Update on Sports and the Law: The Future of Sports Betting and Daily Fantasy Sports in Mississippi. Gaming Section MS Bar CLE June 17, 2016
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1 Update on Sports and the Law: The Future of Sports Betting and Daily Fantasy Sports in Mississippi Gaming Section MS Bar CLE June 17, 2016
2 Legalized Gaming in Mississippi Creation of the MS Agricultural and Manufacturing Aid Society in 1867 Very active gaming climate along the coast in the mid-1900s Europa Star cruise ship in 1987 Cruise ship legislation in 1989 Gaming Control Act in 1990
3 MS Gaming Overview Gaming allowed in river counties and coastal counties if approved by voters in those counties. First casino in Gross gaming tax rate totals 12% (8% to state and 4% to local jurisdiction) October 1993 the MGC was formed and assumed regulation Gross gaming revenue for the state first hit the billion-dollar mark in April 1994
4 Comparison to other Jurisdictions 40 states allow some type of gaming facility Gaming Revenue NV $11B, LA $3.3B, PA $3B, NJ $2.6B, IN $2.1B, MS $2.1B State Tax Rate MS 8%, NV 6.75%, NJ 9.25%, LA 21.5%, IN 15-40%, PA 55%
5 History of Sports Betting Sports betting has been around as long as sports have In early America, sports betting was not viewed unfavorably, as long as games were not fixed Europe has been able to avoid major sports wagering scandals and betting has not been tied to organized crime as much as it has in the U.S.
6 Sports Betting Scandals Chicago Black Sox scandal of 1919 Pete Rose banned from baseball in 1989 for betting on games 1994 point shaving scandal at Arizona State University NBA referee Tim Donaghy pled guilty in 2007 to allegations he wagered on games he was involved in
7 Regulation of Sports Betting First regulated by state Professional and Amateur Sports Protection Act of 1992 PASPA Supported by major sports leagues Effectively outlawed nationwide sports betting Nevada, Delaware, Oregon and Montana were exempt One year window to opt-in for some states
8 Regulation of Sports Betting Unlawful Internet Gambling Enforcement Act of 2006 UIGEA Prohibits payments/wagers involving the internet and that would be unlawful under any state or federal law The fantasy sports carve out of UIGEA is frequently cited by daily fantasy operators
9 Regulation of Sports Betting Interstate Wire Act of 1961 was designed to help the DOJ and states deal with organized crime and gambling Prohibited use of wire communications to conduct sports betting DOJ opinion in 2011 as well as Fifth Circuit have reiterated that the Wire Act only pertains to sports betting, and not other forms of online gaming
10 New Jersey litigation Needing to boost a struggling industry, New Jersey passed laws authorizing sports wagering in 2012 Challenged by all 5 major sports leagues, a three judge panel of the 3rd Circuit ruled that the NJ law violated PASPA Court s opinion left open, however, the possibility NJ could repeal prior laws
11 New Jersey litigation In 2014 New Jersey passed a gambling law that repealed former prohibitions on sports wagering in casinos & racetracks Again, a three judge panel of the 3rd Circuit ruled against NJ, holding that the selective repeals amounted to an authorization of sports betting Because of the nature of the 2012 and 2014 rulings, the 3rd Circuit reheard the case en banc in February 2016
12 Sports Betting in Mississippi Criminal Gaming cited in Consideration, Chance, Reward Any form of wagering that involves these elements is illegal unless exempted. Exempted are: Games in a licensed casino Charitable gaming/bingo Raffles for a charitable or civic organization Sweepstakes tied to a commercial product
13 Sports Betting in Mississippi How could it be legalized? Analysis of and et seq wagering on an athletic event is illegal unless at a casino defines sports pool no wagering on an athletic event or event that does not take place on the premises
14 Sports Betting in Mississippi casino can t conduct a sports pool or other games without first obtaining a gaming license casino can only establish a sports pool or race book after getting permission from the Executive Director of the MGC.
15 Sports Betting in Mississippi Prior attempt to establish a sports book at Imperial Palace casino in Biloxi in 1990s. Miss. Gaming Commission v. Imperial Palace of Mississippi, Inc. (Miss. 1999) Casino sought to establish a race and sports book on property. Mississippi Gaming Commission denied request.
16 Sports Betting in Mississippi Casino was granted declaratory judgment by Chancery Court which held a race book was lawful in Mississippi On appeal, Miss. Supreme Court ruled in favor of MGC Court held that deference be given to the MGC s plain reading of , that included a prohibition of wagering on events held outside the premises
17 Sports Betting in Mississippi The IP case makes no mention of any Mississippi constitutional issues with regard to sports betting or other state law outside of those referenced in the Gaming Control Act. House Bill 806 of the 2015 Legislative Session would have amended the Gaming Control Act to allow sports betting if federal law allowed (the Bill died in committee)
18 Sports Betting Problems Currently conducted illegally all over Mississippi and other states Unlicensed bookmakers and easy access to illegal/offshore gaming sites No oversight, taxation, ability to identify underage or problem gaming Only enforcement is done sporadically by local or federal authorities
19 Fantasy and Daily Fantasy Sports Popularity increased with the popularity of the internet in the 1990s and 2000s Season long fantasy sports had been the popular model until a few years ago Season long fantasy involves drawn out contests and less money wagered Daily fantasy involves quick results and more wagering and awards
20 Fantasy and Daily Fantasy Sports New York Attorney General Eric Schneiderman was the first to really take a hard stance against daily fantasy Others followed suit, some states allowed it, some are still undecided Mississippi AG opinion in January 2016 found daily fantasy to be illegal Daily Fantasy legalized in 2016 Legislative Session - Senate Bill 2541
21 Fantasy and Daily Fantasy Sports For the next year, MGC accepts and monitors registration of daily fantasy operators A task force will evaluate the daily fantasy business and make recommendations on legislation for next year Daily Fantasy Operators currently pay no registration fees or gaming taxes
22 Daily Fantasy Sports States that are currently a no for DFS: Alabama, Arizona, Hawaii, Idaho, Iowa, Louisiana, Montana, Nevada, New York, and Washington Situation still fluid in some states, including California, Florida, Texas, and Vermont As of June 1, only one operator had reopened daily fantasy sports in Mississippi although four are registered
23 Future of Sports Betting for MS Everyone is watching the 3rd Circuit Mississippi should take a proactive approach to determine if it should have sports betting if federal law changes LA and PA are holding hearings to discuss ways to combat increased gaming competition Sports books in casinos would be a first step that could be implemented quickly Possible incentive to visit Mississippi
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