Gaming & Gambling Update – Week of February 12, 2024

Orrick, Herrington & Sutcliffe LLP

Welcome to Orrick’s new Gaming & Gambling Update! We aim to share a sampling of the latest legislative, regulatory and legal developments in the gaming and gambling market. Of course, if you have questions or would like further information, please feel free to contact any of us. We would be glad to help!

Recent Developments

Kansas Senate To Take Up Sports-Betting Advertising Ban

Kansas lawmakers have launched a new effort to curb the spread of gambling advertisements by proposing a ban on online advertising for sports betting in the state. Senate Bill 432 would authorize the executive director of the Kansas Lottery – which regulates sports-betting in the state – to prohibit all “advertisements published through internet websites, other online mediums or electronic device applications,” (KS SB 432). The bill would exempt  any prohibition on advertisements that are “published as part of content offered by an interactive sports wagering platform.”

The Kansas proposal reflects growing sentiment along similar lines elsewhere. At this year’s Super Bowl, the NFL confirmed that only three sports-betting ads would be shown during the broadcast, and as reported elsewhere in this Update, Ontario has adopted stringent new limitations.

Ohio Governor, NCAA Call for Prop Bet Restrictions

The governor of Ohio and the National Collegiate Athletic Administration are requesting that Ohio prohibit proposition betting on college sports due to concerns over gambling-related harassment of the players. This is the latest move in Ohio’s efforts to protect student-athletes from harassment, as a new law was adopted last year that stipulates the placement of anyone convicted of harassing a collegiate athlete for gambling reasons on the involuntary exclusion list by the Ohio Casino Control Commission. The Commission has acknowledged the request and said it has notified sports gaming operators to submit comments on the issue. 

Virginia Has Skill Game and a VGT Bills; Future Brighter For ‘Skill-Game’ Machines In Pennsylvania, Virginia

In response to the Virginia Supreme Court’s October reinstatement of a 2020 Virginia law that prohibits skill games, a new bill has been introduced to legalize the machines. SB 212 would “re-establish the Virginia Alcoholic Beverage Control Authority as the regulatory authority, limit the number of machines to five in ABC licensed facilities and 10 in truck stops, and set a 15% tax rate for skills games,” (VA SB 212). The bill was introduced by State Sen. Aaron Rouse and is co-sponsored by the chair of the Senate Finance Committee, Louise Lucas. Additionally, a bill that would legalize video game terminals (VGTs) in Virginia has been introduced (SB 307), but it currently does not have the same level of support as Rouse’s skill game bill. 

In Pennsylvania, Governor Josh Shapiro released his 2024-25 budget proposal, which included provisions to tax and regulate skill games across the Commonwealth. The bill would impose a 42% tax on the daily gross gaming revenue from skill-involved electronic gaming machines. The proposal gives the Pennsylvania Gaming Control Board regulatory powers over the machines. Pace-O-Matic (a major manufacturer of the machines) opposes the measure and instead supports legislation that would require skill games to be licensed and regulated by the Pennsylvania Department of Revenue. 

Ontario Regulator Gives Guidance on New Ad Rules

The Alcohol and Gaming Commission of Ontario (AGCO) has finalized new standards that prohibit operators from using current and former professional athletes and certain celebrities to endorse sportsbooks. The regulators are urging operators to use their own judgment in determining what is a violation of this standard. Celebrities who “would likely be expected to appeal to minors” are prohibited, and the AGCO has asked registrants to establish whether that standard has been violated through credible assessments supported by records and control activities. 

The AGCO also made certain clarifications to its new rules, stating that the limitations are not intended to prevent the use of game footage in advertisements and that athletes advocating for responsible gaming practices are exempted from the ban.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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