Source: https://practiceguides.chambers.com/practice-guides/gaming-law-2019/massachusetts
Timestamp: 2019-12-10 04:26:03
Document Index: 664109044

Matched Legal Cases: ['§ 135', '§ 2', '§ 23', '§ 7', '§ 1', '§ 1', '§ 7', '§ 2', '§ 5', '§ 7', '§ 7', '§ 1', '§ 4', '§ 15', '§ 7', '§ 38', '§ 8', '§ 2', '§ 5', '§ 5', '§ 7']

Gaming Law 2019 - Massachusetts | Global Practice Guides | Chambers and Partners
Greenberg Traurig, LLP has a global gaming group that focuses not only on casino operations, but also addresses lotteries, pari-mutuel wagering, charitable gaming, tribal gaming and internet gaming, where permitted by law. The approximately 50 members of the practice group have varied backgrounds and are located throughout the firm’s 41 offices, allowing them to assist gaming clients in this highly regulated industry across multiple US jurisdictions and internationally. The practice’s focus includes the representation of casinos, bricks-and-mortar and online gaming operators, owners and executives, gaming manufacturers and suppliers, private equity firms, and investment banks on gaming-related matters. Greenberg Traurig, LLP (GT) has approximately 2,100 attorneys in 41 locations in the USA, Latin America, Europe, Asia and the Middle East. GT has been recognised for its philanthropic giving, diversity and innovation. Twitter: @GT_Law.
Approximately a dozen bills pertaining to sports betting are pending in the Massachusetts legislature, including one proposed by Massachusetts Governor Charlie Baker (H. 68, or the “Baker Bill”). Three bills are pending that would allow the Massachusetts Lottery to offer its games online. As of this writing, none of the bills has advanced to a full vote of either legislative chamber.
Massachusetts Category 1 and 2 licensees submitted a letter to the legislature urging that land-based sports betting be reserved to them, and that mobile sports wagering be reserved to them and a limited number of DFS operators with proven sports wagering experience. They also urged that wagering be permitted on professional, collegiate and amateur athletics, other than high school sports. Further, they recommended that sign-ups be permitted online, without a requirement that applicants appear in person.
Plainridge Park’s parent company wrote separately that mobile sports betting operators should be required to partner with a Category 1 or 2 licensee. A prominent fantasy sports operator countered that no such partnering should be required and that mobile sports betting operators should be allowed to operate independently of bricks and mortar casinos.
Except in respect of certain licensed charitable gaming and ADW on pari-mutuel wagering events, online gambling is unlawful in Massachusetts. More specifically:
online casino gaming, including online slot-style games, and online sports betting offered by commercial operators is not lawful in Massachusetts;
the Massachusetts Lottery is not authorised to sell its products online, except for season tickets; and
online poker, where consideration is risked for money, property or any representation of value, falls within Massachusetts’s general ban on illegal gaming (see 2.2 Land-Based for detailed analysis).
Both traditional season-long fantasy sports contests and DFS contests are expressly permitted in Massachusetts. A law enacted in 2016 authorised the offering of “fantasy contests” from 1 August 2016 to 31 July 2018 (Session Law 2016, ch. 219, § 135, referred to herein as the “2016 DFS Law”). A 2018 law made the temporary authorisation permanent by removing the sunset provision. The 2016 DFS Law made mandatory compliance with fantasy sports regulations promulgated by the Attorney General (codified at 940 CMR 34.00; hereinafter, the “MA DFS Regulations”).
The MA DFS Regulations define DFS broadly as “any contest in which the offer or award of a [p]rize is connected to the statistical performance or finishing position of one or more persons participating in an underlying amateur or professional competition, but that does not include offering or awarding a [p]rize to the winner or participants in the underlying competition itself”. The MA DFS Regulations state that they shall not be interpreted as authorising a wager, bet, or gambling activity that is prohibited by law. Thus, by categorising DFS as not a wager, bet, or gambling activity prohibited by law, the Attorney General implicitly determined that DFS is predominately a game of skill, and thus not prohibited by Massachusetts law.
The MA DFS Regulations prohibit play by persons under the age of 21, and prohibit contests based on amateur, college, high school or student sporting events. DFS operators also must (i) not extend credit to players; (ii) implement certain responsible gaming measures, including self-exclusion and third-party exclusion options; (iii) adhere to specified advertising restrictions; (iv) comply with prohibitions on insider participation; and (v) provide beginner contests and limitations on experienced players participating against beginner players.
Online social gaming is not prohibited or regulated in Massachusetts. Social games that are free-to-play (including games where players can purchase game features/goods that cannot be redeemed for cash or a “real world” prize) are permitted in Massachusetts. In July 2017, a special commission of the Massachusetts legislature (the “Special Commission”) published the Report of the Special Commission to conduct a comprehensive study relative to the regulation of online gaming, fantasy sports gaming and daily fantasy sports (the “2017 Report”). The Special Commission examined social gaming and noted that social games that are free-to-play and do not involve the expectation of a financial return likely would not be considered illegal gaming in Massachusetts, but a social game may be illegal if any virtual money a player earns from gameplay can be sold or redeemed for a prize of value.
Regarding online charitable gaming, Massachusetts has no law that expressly allows raffle ticket sales over the internet, but such online sales are not expressly prohibited. The statutes and related regulations suggest that any computer equipment and software involved in determining the winning raffle numbers must be located in the permitting Massachusetts city or town. Charitable gaming is permitted in Massachusetts when conducted by one of a group of non-profit organisations, including veterans' groups, churches or religious organisations, educational or charitable organisations and civic or service organisations, no part of the net earnings of which inures to the benefit of any member or shareholder. Permitted games include bingo (also referred to as “beano”), raffles and bazaars (more commonly referred to as “casino nights”, but including poker tournaments where there is no betting on individual hands or prizes based on the number of participants or fees collected). Additional regulations apply to raffles in which the total prize value exceeds USD10,000 or the ticket price is more than USD10.
Betting on sports events is currently illegal in Massachusetts, although several bills are pending that, if enacted, would legalise betting on certain sports events.
Pari-mutuel wagering on live horse racing held in the Commonwealth, and betting on simulcast events of live harness horse racing conducted in Massachusetts or elsewhere, is permitted at MGC-licensed racetracks. The MGC is empowered to prescribe rules, regulations and conditions under which horse racing meetings and simulcasts may be conducted.
The operation of up to three land-based casino destination resorts and one slots facility is authorised. See 1.1 Current Outlook and 1.2 Recent Changes, and 3.1 Key Legislation and 4 Licensing and Regulatory Framework.
Poker is among the table games that may be conducted by a licensed destination resort casino. “Table game” is defined in M.G.L. ch. 23K, § 2 as “a game, other than a slot machine, which is authorised by the [MGC] to be played in a gaming establishment.”
It is unclear whether charity poker tournaments are permitted. In June 2005, the Massachusetts Attorney General issued an “Advisory on Poker Tournaments” (the “2005 AG Advisory”) in which she opined that poker tournaments could be conducted by specified non-profit organisations, provided there was no betting on individual hands or competing for a prize based on the number of participants or the amount of proceeds collected.
It was implicit in the 2005 AG Advisory that poker is a game of chance, but the 2005 AG Advisory noted that “Massachusetts appellate courts have not been called upon to determine whether traditional forms of poker are considered games of chance rather than skill.” That remains the case as of this writing.
Since the 2005 AG Advisory was issued, the Commonwealth has elected a different Attorney General, and the 2005 AG Advisory is no longer accessible on the current Attorney General’s website. It is therefore of questionable validity.
Thus, it is unclear whether poker tournaments of any variety can be conducted, but if they are considered games in which chance predominates over skill, then they may only be conducted at licensed land-based casinos and by qualifying charitable organisations (and, in the latter case, subject to the applicable regulations governing charitable games).
Bingo is lawful only if conducted by qualifying non-profit organisations and in compliance with applicable regulations.
Gaming machines are unlawful in Massachusetts unless they are offered by an MGC-licensed casino or slots facility.
Lotteries are unlawful except for charitable raffles and the Massachusetts Lottery overseen by the Massachusetts Lottery Commission (the “Lottery Commission”). The Massachusetts Lottery operates traditional draw games, such as PowerBall and Mega Millions, instant ticket (or “scratch off”) games, and Keno.
Qualifying non-profit organisations may conduct raffles and bazaars. Such activities are subject to permitting from the clerk of the city or town in which the raffle will be drawn or the bazaar will be held. Proceeds of the raffle or bazaar may be used only for educational, charitable, religious, fraternal or civic purposes, or for veterans' benefits. Qualifying non-profit organisations wishing to conduct bingo may only do so in towns that have voted to allow the game to be licensed, which licence must be granted by the Lottery Commission.
The Expanded Gaming Act established the MGC and authorised the licensure of one slots facility and up to three destination resort casinos, one each in the West, East and Southeast regions of the Commonwealth.
The 2016 DFS Law authorised fantasy sports contests for cash pursuant to and in accordance with the MA DFS Regulations. The 2016 DFS Law also created the Special Commission, which issued the 2017 Report.
The Massachusetts Lottery is governed by laws at M.G.L. ch. 10, §§ 23-35. Charitable games are governed by laws at M.G.L. ch. 271, § 7A. The law provides that such activities are subject to local permitting and returns must be filed with the Lottery Commission.
Pari-mutuel wagering is allowed on live horse races at racetracks licensed by the MGC pursuant to M.G.L. ch. 128A, § 1 et seq. Licensed racetracks may also conduct pari-mutuel wagering on live simulcasts of horse, harness and dog racing pursuant to M.G.L. ch. 128C, § 1 et seq.
Massachusetts general definitions of statutory terms (at M.G.L. ch. 4, § 7) define “illegal gaming” as "a banking or percentage game played with cards, dice, tiles or dominoes, or an electronic, electrical or mechanical device or machine for money, property, checks, credit or any representative of value, but excluding: (i) [lottery games conducted by the State Lottery]; (ii) [games conducted pursuant to the Expanded Gaming Act]; (iii) pari-mutuel wagering on horse races; and (iv) [bingo and other charitable gaming conducted by qualifying organizations pursuant to M.G.L. ch. 271]."
In addition, “gaming” is made unlawful under Massachusetts criminal laws at M.G.L. ch. 271, § 2 and is defined as “play[ing] at cards, dice or any other game for money or other property, or bet[ting] on the sides or hands of those playing, except as permitted under chapter 23K [MGC-licensed casino gaming].”
Cyber cafes are also illegal in Massachusetts (M.G.L. ch. 271, § 5B); specifically, operating an “electronic machine or device to: (1) conduct a sweepstakes through the use of an entertaining display, including the entry process or the reveal of a prize; or (2) promote a sweepstakes that is conducted through the use of an entertaining display, including the entry process or the reveal of a prize.” An “electronic machine or device” is, generally, a device that is owned, leased or otherwise possessed by a sweepstakes sponsor or promoter that is intended to be used by a sweepstakes entrant, and that is capable of displaying information on a screen or other mechanism.
Operating a “lottery” is also unlawful, unless conducted by the Massachusetts Lottery or by a qualifying non-profit entity pursuant to the charitable gaming statute (in which case it is referred to as a “raffle”). The elements of a “lottery” are “(1) the payment of a price for (2) the possibility of winning a prize, depending upon (3) hazard or chance” (Commonwealth v Stewart-Johnson, 941 N.E.2d 656, 658 (Mass. App. 2011).)
Massachusetts follows the “predominance” or “dominant factor” test, meaning that “a game is... considered a lottery if the element of chance predominates” even if some skill is involved, “and not a lottery if the element of skill predominates.” Id.
In the Expanded Gaming Act, codified at M.G.L. ch. 23K, “gambling” is defined as “the playing of a game by a patron of a gaming establishment.” “Game” is defined as “a banking or percentage game played with cards, dice, tiles, dominoes, or an electronic, electrical or mechanical device or machine played for money, property, checks, credit or any other representative of value which has been approved by the [MGC]”. The term "gambling" has been construed as synonymous with “gaming” by the Supreme Judicial Court of Massachusetts (Com. v Theatre Advertising Co., 286 Mass. 405 (1934)).
There is no official definition of online gambling in Massachusetts. In its 2017 Report, the Special Commission recommended that Massachusetts adopt a comprehensive definition of “online gaming” that would include items like fantasy contests, DFS, online versions of traditional casino games and other online forms of gaming. The 2017 Report specifically recommended that online gaming be defined as “an activity, offered through the internet or through other communications technology, that allows a person utilizing money or currency of any kind, to transmit electronic information to (1) risk something of value (2) on the outcome of an event (3) with an opportunity to win a prize.”
Key gambling-related offences in Massachusetts include the following:
setting up an unlawful lottery (M.G.L. ch. 271, § 7);
operating a gaming house, except as permitted under the Expanded Gaming Act (M.G.L. ch. 271, § 7);
operating a sportsbook, buying or selling pools upon the result of a trial or contest of skill, speed or endurance of man, beast, bird or machine, or upon the result of a game, competition, political nomination, appointment or election, unless pursuant to M.G.L. ch. 23K;
manufacture, transportation, sale and/or possession of a gambling device, unless it is for use in gambling pursuant to the Expanded Gaming Act; and
allowing persons under the age of 21 to play at a licensed casino or slots facility.
In addition, anti-money laundering (AML) provisions are part of the Expanded Gaming Act (M.G.L. ch. 267A, § 1 et seq). AML is discussed in 8 Anti-money Laundering.
Setting up an unlawful lottery is punished by a fine of up to USD3,000 or by imprisonment for up to three years.
Operating a gaming house is punished by a fine of not more than USD50 or by imprisonment for up to three months.
Operating a sportsbook, buying or selling pools, as described above, is punished by a fine of up to USD3,000 or by imprisonment for up to three years.
The penalty for manufacturing, transporting, selling and/or possessing a gambling device is forfeiture of said device to the Commonwealth.
The penalty for allowing persons under the age of 21 to play at a licensed casino or slots facility is a fine of up to USD10,000 or imprisonment for up to one year, or both.
As noted above, there are approximately a dozen bills pending that would legalise sports betting in the Commonwealth. The Governor’s sports betting bill – the “Baker Bill” – would authorise the MGC to grant “bricks-and-mortar” sports-wagering licences to the destination resort casinos and slots facility in Massachusetts, allowing them to conduct in-person sports wagering at the facility, as well as online sports wagering. Only persons 21 and over would be able to wager. Wagering on amateur sports, including collegiate sports, and eSports would be prohibited. Unlike some of the other bills, the Baker Bill would also allow the operation of online sports betting by certain fantasy sports operators whether or not they are partnered with a bricks-and-mortar gaming facility.
The Baker Bill would establish tax rates for sports wagering and DFS contests in the amount of 10% on in-person sports wagering and 12.5% for online sports wagering and DFS contests.
As at the date of publication, the various bills have been collectively referred to the Joint Committee on Economic Development and Emerging Technologies for deliberation. Although the Joint Committee held hearings on the bills in May and July 2019, none of the bills are expected to pass in calendar year 2019. New bills are expected to be introduced and considered in 2020.
There are also a number of bills pending that would authorise the Massachusetts Lottery to offer its games online. These include a bill submitted by the Department of State Treasurer (H. 37), which oversees the Massachusetts Lottery. These bills were the subject of a hearing before the Joint Committee on Consumer Protection and Professional Licensure in July 2019.
Each type of gaming permitted in Massachusetts has a corresponding regulatory and governance structure. Regulated gaming in Massachusetts includes casinos, poker, gaming machines, horse racing, fantasy sports, lottery games, sweepstakes and charitable gaming.
The MGC is responsible for general oversight of casino gaming (including slot machine games and table games) and pari-mutuel wagering. The MGC’s responsibilities include overseeing the licensing process and making licensing decisions; collecting fees and taxes; promulgation of regulations for gaming administration; monitoring any federal activity regarding internet gaming; acting as trustees for any gaming-related trust funds; proscribing minimum controls and standards for the industry; and making determinations regarding affected live entertainment venues (M.G.L. ch. 23K, § 4). The Racing Division of the MGC serves as the key regulatory authority governing horse racing.
The Lottery Commission conducts the state-run lottery and possesses licensing and supervisory authority over sales agents’ sales of tickets and lottery products. The Charitable Gaming Division of the Lottery Commission regulates and licenses charitable “beano” (bingo) games. However, the Lottery Commission acts strictly as a tax collector for raffles and bazaars. Raffles and bazaars are governed by laws and regulations promulgated by the Attorney General, and are also regulated at the local level by the cities and towns from which permits are required.
The Office of the Attorney General serves as the key regulatory authority governing fantasy sports. The Division of Gaming Enforcement of the Office of the Attorney General enforces criminal violations of casino gambling laws, such as investigating and prosecuting allegations of criminal activity related to or affecting the operation of gaming establishments or games and receiving and taking appropriate action on referrals for criminal prosecution. The Massachusetts State Police Gaming Enforcement Unit also investigates criminal violations of provisions or any other law pertaining to gaming in Massachusetts.
In Massachusetts, the general regulatory approach to gambling in Massachusetts is that gambling not expressly authorised is prohibited.
A Category 1 licence permits the licensee to operate a destination resort casino with table games and slot machines. The minimum capital investment for a Category 1 licence is USD500,000,000 on a hotel, gaming area and any amenities. A Category 2 licence permits the licensee to operate up to 1,250 slot machines. The minimum capital investment for a Category 2 licence is USD125,000,000 on a gaming area and other amenities. Such investments must be made within two years of receipt of the licence. Vendors conducting business with, and certain employees of, a licensed casino or slots facility must be licensed or registered by the MGC.
Permits to operate a charitable raffle or bazaar can only be issued by the clerk of the city or town in which the raffle will be drawn or the bazaar will be held, and only qualifying non-profit organisations are eligible to receive such permits.
The Lottery Commission is responsible for issuing licences to conduct bingo. Bingo may only be conducted in a town whose voters have voted to allow bingo.
Besides charitable raffles, the only lottery authorised to operate in Massachusetts is the Massachusetts State Lottery. Prior to selling lottery tickets, retailers must file an application with the Lottery Commission to become a licensed agent.
Licences for live horse racing are required in order to hold “racing meetings” at horse race tracks (a “Horse Race Meeting Licence”). Others required to be licensed include horse owners, trainers, drivers, authorised agents, stable employees (eg, groomers or stable foremen), veterinarians, blacksmiths, vendors and racing officials.
Currently, no licensing applies to the conduct of fantasy sports contests in Massachusetts.
Pursuant to the Expanded Gaming Act, the MGC can issue up to three Category 1 licences, one per each “region” of the Commonwealth (East, West and Southeast), and one Category 2 licence anywhere in Massachusetts.
Licences to conduct bingo are only available in towns that have voted to allow bingo. There are no restrictions on the availability of charitable gaming licences or permits to those non-profit organisations that qualify for them provided that no such organisation may conduct more than three bazaars in any single calendar year or more than one bazaar in any single day.
Licences for vendors and employees are readily available subject to satisfaction of all requirements.
With respect to casino licensing, Category 1 licences are valid for an initial period of 15 years and Category 2 licences are valid for a period of five years.
A permit to conduct a raffle or bazaar is valid for one year.
Licensed bingo operators must renew their licence on an annual basis.
The duration of licences available to employees is dependent upon the type of employment, as some positions are exempt from licensing requirements. Gaming employees that are required to obtain a licence must renew an initial licence after five years and then every three years after that.
The duration of licences available to vendors is dependent upon their classification as a non-gaming vendor, a gaming vendor-secondary or gaming vendor-primary. Non-gaming vendor licences are valid for five years, while gaming vendor-primary and gaming vendor-secondary licences are valid for three years.
Horse Race Meeting Licences must be renewed annually. Other licensees may apply for three-year licences.
Applicants seeking to obtain a Category 1 or Category 2 licence must first meet all 16 criteria listed in M.G.L. ch. 23K, § 15.
Organisations permitted to apply for a permit to conduct a raffle or bazaar in Massachusetts under M.G.L. ch. 271, § 7A include (i) a veterans' organisation chartered by Congress; (ii) a church or religious organisation; (iii) a fraternal or fraternal benefit society; (iv) an educational or charitable organisation; (v) a civic or service club or organisation; and (vi) clubs or organisations organised and operated exclusively for pleasure, recreation and other non-profit purposes.
Applications to carry out bingo are restricted to the organisations identified in M.G.L. ch. 10 § 38, including (i) any fraternal organisation having chapters or branches in at least one other New England state; (ii) any corporation organised under M.G.L. ch. 180; (iii) any religious organisation affiliated with an established church within Massachusetts; (iv) any veterans’ organisation incorporated or chartered by Congress; (v) any volunteer, non-profit fire company; (vi) the Boston Firemen’s Relief Fund; (vii) any volunteer, non-profit organisation furnishing a public ambulance service; (viii) any voluntary association for promotion of interests of intellectually disabled children; and (ix) any non-profit athletic associations.
Generally, employees of Massachusetts gaming establishments who are involved in the gaming operations or responsible for the oversight thereof, as well as management personnel, are required to be licensed in order to ensure that they meet the statutory requirements of good character, honesty and integrity. Employees that are required to be licensed must complete a written application and undergo a background investigation.
Horse Race Meeting Licence applicants must provide basic information about the entity seeking such licence, including its name, principal office, entity form, its capitalisation, information about its beneficial owners and financials. Applicants must also answer questions related to their suitability. Applicants must also provide information regarding the premises, including its ownership status, local permits, taxes and insurance. Other horse racing-related licence applications require significantly less information and are generally limited to providing personal information about the applicant and suitability disclosures (eg, applicable licences, criminal history and previous employers).
For Category 1 and Category 2 licences, the MGC first issues a request for application, which must be advertised in a newspaper of general circulation and on the official internet website of the MGC (M.G.L. ch. 23K, § 8). The deadline to submit an application is typically provided by the MGC in the posted request. From the time of the request through a decision, the process takes approximately two years.
An organisation wishing to conduct a raffle or bazaar must have been organised and actively functioning as a non-profit organisation in Massachusetts for a minimum of two years prior to applying for a permit to conduct a raffle or bazaar.
An organisation wishing to conduct bingo must have been in existence for at least five years before an application is filed with the town where the game is sought to be held.
Applications for 2020 Horse Race Meeting Licences were due by 1 October 2019, at which point they are subject to review by the MGC and the public, including through public input hearings in proposed host communities at future dates to be determined. There is no specific timeline provided for applicants of other horse racing-related licences.
For Category 1, each applicant for a gaming licence must pay a non-refundable application fee of USD400,000 (205 CMR 114.02). Each licensee must pay an initial licensing fee of USD85,000,000.
For Category 2, each applicant for a gaming licence must pay a non-refundable application fee of USD400,000 (205 CMR 114.02). The licensee must pay an initial licensing fee of USD25,000,000 (205 CMR 121.01).
The application fee for a licence to carry out bingo is USD50, which must be renewed annually.
The application fee for a non-gaming vendor licence is USD100. The application fee for a gaming vendor-secondary licence is USD5,000. The application fee for a gaming vendor-primary licence is USD15,000.
Horse Race Meeting Licence applicants must attach a certified cheque or bank draft payable to the MGC in an amount equal to the greater of (i) 0.0013 times the average daily handle for the racing meeting (with such applicant) that occurred in the prior year or (ii) USD300. The applicant must also provide the MGC with a surety bond issued by a surety qualified to do business in Massachusetts and approved by the MGC in an amount equal to USD125,000. Other application fees range from USD5 (eg, groomers) to USD90 (eg, an owner-trainer-driver licence) per year, depending on the specific licence.
Category 1 and Category 2 licensees must pay an annual licence fee of USD600 for each slot machine approved by the MGC for operation.
Regarding ongoing annual fees with respect to conducting horse racing meetings, see 4.8 Application Fees.
Premises licensing is regulated under the Expanded Gaming Act, discussed above.
On 1 August 2019, the Massachusetts legislature renewed live harness horse racing and simulcasting for another year.
Not applicable given that online gambling currently is illegal under Massachusetts law.
The Special Commission’s recommendations in its 2017 Report include adopting a broad definition of “online gaming.” In addition, the Special Commission recommended best practices for legal gaming ages, geolocation, suitability and registration/licensure, responsible gaming/preventing compulsive gaming, fairness in game play, truth in advertising, controlling for apparent conflicts of interest, data and network security, and fund processing, segregation and protection. The Special Commission also recommended that the MGC serve as the appropriate body to administer day-to-day governing of online gaming, but that the legislature should retain the authority to decide whether and to what extent online gaming should be legalised. In that regard, while the Special Commission determined that the legalisation of additional online gaming is inevitable, the Special Commission recommended that the legislature should not legalise more expansive online gaming at that time, but rather, should re-evaluate following the opening of the Encore Boston Harbor and MGM Springfield Casino and other developments in other jurisdictions. Finally, the Special Commission recommended that the Commonwealth consider investing in the eSports industry.
Currently, there are no any technical measures (including ISP blocking and payment blocking) established by law designed to protect consumers in Massachusetts from unlicensed operators.
The Commonwealth of Massachusetts has adopted certain player protections and responsible gaming rules and regulations (such as the MA DFS Regulations), including age and other operating restrictions, advertising restrictions (see 9 Advertising), and problem gaming and/or problem gambling programmes and initiatives, including self-exclusion programmes and resources available to players through the Massachusetts Council on Compulsive Gambling, a non-profit organisation.
The Commonwealth of Massachusetts maintains different minimum age requirements depending on the underlying activity. In order to purchase a lottery ticket, place pari-mutuel wagers on horse races, or be on the premises of an applicable gaming licensee where charitable gaming is being played, an individual must be at least 18 years old. In order to wager or be in a gaming area at a Category 1 or 2 gaming facility or play DFS, an individual must be at least 21 years old.
There are no mandatory wager, time, or deposit limits applicable to gambling activities. Players can voluntarily choose to set time limits, loss limits and/or win limits. Casinos may operate 24 hours a day if their operating hours have been registered with the MGC.
The MA DFS Regulations, however, provide certain play restrictions, including deposit limits. For example, players cannot deposit more than USD1,000 in any calendar month, subject to certain temporary or permanent exceptions at the request of a DFS player and subject to the DFS operator’s analysis of the player’s income or asset information, which must be reviewed annually, to determine the player’s financial ability to afford losses at the proposed new deposit limit level. The MA DFS Regulations also protect beginner players from experienced players by requiring beginners-only contests and contests that exclude highly experienced players. Highly experienced players must also have a symbol attached to their username that indicates their skill and experience level. Further, the MA DFS Regulations place limits on the number of entries each individual may submit into a contest, depending on the number of maximum entries permitted among all players for such contest. Players also cannot use scripts to facilitate submitting entries into multiple contests or multiple entries into a single contest. Finally, DFS operator employees, officers, directors and contractors cannot participate in public contests nor may any athletes, agents, team employees, referees, or league officials associated with any competition that is the subject of the DFS contest participate in any such contest.
The MGC is required to establish a list of self-excluded persons. A person may self-exclude by filing a statement with the MGC acknowledging that such person is a “problem gambler” and agreeing that during any period of voluntary exclusion, such person may not collect any winnings or recover any losses resulting from any gaming activity at a gaming establishment. A person’s immediate family member or guardian may also petition a district court in writing for an order of exclusion from gaming establishments.
The MGC has further issued regulations governing voluntary self-exclusion set forth at 205 CMR 133.00. Category 1 and 2 gaming licensees must submit a written policy relating to compliance with the self-exclusion programme, which is subject to MGC approval. They must also train their employees on the policy. A Category 1 or 2 gaming licensee must affirmatively notify the MGC within ten days if an employee or agent fails to exclude or eject any self-excluded persons. If the gaming establishment knowingly or recklessly fails to do so, the MGC may revoke, limit, condition, suspend or fine a gaming licensee.
The MA DFS Regulations also provide DFS players the opportunity to self-exclude and DFS operators must honour any such requests, including regarding participation in any specific contests, setting entry limits, limiting play to contests with contest fees below an established limit, or to set self-imposed deposit limits.
The MGC has adopted the “Responsible Gaming Framework”, which is designed to “create a sustainable, socially responsible, and accountable approach to gaming” by providing and promoting best gaming practices among licensees designed to minimise harm to individuals and communities from gambling. The Responsible Gaming Framework provides that each casino and slot parlour licensee must develop a Responsible Gaming Policy and Responsible Gaming Plan, which must include programmes and practices guided by the most current “Informed Decision Making Framework” developed and published by the Responsible Gaming Council’s Centre for Advancement of Best Practices.
Massachusetts gaming operations, including commercial casino operators, are subject to statutes both at the federal and state level designed to prevent money laundering and other financial crimes.
Under federal law, the Currency and Foreign Transactions Reporting Act of 1970 (also known as the “Bank Secrecy Act”, or the BSA) serves as the primary anti-money laundering (AML) legislation applicable to the gaming industry. It requires “financial institutions” (which includes casinos, card clubs, gaming clubs, card rooms, gaming rooms and similar gaming establishments with annual gaming revenue in excess of USD1,000,000) to keep certain records of cash purchases, file reports of cash transactions and report suspicious activity of money laundering or other financial crimes. Other relevant federal statutes addressing money laundering include the Money Laundering Control Act of 1986 (making money laundering a federal crime), the Anti-Drug Abuse Act of 1988, the Annunzio-Wylie Anti-Money Laundering Act of 1992, the Money Laundering Suppression Act of 1994, the Money Laundering and Financial Crimes Strategy Act of 1998, the USA PATRIOT Act of 2001, and the Intelligence Reform and Terrorism Prevention Act of 2004, which collectively have expanded compliance, registration and reporting requirements for financial institutions as well as law enforcement’s ability to prosecute financial crimes committed thereby.
From an enforcement perspective, the BSA allows the Secretary of the US Treasury to delegate its duties and powers thereunder to appropriate supervising agencies. In 2001, the Financial Crimes Enforcement Network (FinCEN) was granted broad authority to take all necessary and appropriate actions to implement and administer the provisions of the BSA, including the promulgation and amendment of regulations and the assessment of penalties. Since 2003, FinCEN has published guidance relating to the gaming industry, including best practices for record-keeping, establishing sufficient compliance programmes, conducting customer due diligence, reporting suspicious activity and sharing suspicious activity reports with other casinos.
In addition, the Internal Revenue Service (IRS) also regulates money laundering by (i) conducting BSA examinations, ensuring appropriate BSA programmes are established and implemented; (ii) receiving financial institutions’ and casinos’ currency transaction reports; and (iii) providing training about money laundering procedures. In 2016, the IRS issued final regulations updating existing rules regarding the filing of information returns to report winnings from bingo, keno and slot machine play, and adding new rules for electronically tracked slot machine play and payee identification.
The BSA provides for both civil and criminal penalties. Penalties for civil offences range from as low as USD500 for negligence, the greater of USD100,000 or 50% of the amount of the transaction for wilful violations, and up to USD1,000,000 on certain international counter money laundering violations. Criminal penalties can include (i) for single wilful offences, up to five years in prison and/or a maximum fine of USD250,000; (ii) for wilful offences in conjunction with a violation of another US law or as a part of any illegal activity involving more than USD100,000 in a 12-month period, up to ten years in prison and/or a maximum fine of USD500,000; and (iii) a fine of up to USD1,000,000 for certain international counter money laundering violations. Notably, each day that a financial institution fails to provide for appropriate procedures to ensure AML compliance incurs an additional violation of the BSA. All property involved in any offence is also subject to forfeiture.
At the state level, M.G.L. ch. 267A and M.G.L. ch. 271A provide for additional criminal penalties for operators facilitating criminal activity in the Commonwealth. Under M.G.L. ch. 267A, first-time offenders face (i) up to six years in state prison and/or (ii) a maximum fine of the greater of (a) USD250,000 or (b) twice the value of the property transacted. Second-time offenders (and each subsequent offence thereafter) face (i) a minimum of two years and a maximum of eight years in state prison and/or (ii) a maximum fine of the greater of (a) USD500,000 or (b) three times the value of the property transacted. M.G.L. ch. 271A § 2, meanwhile, prohibits persons who are guilty of “criminal enterprise activity” from using that activity to obtain any interest or involvement in licensed casino operations. Those found guilty of criminal enterprise activity face (i) up to 15 years in state prison and/or (ii) a maximum fine of up to USD25,000.
As discussed in 8.1 AML Legislation, the BSA and subsequent federal statutes provide AML compliance requirements; Massachusetts does not maintain a separate regulatory agency akin to FinCEN or the IRS to further regulate money laundering. Among the BSA requirements for casinos and other gaming entities that are “financial institutions” are (i) currency transaction reporting (CTR); (ii) suspicious activity reporting (SAR); (iii) instituting and maintaining an AML compliance programme, including “know your customer” due diligence processes; and (iv) record-keeping.
Transactions that require CTR from casinos include, in each case exceeding USD10,000, purchases or redemptions of chips; advances and payments of any form of credit; bets and payments thereof; wire transfers; purchasing and cashing cheques; exchanges of currency; bills inserted into electronic gaming devices; travel and complimentary expenses and gaming incentives; and payments of tournaments, contests and other promotions. Casinos must verify and record the name and address from a passport or other means of acceptable identification documentation, and record any account number, social security number or taxpayer identification number.
Transactions that require SARs from casinos include those exceeding USD5,000 in which a casino knows, suspects, or has reason to suspect a possible violation of law or regulation. The USA Patriot Act further authorises the sharing of information relating to money laundering among financial institutions.
Financial institutions are also tasked with instituting effective AML compliance programmes.
Casinos must also establish “know your customer” (KYC) due diligence processes to determine the source of any funds, reasonably designed to enable a casino to detect and report, on an ongoing basis, any known or suspected money laundering activity conducted through or involving any correspondent account of such casino.
Finally, financial institutions must keep substantial records, including the name, permanent address and social security number of the individual or individuals having a financial interest in a deposit, account, or line of credit. In addition, casinos must keep exhaustive records of customer transactions, as specified in the law.
The Attorney General is generally tasked with regulatory oversight of advertising practices within the Commonwealth, including protecting consumers against unfair and deceptive advertising in conducting any trade or commerce, pursuant to M.G.L. ch. 93A (the “Massachusetts Consumer Protection Law”). DFS operators must also comply with Attorney General Regulations 940 CMR 3.00 (General) and 940 CMR 6.00 (Retail Advertising) to the extent that they apply to the DFS business model (the “AG General Advertising Regulations”).
In addition, the MGC has promulgated advertising regulations for gaming licensees set forth in 205 CMR 150.00, et seq (the “MGC Consumer Protection Regulations”).
“Advertising” is defined in 940 CMR 3.01 as “any commercial message in any newspaper, magazine, leaflet, flyer, or catalog, on radio, television, public address system, or made in person, in direct mail literature or other printed material, or any interior or exterior sign or display, in any window display, in any point of transaction literature or price tag which is delivered or made available to a customer or prospective customer in any manner whatsoever.” 940 CMR 6.01 provides a similar definition of “any oral, written, graphic, or pictorial representation made by a seller in the course of the solicitation of retail business or which encourages a person to purchase a retail product,” which includes “representation[s] made in a newspaper, magazine, on or via the Internet or other publication or on radio or television or contained in any notice, handbill, sign, billboard, banner, poster, display, circular, pamphlet, catalog, or letter” and includes “any representation disseminated within Massachusetts if the advertisement is directed to consumers in Massachusetts, or accessible to Massachusetts consumers on or via the Internet.”
The Massachusetts Consumer Protection Law, the AG General Advertising Regulations, the Massachusetts DFS Regulations and the MGC Consumer Protection Regulations serve as the key regulatory provisions governing gaming-related advertising in the Commonwealth.
The AG General Advertising Regulations generally prohibit false, untrue, unfair, misleading, deceptive, fraudulent, or falsely disparaging advertising, including deceptive pricing, refund, return, guarantee and cancellation privileges or policies, deceptive promotional offers and referral schemes, deceptive advertising of “easy credit” schemes and false business schemes.
The MGC Consumer Protection Regulations prohibit gaming licensees from authorising or conducting marketing, advertising, and/or promotional communications or activity relative to gaming that specifically targets persons younger than 21 years old.
The MA DFS Regulations prohibit advertisements depicting persons under 21, students, schools or colleges, and school or college settings. Advertisements may not state or imply endorsements by persons under 21 (other than professional athletes who may be under 21), collegiate athletes, colleges, or college athletic associations. Advertisements must also include information concerning assistance available to problem gamers or direct consumers to a reputable source for such information. Representations concerning winnings must be accurate, not misleading, and capable of substantiation at the time the representation is made. DFS operators also may not directly market to self-excluded (or otherwise barred) players. Advertisement records must be kept for at least four years from the date of the last use of such advertisement.
Under the Massachusetts Consumer Protection Law, penalties for fraudulent or deceptive advertisements include injunctive relief, actual damages, up to treble damages (and not less than two times actual damages) if a court finds that the advertiser acted wilfully or knowingly, and prevailing party attorneys’ fees. The Massachusetts Consumer Protection Law also explicitly provides consumers the ability to bring class action suits.
In addition, violations of the Massachusetts Consumer Protection Law and/or the MGC Consumer Protection Regulations allow the MGC to discipline gaming licensees in accordance with 205 CMR 132.00, et seq, which may include the suspension, revocation, or other restriction or condition on the gaming licensee’s licence and/or the assessment of a civil administrative penalty.
A Category 1 or 2 licensee cannot transfer any direct or indirect interest in a gaming licence or establishment without prior approval of a majority of the MGC. Any proposed transferee must independently qualify for licensure.
A Category 1 or 2 licensee has a continuing duty to advise the MGC Investigations and Enforcement Bureau, within ten days, of any “significant financial event.” A significant financial event includes a merger, acquisition, consolidation, debt restructuring, material change in debt rating by major credit rating agencies, a legal entity change, a material ownership change, the assessment of a fine or penalty of USD250,000 or greater by the US Securities and Exchange Commission (SEC) or an international equivalent, restatement of previously issued financial statement(s), late filing of financial statement(s) with the SEC or an international equivalent, a bankruptcy petition, default of financial debt covenants, receivership, disposal of a material business segment or asset, or adverse action(s) taken by the IRS.
Each applicant for a Category 1 or 2 licence or existing licensee must immediately notify the MGC as soon as it becomes aware that it intends to enter into a transaction bearing any relation to its gaming establishment that may result in new persons being involved in the gaming establishment’s financing or of an investor holding 5% or more of the common stock of the licensee.
The MGC looks to significant financial events (as discussed in 10.1 Disclosure Requirements) and/or the acquisition of more than 5% of the publicly traded securities of the gaming licensee, its parent, holding or intermediary company to determine if a change of control has occurred in regard to a Category 1 licensee.
A passive investor may need to be approved or “qualified” by the MGC should that investor acquire more than 5% of the common stock of the gaming licensee, its parent, holding or intermediary company. Upon such acquisition, within 30 days after the filing of appropriate schedule with the SEC or upon the request of the MGC, the investor shall file a completed qualifier application with the MGC.
The MGC may waive this requirement, in its sole discretion, in the following circumstances: (i) for institutional investors that hold up to 15% of the stock of the gaming licensee or its parent, holding or intermediary or subsidiary company, if the stock was acquired for investment purposes only and the investor does not have any intention to influence or affect the operations of the gaming licensee or its parent, holding or intermediary or subsidiary company; or (ii) when an investor or person that acquires a debt instrument issued by a gaming licensee in a public or exempt private offering in the ordinary course of business and does not have any right or ability to control or influence the affairs of the gaming licensee.
The MGC has broad powers to enforce Massachusetts’ gaming laws and regulations. It has the power to (i) levy and collect assessments, fees and fines, and impose sanctions for violations; (ii) restrict, suspend or revoke licences; (iii) conduct adjudicatory proceedings; and (iv) refer violations to Massachusetts’ State Police and Attorney General for criminal prosecution.
The MGC’s Investigations and Enforcement Bureau (IEB) is the primary enforcement agent for regulatory violations. The IEB can issue cease and desist orders for violations of Massachusetts gaming laws and regulations, and can levy civil administrative penalties. The gaming enforcement unit of the Massachusetts State Police has jurisdiction over gaming and gambling-related criminal activity.
Sanctions and penalties are issued and enforced by the MGC. If a licensee were to continue gaming operations under a suspended or revoked licence, such could be a violation of Massachusetts’ criminal laws against illegal gaming. In addition, if a licensee fails to comply with a MGC sanction, the MGC and its IEB may refer such violation to the Massachusetts Superior Court for enforcement.
Civil administrative penalties issued by the MGC or its IEB may be referred to the Massachusetts Superior Court for enforcement. A person or organisation receiving a civil administrative penalty has the right to a hearing before an MGC hearing officer. An MGC hearing officer’s decision may be appealed to a full hearing in front of the MGC.
There are no recent developments related to social gaming in Massachusetts.
In its 2017 Report, the Special Commission recommended that Massachusetts consider promoting eSports as an economic development opportunity by encouraging the hosting of eSports tournaments in the Commonwealth and hosting of eSports teams.
Senate Bill 2273 authored by Democratic State Senator Eileen Donoghue, and filed on 17 January 2018, would explicitly exempt fantasy sports from the Commonwealth’s ban on illegal gambling. In addition, the bill would call for a 15% tax on gross revenue, require a USD100,000 registration fee for DFS operators and would give the MGC oversight of the industry. Violations by operators under the proposed statute are accompanied by a civil penalty of up to USD2,000 or up to USD10,000 for wilful violations.
In February 2016, the MGC posted a request for public comment regarding draft regulations pertaining to skill-based gaming on gaming devices in gaming establishments. The draft regulations would provide new definitions to distinguish among “games of chance”, “games of skill” and “hybrid games” involving a combination of skill and chance, and require disclosures, payment calculations and procedures for ensuring minimum technological requirements when a gaming establishment provides games of skill or hybrid games to customers.
There are no Massachusetts laws addressing the use of blockchain, distributed ledger technology or cryptocurrencies. However, a pending Senate Bill (S. 200) would form a special legislative commission to study the use of blockchain technologies for government record-keeping and study various issues relating to cryptocurrencies. The bill remains in committee.
Currently there are no bills pending that seek to reform gaming in Massachusetts.
Gambling winnings are taxed as state and federal income.
Category 1 licensees are required to pay a tax of 25% of their daily gross gaming revenue.
Category 2 licensees are required to pay a tax of 40% of their daily gross gaming revenues along with a daily assessment of 9% of its gross gaming revenue. The latter tax shall be credited to the Race Horse Development Fund.
In addition to these taxes, Category 1 and 2 licensees must pay an annual licence fee of USD600 for each slot machine approved by the MGC for use at a gaming establishment. The MGC will also assess an annual fee of not less than USD5,000,000, divided proportionally amongst the gaming licensees by the amount of gaming positions at each gaming establishment. The proceeds of this assessment are to fund public health programmes that address compulsive gambling and provide addiction services.
Currently the operation of fantasy sports contests is not taxed in Massachusetts.
M.G.L. ch. 128A, § 5 and M.G.L. ch. 128C, § 5 sets forth the applicable taxes pertaining to pari-mutuel wagering on live horse races and simulcasts thereof, which vary significantly (including the beneficiaries thereof) depending upon the type and form of bets placed.
The Charitable Gaming Division of the Lottery Commission collects a 5% bingo tax. Pursuant to M.G.L. ch. 271, § 7A, raffles and bazaars are also subject to a tax of 5% on the gross proceeds.
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