Is gambling regulated at a national or subnational level in your jurisdiction, and what sorts of land-based gambling are permitted?
In the United States, gambling is regulated at the state, tribal, and local levels. The states are the major regulators, enforcing criminal gambling prohibitions and regulating legal gambling companies. At the same time, the federal government mostly assists in pursuing multistate enterprises that break state gambling laws or offer illegal sports betting.
Land-based commercial casinos are legal in 18 states, including Colorado, Indiana, Iowa, Kansas, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, Nevada, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, South Dakota, and West Virginia, as of 2019. Riverboat casinos are legal in six states, including Illinois, Indiana, Iowa, Louisiana, Mississippi, and Missouri. Other states have ‘racinos,’ or racetracks that offer to gamble, while Native American tribes run casinos and card rooms in various forms (including California). Later this year, Massachusetts is slated to build its first land-based casino.
The now-defunct Professional and Amateur Sports Protection Act made sports betting illegal in the United States until early 2018. (PASPA). Nevada was completely free from the PASPA prohibition, allowing it to offer intrastate sports betting, whereas Delaware, Oregon, and Montana had only partial exemptions. Sections 3701 et seq. of the United States Code (PASPA). Currently, 15 jurisdictions (in addition to Nevada) have either authorized or begun sports betting: Arkansas, Delaware, Illinois, Indiana, Iowa, Mississippi, Montana, New Jersey, New Mexico, New York, Pennsylvania, Rhode Island, Tennessee, West Virginia, and the District of Columbia. (Without state law requirements, the Santa Ana Pueblo tribe in New Mexico began offering sports betting at its casino facility.) Except for Arkansas, Mississippi, New Mexico, New York, and Rhode Island, all but five of them allow mobile or internet sports betting. Tennessee’s regulation is unique in that it only applies to mobile devices and has no land-based or retail component.
Many states allow pari-mutuel wagering on horse races, with a handful allowing greyhound racing and one (Florida) allowing wagering on the game of jai alai.
Except for Alabama, Alaska, Hawaii, Mississippi, Nevada, and Utah, every state has its lottery. Lotteries are handled by the state and are not available through commercial operators.
In response to most of these inquiries, we focus on casino gambling and sports betting, while we mention horse-race wagering and other appropriate gambling activities.
Licenses for establishments
Please describe the licensing requirements for each form or classification of land-based gambling. Is there a cap on the number of licenses available in your jurisdiction?
The number of available licenses will be limited in most states, and the licensing standards will differ from one state to the next. Casino owners and operations, casino personnel, and companies that do business with casinos, for example, all require licenses or registrations in New Jersey. See, for instance, NJAC 13:69C (Casino Licencees) and NJAC 13:69J (Casino Licencees) (Persons Doing Business with Casino Licencees). Nevada also has a licensing system for gaming personnel and establishments, such as bars, where gambling is only an afterthought (called a restrictive license in Nevada). See Nevada Gaming Regulation 3 for further information (Licencing: Qualifications).
Licensing for directors, officers, and owners
Is it necessary for licensees’ directors, executives, or owners to be licensed or vetted for suitability?
Regulatory mechanisms in states where gambling is permitted are sophisticated and thorough. As a result, state licensing regimes are frequently intrusive and demand a thorough examination of licensee applicants. The suitability review’s goal is to verify that licensees are trustworthy and have good character and integrity. In Nevada, for example, casino licenses are not issued until applicants demonstrate sufficient commercial understanding, skill, and experience, as well as substantial and appropriate financing. Section 463.170 of the Nevada Revised Statutes (3). In New Jersey, for example, key employees such as pit bosses, casino managers, and casino operators must go through a rigorous licensing process that demonstrates the person’s financial stability, integrity, and responsibility and their good character and reputation for honesty and integrity. See NJAC 19:41A-5.5 for more information.
Location
Is it legal for a gaming establishment to be part of a resort, restaurant, or other multi-purpose establishments? What restrictions are in place?
Yes, but each state that has legalized gambling will have its own set of restrictions. In Nevada, a tavern owner can apply for an unrestricted license, allowing the facility to have 15 or fewer slot machines unrelated to the tavern’s principal operation. Riverboat casinos are legal in Illinois, Indiana, Iowa, Louisiana, Mississippi, and Missouri.
Institutional/passive ownership
Is there any provision for exemption or adjustment of licensing criteria for passive or institutional ownership?
State laws vary in this area, but it is common for states to exempt institutional owners of licensees up to certain specified thresholds from licensing requirements, as long as those owners are passive – they do not actively participate in the operation or management of the gambling enterprise. The permissible levels vary, with a common upper range of 10%. Importantly, institutional owners who qualify for this exemption are still subject to the gambling authorities’ scrutiny, which can ‘call them forward’ for assessment at any time if they believe it is warranted.
Gambling responsibly
What responsibilities do licensees have in terms of responsible gambling?
Licensees’ responsibilities for responsible gaming will differ from state to state. In Nevada, licensees who engage in issuing credit, check cashing, or direct mail marketing of gaming opportunities must create a mechanism that allows consumers to limit their exposure to that licensee’s marketing. The licensee’s program establishes the rules and procedures that will enable a patron to opt out of such marketing. Licensees must also train all workers who have direct contact with gaming patrons, with the training taking into account the nature and symptoms of problem gambling. See Nevada Gaming Regulation 5.170 for further information. Many states require licensees to keep their self-exclusion lists, allowing people to self-identify and then force the licensee to refuse service to anyone on the list. The Division of Gaming Enforcement in New Jersey produces and maintains a centralized list of those who have self-excluded themselves from participating in gaming activities at licensed casinos and simulcasting facilities. Sections 5:12-71.2 and 5:12-71.3 of the New Jersey Statutes apply. Missouri was the first state to implement a voluntary exclusion policy, and it is noted for its rigor. In Missouri, a person who registers themself on the self-exclusion list but is discovered at a gaming establishment will be charged with trespassing. 45-17-010 of the Missouri Code of State Regulations.
Taxes
What type of tax and what tax rate applies to each legal form of land-based gambling?
The taxation of land-based gambling is usually based on gross gaming income (GGR), and the rate differs from one jurisdiction to the next. Although the meaning of GGR varies, at its most basic level, it refers to the gross amount received from bettors minus winnings and incentives or promotional credits granted to the bettors.