In 2011, Massachusetts enacted the Expanded Gaming Act (the "Gaming Act"). The law’s main purposes were to raise money for the Commonwealth, create jobs and contribute to the growth of the Massachusetts economy. At the time the law was enacted, Massachusetts residents had to travel outside the state for casino gambling.
Destination Resort Casinos
The Gaming Act allows for up to three destination resort casinos (Category 1 licensees), one each located in the western, eastern and southeastern regions of the Commonwealth, and a single slots facility (Category 2 licensee). The Gaming Act created the Massachusetts Gaming Commission (MGC) to regulate and oversee the casinos and pari-mutuel wagering.
At the time of writing, destination resort casino licences have been awarded to casino operators in the West region (the MGM Springfield Casino, in Springfield) and the East region (the Encore Boston Harbor, in Everett, which borders Boston), but no licence has been awarded for a destination casino resort in the Southeast region. The Category 2 licence was awarded to Penn National, which operates the Plainridge Park slots facility and harness horse racing track in Plainville, located between Boston and Providence, Rhode Island.
Plainridge Park opened in June 2015, the MGM Springfield Casino opened in August 2018 and the Encore Boston Harbor went live in June 2019. In September 2020, Plainridge Park’s licence was renewed for five years. It is the first of Massachusetts’ gaming facilities to be relicensed.
Among the reasons a licence for the Southeast region remains unawarded is uncertainty about whether a gaming facility in that region will be developed by the Mashpee Wampanoag American Indian Tribe (the Mashpee Wampanoag) and operated pursuant to the federal Indian Gaming Regulation Act (IGRA). A federally recognised tribe, the Mashpee Wampanoag have faced several legal hurdles in their quest to develop a casino in southeastern Massachusetts. In 2018, the US Department of the Interior (DOI) decided that the tribe was not eligible to have land taken in trust for them to use for a casino, and legislation that would reverse that decision is stalled in the US Congress.
Massachusetts’ other federally recognised tribe, the Wampanoag Tribe of Gay Head (the Aquinnah), also faced legal hurdles establishing a gaming facility on its reservation lands located on the island of Martha’s Vineyard. Opposed in court by the Commonwealth, the US First Circuit Court of Appeals held in 2017 that the Aquinnah were eligible to conduct gaming on their reservation lands under the IGRA. As a result, the Aquinnah proceeded with construction of a Class II facility that will offer bingo games with the look and feel of slot machines. However, in 2019, the federal Massachusetts District Court held that the Aquinnah must seek local permits to build its facility and issued an injunction halting construction. The Aquinnah appealed, arguing that the IGRA pre-empts state and local construction laws. The US First Circuit Court of Appeals heard arguments in the case in September 2020.
Horse, Harness and Greyhound Racing
In addition to casino gaming, Massachusetts allows pari-mutuel wagering on live harness horse races at Plainridge Park, and wagering on simulcast horse, harness and greyhound racing events is permitted at Plainridge Park; Boston’s Suffolk Downs, a thoroughbred horse track until it stopped hosting races in 2019; and Raynham Park, a former greyhound racing facility. Finally, online pari-mutuel wagering on horse races involving pre-funded wagering accounts – also known as “advance deposit wagering”, or ADW – is lawful in Massachusetts. Betting on live greyhound races occurring in Massachusetts was banned pursuant to a state-wide ballot initiative approved by voters in 2008.
Massachusetts allows limited charitable gaming – ie, raffles, bingo and “casino nights” – when conducted by qualifying non-profit organisations. Permits are required. Charitable online raffles are also permitted, subject to compliance with state regulations.
Massachusetts has one of the most successful state lotteries in the nation. A 2018 study by LendEDU out of Hoboken, New Jersey, showed that, in 2017, annual per person lottery spending in Massachusetts was USD737, more than in any other state. Despite the adverse impacts of the COVID-19 pandemic, in the fiscal year ending 30 June 2020, the Massachusetts Lottery generated USD5.252 billion in revenues, the third-highest total in the lottery’s 49-year history. The Massachusetts Lottery currently is prohibited from selling its products (except for season tickets) via online or mobile channels. As of this writing, three bills are pending before the legislature that would authorise the Lottery to offer its games via such channels.
Daily Fantasy Sports
Finally, the offering of daily fantasy sports (DFS) contests is expressly lawful in Massachusetts. Although unlicensed and untaxed, it is subject to consumer protection regulations promulgated by the Massachusetts Attorney General (“Attorney General”).
The COVID-19 pandemic hit Massachusetts hard. The MGC closed its casinos, horse racing track and simulcast betting facilities from March 15 until the first week of July. When these facilities reopened, they did so under capacity limits, and the casinos were not allowed to offer poker, roulette and craps. These restrictions remain in place as of this writing amid concerns about a cold-weather surge in COVID-19 cases.
Except in respect of certain licensed charitable gaming and ADW on pari-mutuel wagering events, online gambling is unlawful in Massachusetts. More specifically:
Both traditional season-long fantasy sports contests and DFS contests are expressly permitted in Massachusetts and they are conducted online. A 2016 law authorised the offering of “fantasy contests” from 1 August 2016 to 31 July 2018, and a 2018 law made the temporary authorisation permanent (collectively, the "DFS Law"). The DFS Law mandates compliance with fantasy sports regulations promulgated by the Attorney General (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:
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 not prohibited or regulated 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 opined that social games that are free-to-play and do not involve the expectation of a financial return likely would be legal in Massachusetts, but social games might be illegal if any virtual money won from game play could be sold or redeemed for something 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 a non-profit organisation, including veterans' groups, churches or religious organisations, educational or charitable organisations and civic or service organisations, and 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 (as also called “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.
Massachusetts allows pari-mutuel wagering on live harness horse races held at Plainridge Park and on simulcast live racing events when occurring at one of Massachusetts’ three licensed simulcast betting facilities. The MGC is empowered to prescribe rules, regulations and conditions under which horse racing meetings and simulcast wagering 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, 1.2 Recent Changes, 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.”
The Attorney General’s website, in an FAQ, states that qualified non-profit organisations may conduct charity poker tournaments and Las Vegas-style “casino” nights. Such poker tournaments must be permitted and conducted in accordance with the Attorney General’s regulations for charitable gaming.
However, it is unclear whether poker tournaments not offered by qualified charitable organisations can be conducted, but if poker is considered a game in which chance predominates over skill, then poker tournaments 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). That said, at least one of the land-based casinos hosted poker tournaments in 2019.
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 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 DFS Law authorised fantasy sports contests for cash pursuant to and in accordance with the MA DFS Regulations. The 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.
Regarding lawful gambling, the Gaming Act defines “gambling” as “the playing of a game by a patron of a gaming establishment”, where “game” is “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]”, and “gaming establishment” is a gaming facility licensed by the MGC.
“Illegal gaming” is defined similarly to “game”, above, but excludes:
It is also unlawful in Massachusetts to “play at cards, dice or any other game for money or other property, or bet on the sides or hands of those playing, except as permitted under [the Gaming Act].”
Cybercafes are illegal in Massachusetts. Specifically, it is illegal to operate 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 or leased 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 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 Gaming Act, “gambling” is defined as “the playing of a game by a patron of a gaming establishment.” “Game” is defined as stated in 2.2 Land-Based. "Gambling" has been construed as synonymous with “gaming” by the Supreme Judicial Court of Massachusetts (Com. v Theatre Advertising Co., 286 Mass. 405 (1934)).
Massachusetts law does not define “online gambling.” In its 2017 Report, the Special Commission recommended that Massachusetts adopt a comprehensive definition of “online gaming” that would include items such as 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 utilising 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.”
In addition to the crimes described in 3.2 Definition of Gambling, key gambling-related offences in Massachusetts include the following:
Anti-money laundering (AML) provisions that are part of the Gaming Act are 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, or 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.
Manufacturing, transporting, selling and/or possessing a gambling device is punished by a fine of up to USD5,000 and forfeiture of said device to the Commonwealth.
Cheating at a licensed gaming facility is punishable by a fine and/or imprisonment. The amount and/or duration depends on the value of the money, property or wager cheated.
Possession of a device used for cheating at a licensed gaming facility is punishable by imprisonment for 2½ years and/or by a fine not to exceed USD10,000.
Manufacturing, distribution or sale of a cheating device is punishable by imprisonment for not more than five years and/or a fine not to exceed USD25,000.
The penalty for allowing persons under the age of 21 to play at a licensed casino or slots facility is, for an individual’s first offence, a fine of up to USD10,000 or imprisonment for up to one year, or both; and for a business’ first offence, a fine not to exceed USD500,000.
The Massachusetts Legislature has been deliberating sports betting throughout the legislative year 1999-2020, and pre-COVID, prospects for passage of a bill in 2020 were bright. However, those prospects have dimmed. Economic development bills intended to address the state economy ravaged by COVID-19 are pending before the Massachusetts Senate and House. In July 2020, the House bill passed, including provisions allowing licensed sports wagering. Soon thereafter the Senate passed a similar bill, but that bill did not allow sports betting. Massachusetts Governor Charlie Baker is known to support sports betting, other than betting on college sports events. However, at the time of writing, it appeared unlikely that Massachusetts would pass a sports betting bill in 2020.
Under the House-passed bill, sports betting would be regulated by the MGC. The Commonwealth’s casinos and sole racetrack would be eligible to conduct in-person sports wagering. Licensed casinos would be allowed to operate mobile sports betting, as would certain fantasy sports operators and up to two sports betting operators licensed to operate mobile sports betting in at least two other US states for at least one year. Mobile bets could be accepted only from those at least 21 years of age, physically located within the Commonwealth, and not self-excluded or excluded from play pursuant to the law. Betting on collegiate sports would be allowed, except for wagers dependent on the performance of an individual athlete in a collegiate sport or athletic event. The licence application fee would be USD250,000 for a five-year licence, and five-year renewals would entail a USD100,000 renewal fee. Upon request of a sports league, operators would be required to use official league data to settle proposition and in-play wagers, provided such data was provided on commercially reasonable terms and conditions. Sports wagering operators would be assessed a tax in the amount of 15% of net sports wagering revenue and an additional tax in the amount of 1% of net sports wagering revenue from events occurring at sports venues in the Commonwealth.
As of this writing, there are also a number of bills pending that would authorise the Massachusetts Lottery to offer its games online. Although a hearing was held on one such bill in 2019, neither chamber has voted on any of these bills.
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 has general oversight of casino gaming and pari-mutuel wagering. The MGC oversees the licensing process and making licensing decisions, collects fees and taxes, promulgates regulations for gaming administration, monitors any federal activity regarding internet gaming, acts as trustees for any gaming-related trust funds, proscribes minimum controls and standards for the industry, and makes determinations regarding affected live entertainment venues. The Division of Racing of the MGC regulates horse racing.
The Lottery Commission conducts the state lottery and possesses licensing and supervisory authority over ticket sales agents 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 in which they are held.
The Office of the Attorney General governs fantasy sports. The Division of Gaming Enforcement of the Office of the Attorney General enforces criminal violations of casino gambling laws, including investigating and prosecuting allegations of criminal activity involving gaming establishments or games. The Massachusetts State Police Gaming Enforcement Unit investigates violations of other Massachusetts gaming laws.
In Massachusetts, the general regulatory approach 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 million 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 million on a gaming area and other amenities, and 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, only the state lottery is authorised to operate lotteries in Massachusetts. 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, operators of fantasy sports contests in Massachusetts are not required to be licensed.
Pursuant to the 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 qualifying non-profit organisations, 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.
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 gaming 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 the 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:
Applications to carry out bingo are restricted to the organisations identified in M.G.L. ch. 10 § 38, including:
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 submit to 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 and the relevant 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.
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 website of the MGC. The deadline to submit an application is provided by the MGC in the posted request, and the entire 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 before applying for a permit.
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 2021 Horse Race Meeting Licences were due 1 October 2020, and are subject to review by the MGC and the public, including through public input hearings. No specific timeline is provided for applicants of other horse racing-related licences.
Each applicant for a Category 1 licence must pay a non-refundable application fee of USD400,000. Each licensee must pay an initial licensing fee of USD85 million.
Each applicant for a Category 2 licence must pay a non-refundable application fee of USD400,000. The licensee must pay an initial licensing fee of USD25 million.
The application fee for a licence to carry out bingo is USD50.
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 pay 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 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 also pay an annual licence fee of USD600 for each slot machine approved by the MGC.
Regarding ongoing annual fees with respect to conducting horse racing meetings, see 4.8 Application Fees.
Premises licensing is regulated under the Gaming Act, discussed above.
In June 2020, Massachusetts renewed live harness horse racing and simulcasting for another year through 31 July 2021; however, the Horse Race Meeting Licence and simulcast licence held by Suffolk Downs is subject to the conditions that:
Not applicable given that online gambling currently is illegal under Massachusetts law.
Not applicable given that online gambling currently is illegal under Massachusetts law.
Not applicable given that online gambling currently is illegal under Massachusetts law.
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 oversee authorised online gaming, but that the legislature 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 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 beginners by requiring beginners-only contests and contests that exclude highly experienced players. Highly experienced player usernames must also have a symbol attached 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, and must train their employees thereon. 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 million) 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. 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 civil and criminal penalties. Penalties for civil offences include USD500 for negligence, the greater of USD100,000 or 50% of the amount of the transaction for wilful violations, and up to USD1 million on certain international counter-money laundering violations. Criminal penalties can include, for single wilful offences, up to five years in prison and/or a maximum fine of USD250,000; 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 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.
M.G.L. ch. 267A (“267A”) and M.G.L. ch. 271A (“271A”) provide for additional criminal penalties for operators facilitating criminal activity in the Commonwealth. Under 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 a minimum of two years and a maximum of eight years in state prison and/or a maximum fine of the greater of USD500,000 or three times the value of the property transacted. 271A 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 up to 15 years in state prison and/or 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:
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 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, as specified under law, financial institutions must keep substantial records of any individual having a financial interest in a deposit, account, or line of credit, and casinos must keep exhaustive records of customer transactions.
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 substantially similar definition, emphasising representation and media that “encourages a person to purchase a retail product” that 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, 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.
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, 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.
Category 1 or 2 licensees cannot transfer any direct or indirect interest in a gaming licence or establishment without approval of a majority of the MGC. Any proposed transferee must independently qualify for licensure.
Category 1 or 2 licensees have a continuing duty to advise the MGC Investigations and Enforcement Bureau (IEB), within ten days, of any “significant financial event”, such as a merger, acquisition, consolidation, debt restructuring, material change in debt rating, legal entity change, material ownership change, 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, bankruptcy, 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 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, or its parent, holding or intermediary company to determine if a change of control has occurred.
A passive investor may need to be “qualified” by the MGC should that investor acquire more than 5% of the common stock of the gaming licensee, or its parent, holding or intermediary company. Upon such acquisition, within 30 days after the appropriate filing 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, as follows:
The MGC and its IEB have broad powers to enforce Massachusetts’ gaming laws and regulations. The MGC has the power to:
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.
Civil administrative penalties and sanctions 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, whose 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.
House Bill 4559, a consolidated bill sponsored by the Joint Committee on Economic Development and Emerging Technologies and favourably reported and referred to the House Committee on Ways and Means on 12 March 2020, would explicitly carve out DFS from its proposed definition of “sports wagering”, make it illegal to bet on DFS, and would call for a 12% tax on revenue from DFS contests to be remitted on a monthly basis.
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 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. In August 2020, the bill was reported favourably out of the committee and referred to a second 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 their 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 million, 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 set 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.