£15,753/€19,028) in deposits within a 24-hour period. It is not clear if this applies to one operator or to multiple operators. That said, operators do not generally share this type of information. It’s not clear how or if regulators could track deposits on multiple platforms.
Responsible gambling
The proposal outlines fairly standard responsible gambling suggestions. Among them are voluntary exclusion lists, state-funded treatment options, requiring help-line information be front and centre and banning the use of the phrase “risk free”. It further addresses responsible gambling by suggesting deposit and bet limits.
Rather than put a number on how many tax dollars should go to fund such programmes, NCLGS left that open-ended. The text of Section 16-C(4) reads: “A specific percentage of the tax levied on gaming revenue, as set by regulation.” The lawmakers had an opportunity here to make a commitment to problem and responsible gambling funding, but chose not to. RG advocates will most certainly lobby for a higher number than lawmakers or regulators are likely to suggest. In addition, advocates generally prefer a hard dollar number as a minimum amount to be set aside. Tax dollars – derived from handle and revenue – can fluctuate.
In terms of other requirements, the proposal would require operators to “designate trained AI solutions” for detecting gambling addiction or unusual behaviour. This is a unique requirement that could have unintended implications. For example, during a Louisiana legislative hearing in November, a Caesars representative said “we don’t use AI” because proprietary information could be compromised. A law requiring the use of AI could potentially get pushback from operators. Innovative new partnerships, such as that between Mindway AI and Kindbridge Behavioural Health, could make new inroads in the space.
With regard to advertising guidelines, PG and RG advocates will also likely push back. The suggestions include limiting advertising and marketing to those over the age of 21, banning the use of “characters” or “performers” that appeal to younger demographics and prohibiting advertising on college campuses. But in wagering, several North American jurisdictions have taken a harder line by banning the use of celebrities in advertising.
