853125_26326491Today the Massachusetts legislature attached an addendum to its 2014 fiscal year budget proposal calling for the legalization and regulation of online poker.  The addendum was sponsored by no less than 18 Massachusetts State Representatives and, like the law passed in Nevada, will be limited only to online poker.  Other Internet gambling games, such as black jack and roulette, are not up for consideration.

Casinos Already Authorized in Massachusetts

As some of you may be aware, the Massachusetts legislature has already approved a bill that will authorize brick and mortar casinos beginning in 2016 and is currently vetting potential bidders for casino operator licenses.  Given the fact that the bill only authorizes 3 casinos to operate within the State, you can expect the bidding war to be fierce.

Online Poker Proposed Licenses and Regulations

Despite the fact that brick and mortar casinos will not begin operations until 2016, according to the budget addendum, Massachusetts may be looking to allow Internet poker to go live early as next year.  Consistent with the brick and mortar casinos to be authorized within the State, Massachusetts will only issue 3 online poker operator licenses.  The licenses will be good for 10 years and the operators must have age verification systems in place to assure participants are over the age of 21.  Moreover, the licensed operators will need to launch their operations within 30 days of receiving their respective licenses, or risk revocation and/or financial penalties for acting in bad faith.

While only 3 online poker operator licenses will be granted, the proposed addendum does not limit the amount of software providers, affiliate marketers and payment processors that will be licensed.  Surprisingly, the addendum does state that all of the licensees, both operators and service providers, must be located within the State of Massachusetts, unless an out-of-state licensee is granted an exception and approved by the Massachusetts Gaming Commission.

The licensing fee for Internet poker operators is $10 million dollars, which will be credited towards the entity’s first 2 years of taxes.  This appears to be the standard licensing fee structure for online poker operators, as already demonstrated by New Jersey, Delaware and Nevada.

Is Interstate Online Poker a Possibility for Massachusetts?

The easy answer to this question is: not at this time.  However, Massachusetts has not directly given their opinion on interstate compacts and has thus far only addressed intrastate online poker.  With Nevada authorizing and recently soliciting comments on their soon-to-be passed interstate poker compact bill, the addition of another viable and heavily populated state, such as Massachusetts, could have a significant impact on the future of online poker.  Should Nevada’s interstate compact bill provide tax royalty incentives to foreign states, there is a good chance that states such as Massachusetts may be enticed to change their stance and allow their residents to participate in gambling outside their borders.

The development of Massachusetts’s online poker regime is a significant topic for all gaming attorneys and those interested in Internet poker and gambling in general.

If you are interested in learning more about this topic or pursuing a venture in this area, please e-mail us at info@kleinmoynihan.com, or call us at (212) 246-0900.

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