A growing number of legislative proposals are taking shape this spring at the Massachusetts State House, with leaders from both parties pushing competing plans to give a green light to Internet poker and other games.
The leader of the House of Representatives’ small but feisty Republican minority is the latest player to jump into the debate, floating legislation to auction off licenses to online poker operators for $10m apiece.
But the bill, along with two other online proposals filed this spring, would also effectively bar many established overseas operators from bidding.
“There is momentum building,” said Mark Hichar, head of the Gaming Group at Hinckley, Allen & Snyder LLP in Boston.
But, he added, “it certainly would favor the domestic operators.”
Rep. Brad Jones, the chamber’s Republican minority leader, is leading an effort by 18 House members to attach an online poker provision to the state budget.
Like similar proposals in Massachusetts and across the country, the amendment seeks to take advantage of the landmark 2011 U.S. Justice Department memorandum that allows states to legalize some forms of online gambling within their borders.
The proposal would auction off three online poker licenses at $10m apiece, with a whopping $25m penalty for bidders who fail to follow through on their plans.
But the House Republican proposal also appears intent on tilting the playing field of potential competitors.
Bidders must either be located in Massachusetts or have an affiliate based in the state. In addition, would-be online poker operators must plan to have their “computers, servers, monitoring rooms, hubs and storage systems … all located in the commonwealth,” according to the proposed legislation.
Another provision effectively screens out many foreign-based operators, weeding out companies such as PokerStars that accepted bets from U.S. customers after the Bush administration’s controversial Unlawful Internet Gambling Enforcement Act (UIGEA) went into effect on October 13, 2006.
Not only that, but they also would be prohibited from licensing their brands or selling operating software in Massachusetts.
Several major overseas operators were caught up in the federal crackdown that followed UIGEA and would face problems down the line bidding in Massachusetts under the House Republican proposal, Hichar said.
“They are taking a pretty hard stance,” he said.
There is also clearly a desire to give homegrown operators an edge as well.
Rep. Daniel Winslow, a Republican now running for one of the state’s two U.S. Senate seats, had previously championed online gaming proposals in the House.
In a previous interview with GamblingCompliance, Winslow made clear he saw online gaming as a potential boon to the state’s thriving high-tech industry when he pushed online poker legislation last year.
“I have had some expression of interest from high-tech companies about this, but the problem is that it’s all academic at this point,” Winslow said back in April 2012. “It is absolutely in Massachusetts’ high-tech sweet spot.”
Meanwhile, two other online bills are also making their way through the Massachusetts State House this spring.
Republican Sen. Bruce Tarr has filed legislation that would give the state’s three planned casinos, now in the licensing stage, the starring role in the launch of online gambling in Massachusetts.
Instead of being bid for, the licenses would be awarded to the state’s casino developers.
By contrast, Sen. Jennifer Flanagan, a Democrat, wants to have the Massachusetts State Lottery reap the benefits of online gambling.
Her Senate bill would give a green light to the Massachusetts lottery to offer an undefined range of online games to players, who could wager on their personal computers using credit cards.
Of the three proposals, Flanagan’s may stand the best shot at passing, with the state lottery a heavyweight in Massachusetts politics.
Flanagan served on an online task force assembled by state treasurer Steve Grossman, who oversees the lottery.
Even so, Massachusetts Republicans were the first to push online poker in Massachusetts, with Winslow able to successfully negotiate with the much larger, Democratic majority.
Jones, the House Republican leader, now appears to be taking over that role.
Still, the proposed amendment has a serious political flaw, failing to even mention the state lottery, according to Hichar.
“To have legislation that doesn’t acknowledge the most successful lottery in the country seems to be something that won’t go very far,” he said.
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