The Commonwealth of Massachusetts presents a complicated regulatory environment, with several administrative and law enforcement bodies having charge over different types of authorised gambling.
Whilst the Massachusetts Lottery enters the 51st anniversary of its 1971 authorisation, casino gambling is relatively new to Massachusetts, with the Expanded Gaming Act (the "Gaming Act") having been enacted in 2011. The Gaming Act authorised the current land-based casino gambling in the state, and created the Massachusetts Gaming Commission ("MGC" or the "Commission") as overseer.
In August 2022, land-based and mobile sports wagering was authorised by the Massachusetts legislature. The Sports Wagering Act permits:
The Commonwealth’s bricks-and-mortar casinos are authorised to apply for a "Category 1" licence for the right to offer up to two mobile skins in addition to a retail sportsbook. In addition, the Commonwealth’s horse racing simulcast facilities may obtain a "Category 2" licence for the right to offer a retail sportsbook and one mobile skin. The Act also permits up to seven "Category 3" licences to be awarded to mobile operators (Mass. HB 5164, Ch. 23 N, § 3).
Only persons 21 years of age or older are permitted to wager on sporting events (Mass. HB 5164, Ch. 23 N, § 13(d)).
The Commission has published proposed regulations for the application and approval process, but sports betting will not launch until 2023. It is anticipated that Category 1 and 2 licensees may be allowed to launch retail sports betting ahead of Category 3 licensees, but whether to implement a staggered launch remains subject to public comment and further consideration of the Commission.
Casinos, and Horse and Harness Racing
The MGC regulates the Commonwealth’s land-based casinos as well as pari-mutuel wagering on horse and harness racing. Under the Gaming Act, the MGC was authorised to take applications and award up to three Category 1 casino licences (table games and slots) and one Category 2 licence (slots only). Massachusetts currently boasts two Category 1 casinos: the Boston Encore Harbor (opened in 2019 in Everett) and the MGM Springfield (opened in 2018 in Springfield). There is one Category 2 casino: the Plainridge Park Casino operated by Penn National (opened in 2015 in Plainville).
Notably, the Gaming Act authorised the Governor to enter into compacts with federally recognised Native American tribes, but efforts by Massachusetts’ two recognised tribes to obtain necessary approvals have been hampered and prevented to date, despite extensive litigation. One Category 1 licence remains available for the Southeast Region of the Commonwealth, but the uncertainty of the Mashpee Wampanoag Tribe’s bid to build and operate a Category 1 casino on tribal lands in Taunton, Massachusetts, has complicated management of the region, and applications for the Southeast Region accordingly have not been requested by the MGC.
Massachusetts allows pari-mutuel wagering in connection with live thoroughbred and harness racing. However, there is currently no thoroughbred racing in the Commonwealth, as Suffolk Downs ceased hosting races in 2019. Harness racing and live wagering thereon continues at Plainridge Park. Advance deposit wagering on simulcast races is permitted at Suffolk Downs, Plainridge Park and Raynham Park (a former greyhound dog racing facility). TVG accepts online racing wagers from Massachusetts. Notably, the citizens of Massachusetts voted to ban greyhound dog racing in 2008.
Daily Fantasy Sports (DFS) and Other Forms of Gaming and Gambling
DFS has been authorised by the Massachusetts legislature but only in forms approved in regulations of the Attorney General (Session Laws 2016, c. 219, § 135). "Daily fantasy sports" are defined in the regulations as any contest in which the offer or award of a prize 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 prize to the winner or participants in the underlying competition itself (940 Code of Massachusetts Regulations (CMR) 34.03). Persons under 21 cannot participate, and no fantasy sports contests can be based on any amateur, college, high school or student sporting events (940 CMR 34.04). DFS may be conducted remotely. Notably, season-long fantasy sports contests may be exempt from regulation, provided all the funds contributed by the players are distributed to the winning player(s).
Charitable gaming in the form of bingo is allowed to be conducted under strict guidelines for the benefit of charitable organisations. Referred to as "beano", the game may be carried out only by fraternal, church, veterans' or certain not-for-profit organisations approved by the Massachusetts Lottery Commission, in towns that have opted to allow the game to be licensed therein. Licensees cannot conduct the game more than twice per week. Prizes are limited to USD100, with certain exceptions, and a progressive jackpot cannot exceed USD3,000. Alcohol may not be served, and no person under 18 may be admitted or play. All profits must be used for the charitable, religious or educational purposes of the organisation (Massachusetts General Laws (MGL), Chapter 10, Section 38).
All other forms of gambling not expressly authorised are prohibited (see MGL c 271).
Massachusetts laws are silent on the subject of "social" or personal home-based poker nights or gambling games.
From March 2020 to July 2020, the MGC Commission suspended operations of the state’s three gaming facilities due to the COVID-19 pandemic. In the summer of 2021, many of these restrictions were lifted, and the gaming facilities have since reopened.
The Mashpee Wampanoag Tribe’s effort to build its First Light Casino in Taunton is still clearing legal hurdles imposed by the United States Department of the Interior (DOI). In June 2020, the district court rejected the DOI’s actions under the Trump administration in rescinding the DOI’s 2015 recognition of the tribe’s reservation status, finding that the actions of the DOI were "arbitrary, capricious, an abuse of discretion, and contrary to law". The court further ordered the department to "review the matter and issue new findings". In February 2021, the DOI withdrew its appeal pending in the United States Court of Appeals for the First Circuit, meaning that the Mashpee Wampanoag Tribe’s land in Taunton now qualifies as being in federal trust, such that the tribe may build its casino. This decision, however, is now being challenged by a group of Taunton residents, who filed a complaint against the DOI before the district court, in which they seek to overturn the decision.
Moreover, the First Light Casino project appears to have stalled for commercial reasons despite the tribe’s ultimate legal victory. The tribe’s agreement with its commercial casino development partner has been terminated, the government of Taunton has advised it is owed in excess of USD2 million, and new leadership of the tribe may no longer be interested in the USD1 billion casino project. The MGC could reinstate a request for Category 1 applications in the Southeast Region, but that seems unlikely while the Mashpee Wampanoag project in the same region remains in flux and the existing licensees continue to recover from pandemic-related shutdowns and impacts.
The other federally recognised tribe in Massachusetts, the Wampanoag Tribe of Gay Head (Aquinnah), has similarly completed a lengthy course of federal litigation over its Aquinnah Cliffs Casino Project on Martha's Vineyard. The project calls for the conversion of a former town centre into a 10,000 sq ft casino housing 250 electronic gaming machines (Class II). While there is no question about the tribe’s lands being eligible for recognition, the tribe sought to avoid state and local permitting processes. In April 2021, the First Circuit Court of Appeals rejected the tribe’s appeal of a court order that halted construction of the Aquinnah Cliffs project pending review by the Martha's Vineyard Commission and approval of local building permits. The project is not currently scheduled for active consideration by the Commission. In September 2021, the tribe sent an open letter to Governor Charlie Baker seeking negotiations for a compact for Class III operations.
Except for a few specific exceptions, online gambling is prohibited in Massachusetts. As mentioned in 1.1 Current Outlook, lottery subscriptions, wagering with TVG and DFS play may be done remotely. In addition, the Massachusetts legislature recently legalised online sports wagering, although it is not yet operational. Online casino style gaming is not authorised in the Commonwealth.
Special Commission Report
The Massachusetts legislature authorised a Special Commission on Online Gaming, Fantasy Sports and Daily Fantasy Sports as part of a 2016 economic development bill to conduct a comprehensive study into these areas (Session Law 2016, c 219. § 137). The Special Commission submitted its final report and its recommendations for legislation on 31 July 2017.
Overall, the report of the Special Commission recognises the opportunity and benefits presented by various forms of online gaming for the Commonwealth of Massachusetts, and views the legalisation of additional online gaming (beyond DFS) as "inevitable". The Special Commission further studied the issue of whether online games would cannibalise the newly authorised bricks-and-mortar casino gaming and concluded that online games are not dilutive to table game play in a bricks-and-mortar casino. Significantly, the Special Commission further recommended that bricks-and-mortar casinos received preferential treatment with respect to the opportunity to operate online games once they are authorised.
Another significant observation of the Special Commission is that esports presents further opportunities not only for potential online gaming but also as an industry sector. The Special Commission observed that Massachusetts has a very sports-centred culture and that it would be beneficial for the purposes of economic development to take measures to attract and retain esports businesses in the Commonwealth.
General Approach to the Expansion of Gambling
To date, the approach of the Massachusetts legislature, the Office of the Attorney General (OAG) and the MGC has been sophisticated and progressive towards the expansion of gambling, including online products such as DFS and, recently, sports wagering. Thus, the climate for expansion to licensed online gambling in other forms, such as casino style gaming, appears favourable (notably, the authorisation of mobile poker or igaming is absent at this time). The Massachusetts Lottery Commission remains interested in expanding to online ticket sales as well.
"Freemium" games such as those in which users may play for free or purchase virtual coins to use in app-based games of chance but without the opportunity to win cash or anything of value have not been the subject of legislation, regulation or court determination. However, the Special Commission noted in its 2017 Report that such "social" games were most likely legal in Massachusetts, provided that virtual currency from game play could not be sold or redeemed for money or something of value. Free-to-play games and the use of virtual currency was also considered by the OAG in the context of fantasy contests, and fantasy contests in which no prize is awarded other than game-based virtual currency that cannot be redeemed for cash, merchandise or something else of value are considered to be "exempt contests" (940 CMR 34.03). This regulation may logically support the findings of the Special Commission.
Betting on slots and table games is allowed as prescribed by law and regulation at the three licensed gaming establishments listed in 1.1 Current Outlook.
Poker is authorised as a table game in a format approved by the MGC under a Category 1 licence. "Table game" is defined as a game, other than a slot machine, that is authorised by the MGC to be played in a gaming establishment (MGL c 23K, § 2). All wagering and wagering devices not expressly approved and licensed by the MGC are unlawful.
Table games and slot machines as approved by the MGC may be operated at a licensed gaming establishment only. Video gaming terminals or other forms of remote gaming terminals are prohibited. Powered display cabinets or machines to reveal and display the outcome of a sweepstake or contest (eg, electronic product promotion kiosks) may not be operated in Massachusetts (MGL c 271, § 5B).
Non-profit organisations – such as fraternal, religious, charitable or educational groups – that have been in existence for at least five years before their application may conduct charitable games of bingo (or "beano"). The game may only be conducted in a town that has voted to allow the game to be licensed within the town, by individuals at least 18 years of age, and up to twice per week. All profits must be used for the non-profit purposes of the organisation (Mass. Gen. Laws Ann. c 10, §§ 37–38).
Non-profit organisations may also offer charity poker tournaments under the Attorney General’s regulations (see 940 Mass. Code Regs. § 13.01 et seq).
Chapter 271 of the Massachusetts General Laws Annotated (governing "Crimes Against Public Policy") contains Massachusetts’s general prohibition on gambling. Section 7A provides the necessary exceptions for permissible charitable gaming.
Chapter 10, §§ 23–35 of the Massachusetts General Laws Annotated contains provisions related to the Massachusetts Lottery.
The Expanded Gaming Act (2011) created the MGC and the framework leading to the approval and launch of the Encore Boston, MGM Springfield and Plainridge Park Casinos. It also authorised compacts for yet-to-be-established tribal casinos, and a third Category 1 casino licence that has not been awarded by the MGC.
DFS was authorised by a 2016 session law that, in turn, empowered the OAG to oversee DFS subject to the regulations issued by the OAG.
Pari-mutuel wagering is allowed on live horse races at tracks licensed by the MGC (MGL c 128A, § 1 et seq). Licensed racetracks can also conduct pari-mutuel wagering on live simulcasts of horse and harness racing (MGL c 128C, § 1 et seq).
An Act Regulating Sports Wagering (HB 5164) was passed by the Massachusetts legislation in 2022 to legalise land-based and mobile sports betting in the Commonwealth.
The Gaming Act defines gambling as the playing of a game by a patron of a gaming establishment (Mass. Gen. Laws Ann. c 23K, § 2). A "game" is "a banking or percentage game played with cards, dice, tiles, dominoes, 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 [Massachusetts Gaming] Commission". A "gaming establishment" is an MGC-licensed gaming facility.
The definition of "illegal gaming" – ie, a banking or percentage game played with cards, dice, tiles or dominoes, or an electronic, electrical or mechanical device or machine for money, property, cheques, credit or any representative of value, except lotteries conducted by the Massachusetts Lottery, games conducted under the Gaming Act, authorised pari-mutuel wagering on horse races and authorised forms of charitable gaming conducted by eligible organisations – excludes forms of gambling permitted by statute. Essentially, by operation of this definition, all forms of gambling that are not authorised by statute are illegal.
Various terms such as "gaming" and "betting" have been construed by the courts. A "bet" is the hazard of money upon an incident by which one or both parties stand to win or lose by chance (Commonwealth v Sullivan, 218 Mass. 281 (1914)). "Gaming" is considered synonymous with "gambling" (Commonwealth v Theatre Advertising Co., 286 Mass. 405 (1934)).
A "lottery" has three elements: "(1) the payment of a price for (2) the possibility of winning a prize, depending upon (3) hazard or chance" (Com. v Stewart-Johnson, 78 Mass. App. Ct. 592, 594, 941 N.E.2d 656, 658 (2011)). Where a game contains elements of both chance and skill, it will be considered a lottery "if the element of chance predominates and not a lottery if the element of skill predominates" (Com. v Lake, 317 Mass. 264, 267, 57 N.E.2d 923, 925 (1944)). This is based on more than just the "bare mechanics of the game itself", considering "whether as actually played by the people who play it chance or skill is the prevailing factor" (id).
Massachusetts has a uniquely broad definition of gambling devices encompassing all manner of slot machines, specifically sweepstakes promotion machines. An "electronic machine or device" is a mechanically, electrically or electronically operated machine or device that:
The same definitions of gambling apply regardless of where it occurs. In-person casino gambling was authorised in the state in 2011 under the Gaming Act. Land-based gambling would be the equivalent of the types of gambling allowed in a licensed gaming establishment under the Gaming Act.
Online gambling does not have a specific definition in Massachusetts. The absence of general legislation on online gambling, combined with the indications of the OAG, indicates it is unlawful, with a few specific exceptions.
In 2017, a Special Commission released a report based on its investigation of online gaming and fantasy sports (see 2.1 Online). The report included specific recommendations for improving gaming legislation in Massachusetts, including the adoption of a particular definition of online gaming 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". Notably, this definition is arguably broader than the court’s definitions noted in 3.2 Definition of Gambling, as the "outcome of an event" yields no distinction for a game determined predominantly by skill and not chance.
Massachusetts has an exceptional plenitude of enumerated gambling offences under Chapter 271, Section 1 et seq of the MGL, with the following penalties.
Please see 3.5 Key Offences.
Importantly and as discussed in 1.1 Current Outlook, in August 2022, Massachusetts passed HB 5164, An Act Regulating Sports Wagering ("Sports Wagering Act"), which authorised land-based and mobile sports betting in the Commonwealth. The Sports Wagering Act permits single-game bets, teaser bets, parlays, over-under, moneyline, pools, exchange wagering, in-game wagering, in-play bets, proposition bets and straight bets. It prohibits the acceptance of any wagers with an outcome dependent on the performance of an individual athlete in any collegiate sport or athletic event, on a high school or youth sporting event, or on injuries (MGL c 23N, § 3). Only persons 21 years of age or older are permitted to wager on sporting events (MGL c 23N, § 13(d)).
Under the Sports Wagering Act, the Commonwealth’s casinos are authorised to apply for a "Category 1" licence for the right to offer up to two mobile skins in addition to a retail sportsbook. In addition, the Commonwealth’s horse racing simulcast facilities may apply for a "Category 2" licence for the right to offer a retail sportsbook and one mobile skin. The Act also permits up to seven "Category 3" licences to be awarded to mobile operators that are not connected to a licensed Category 1 or Category 2 sports wagering operator (MGL c 23N, § 3).
While sports betting is now legal in the Commonwealth, it is not yet operational. Regulations for the Temporary Licensure process were published for public comment on 25 October 2022.
Land-based casino gambling and land-based and mobile sports wagering are regulated and licensed by the MGC, which is also responsible for monitoring and promulgating relevant regulations for the gaming industry, and for setting industry standards.
Criminal breaches of Massachusetts’s gambling rules are handled by the Division of Gaming Enforcement of the OAG and the Massachusetts State Police Gaming Enforcement Unit (Mass. Gen. Laws Ann. c 22C, § 70).
The state lottery is managed and licensed by the Massachusetts Lottery Commission, which also oversees charitable bingo/beano games (Mass. Gen. Laws Ann. c 10, §§ 23–35).
The OAG has promulgated regulations governing DFS.
Massachusetts’ approach to gambling regulations is proscriptive. Generally, gambling that is not specifically authorised is deemed unlawful, and gaming licensees must follow strict and thoroughly prescribed practices.
Sports wagering operations and regulations are forthcoming (see 3.7 Recent or Forthcoming Legislative Changes). In furtherance of these efforts, in October 2022, the Commission requested public comment on a draft sports wagering operator licence application, as well as two regulations addressing the sports wagering and fantasy wagering receipts tax and the sports wagering licence application process.
Under the Gaming Act, the MGC is authorised to oversee the licensing application process for casino gambling and sports wagering, and to make licensing decisions (Mass. Gen. Laws Ann. c 23K, § 1 et seq; MGL c 23N, § 3).
The MGC also possesses supervisory and licensing authority over all participants in pari-mutuel wagering on horse races and simulcasts (MGL c 23K, § 1 et seq).
The Massachusetts Lottery Commission operates the state-run lottery and possesses licensing authority over sales agents. Charitable beano (bingo) games also require permission from the Massachusetts Lottery Commission (MGL c 10, §§ 23–35).
The OAG has issued regulations for charitable raffles and casino nights, and participants must seek approval from the city or town in which the events will be conducted (see 940 CMR 13).
DFS operators do not need to be licensed but must comply with the regulations issued by the OAG.
Employees of casinos and racetracks involved in betting operations must apply for licensure and be found suitable.
Suppliers to the gaming operators may fall within one of three categories requiring licensure:
With the exception of the Category 1 licence for Region C, there are no land-based casino licences left to be awarded by the MGC. The time period for applications for this licence has expired and not been renewed at this time. The MGC is authorised to enter into compacts with federally recognised tribes for a Category 1 licence but this has not yet occurred.
Under the Sports Wagering Act, the Commonwealth’s three casinos are authorised to apply for a "Category 1" licence for the right to offer up to two mobile skins in addition to a retail sportsbook. In addition, the Commonwealth’s horse racing simulcast facilities may obtain a "Category 2" licence for the right to offer a retail sportsbook and one mobile skin. The Act also permits up to seven "Category 3" licences to be awarded to mobile operators (MGL c 23N, § 3).
Licences to carry out beano (bingo) may only be applied for by charitable organisations such as fraternal organisations, charitable corporations, religious groups with a house of worship in the Commonwealth, veterans’ organisations, volunteer associations of firefighters, ambulance organisations or promoters for disabled children, and non-profit athletic associations (MGL c 10 § 38).
Similarly, only the same types of organisations may apply to conduct a charitable raffle or bazaar.
Vendor licences are readily available upon satisfactory completion of the appropriate-level licence application.
Applications for new harness racing licensure are available. Applications for a new live thoroughbred racing licence may be available for 2022 upon request from the MGC.
A Category 1 licence is valid for an initial period of 15 years (Mass. Gen. Laws Ann. c 23K, § 19). A Category 2 licence lasts for five years (Mass. Gen. Laws Ann. c 23K, § 20).
Horse racing operators must seek annual renewal.
A sports wagering operator licence must be renewed after five years.
A licence to conduct beano/bingo requires annual renewal.
Licences for charitable organisations to conduct raffles and bazaars are also valid for one year.
Casino and racing employees, who must be approved for suitability and licensed, must renew within five years, with subsequent renewals every three years.
Vendors must apply for renewal based upon the type of licence, as follows:
Category 1 and Category 2 gaming licence requirements are considerably burdensome (MGL c 23K § 15). Obtaining a licence involves significant financial and suitability requirements, including:
There are a number of requirements for applicant eligibility. The requisite components of the application itself include:
When an applicant applies for a licence, the MGC investigates the applicant’s suitability, including their:
For Category 1 and Category 2 licences, the requirements for persons required to be qualified are extensive. Generally, under 205 CMR 116.02, any person who, in the opinion of the MGC, can exercise control or provide direction to a gaming licensee or applicant for a gaming licence or holding, intermediary or subsidiary companies thereof must qualify.
For a corporate applicant, each officer and director must apply for qualification, and, at the discretion of the MGC, shareholders holding 5% or more of the common stock, each lender, each holder of evidence of indebtedness, each underwriter, each close associate, each executive, each agent, and each employee may have to qualify. The regulations are similarly thorough for any licensee that may be an LLC, limited partnership or partnership.
Owners of more than 5% of a licensed gaming vendor must apply for licensure, although passive institutional investors holding up to 15% of a gaming vendor may be eligible for a waiver (MGL c 23K, § 31(e)).
Key management employees and employees involved in gaming operations must apply for licences and be found suitable. All other employees must be registered (MGL c 23K, § 30). Examples of key employees are set forth in 205 CMR 134.01 and include the following:
Sports wagering application processes and procedures have not yet been finalised. Under the draft regulations, however, applicants for a Category 1, Category 2 or Category 3 sports wagering licence must submit a fully executed application to the Commission. All applications must include:
The draft regulations require the following persons to be qualified: all officers, directors, members, transferees of a member’s interest, managers, partners, persons owning 10% or more of the common stock of a corporate applicant or affiliate, and each person with significant and substantial responsibility for the applicant’s business or having the power to exercise significant influence over decisions concerning the applicant’s operations. Applicants for a sports wagering operator licence must pay a non-refundable application fee of USD200,000, provided, however, that if the costs of the investigation exceed the initial application fee, applicants must pay the additional amount within 30 days.
Presently, only one casino licence is potentially available: a Category 1 licence for Region C (Bristol, Plymouth, Barnstable, Nantucket and Dukes counties). The MGC has not requested any applications at this time. The timeframe for any opening for applications to grant is uncertain at this time. The MGC is unlikely to seek any applications for the remaining Category 1 licence unless and until the plans of the Mashpee Wampanoag Tribe are settled and the impacts of the COVID-19 pandemic on Region C and current gaming operations are studied.
Applicants for Category 1 and Category 2 licences must pay a non-refundable application fee of at least USD400,000. There is a subsequent initial licensing fee of USD85 million for a Category 1 licence and USD25 million for a Category 2 licence, which is due 30 days after the award of the licence.
Every key employee application requires a USD1,000 fee plus out-of-pocket expenses of the MGC if necessary.
A non-gaming vendor licence application carries an expense of USD100.
The Sports Wagering Act requires an applicant for a sports wagering operator licence to pay a non-refundable processing fee of USD200,000. If the costs of the investigation exceed the initial application fee, the applicant must pay the additional amount to the Commission not more than 30 days after notification of insufficient fees. The licensing fee is USD5 million. Furthermore, any qualified gaming entity may request a temporary licence for a fee of USD1 million (MGL c 23N, §§ 6 and 7).
Separate from the expense of the licence and application fees, gaming licensees must pay an annual fee of USD600 per slot machine approved by the MGC for the establishment. Gaming licensees must also pay their proportionate share of USD5 million based upon the number of gaming positions at each gaming establishment, with the proceeds deposited into the Public Health Trust Fund to address compulsive gambling or other addictions (MGL c 23K, § 56).
Operational gaming establishments must pay the following daily fees:
Category 2 licensees must also pay a 9% daily assessment of gross gaming revenue to the Race Horse Development Fund (MGL c 23K, § 55).
In addition, sports wagering operators other than Category 1 and Category 2 sports wagering operators are required to pay a fee of USD1 million in shares to be determined by the Commission to be deposited into the Public Health Trust Fund (MGL c 23N, § 15(e)).
As described in 4.4 Types of Licences to 4.10 Ongoing Annual Fees, gambling premises are authorised and regulated pursuant to the Gaming Act.
Under the Sports Wagering Act, the Commonwealth’s casinos and horse racing simulcast facilities may apply for a "Category 1" or a "Category 2 licence", which, respectfully, would permit them to offer a retail sportsbook (MGL c 23N, § 3).
Under the Sports Wagering Act, customer-facing businesses will have to be licensed as sports wagering operators (MGL c 23N, § 3).
The licensing of sports wagering suppliers and software providers is not addressed in the Sports Wagering Act. Pending final regulations, suppliers to the mobile operations of gaming licensees should expect to be qualified in the current fashion for gaming vendors.
The licensing of sports wagering suppliers and software providers is not addressed in the Sports Wagering Act. Pending final regulations, affiliates should expect to be qualified in the current fashion for gaming vendors.
A "Category 3" sports wagering operator licence permits the operation of sports wagering through a mobile application and other digital platforms approved by the Commission. The mobile skins offered by Category 1 and Category 2 operators must obtain a Category 2 licence (MGL c 23N, § 3).
The Sports Wagering Act includes specific licences for sports wagering through mobile applications and other digital platforms as approved by the MGC.
Whilst the 2017 Special Commission report recommended best practices and deemed the authorisation of igaming to be inevitable, there has been no action to further expand igaming in the Commonwealth.
Mobile sports wagering operators must ensure that mobile sports wagering occurs only using a Commission-approved mobile application or other digital platform to accept wagers initiated within the commonwealth (MGL c 23N, § 12(a)).
Massachusetts regulations contain various responsible gaming rules, such as age restrictions, advertising limitations and gambling-addiction resources. For instance, individuals must be at least 18 years old in order to purchase a lottery ticket and must be at least 21 years old to play in a licensed gaming establishment. The DFS regulations also contain various restrictions, such as limitations on monthly deposits and contest entries.
The Gaming Act, MGL c 23K § 45, requires the MGC to establish a list of persons self-excluded from gaming establishments. A person may request to be placed on the list of self-excluded persons by filing a statement acknowledging that they are a problem gambler and by agreeing that, during any period of voluntary exclusion, they shall not collect any winnings or recover any losses resulting from any gaming activity at a gaming establishment. After making this list available to gaming licensees only, the MGC is empowered to revoke licensure, or suspend or fine a gaming establishment if the establishment knowingly or recklessly fails to exclude from its premises any person placed on the list of self-excluded persons. Gaming establishments may not market to excluded persons. The MGC has developed regulations for the procedures for exclusion (205 Mass. Code Regs. 133.01). The MGC website provides information on how to register for voluntary self-exclusion by phone, in person or online.
While DFS operators do not need to be licensed, they must nevertheless comply with a robust set of regulations effectively geared towards responsible gaming. Participants must be 21, and operators must develop and prominently facilitate parental control procedures to allow parents or guardians to exclude minors from access to any DFS contest platform. In addition, DFS contests may not include amateur, college, high school or student sporting events. DFS advertising and marketing may not be directed to or depict minors (other than professional athletes who may be minors) or any student or collegiate settings or participants. Advertisements must also include information to promote responsible gaming, and operators must provide for user self-exclusion. Deposits are limited to USD1,000 per month unless the user requests an increase and procedures are followed establishing the financial ability to allow such an increase. Notably, operators must also mind the skill level of users, such that highly skilled players must be identified and beginners have games available that exclude highly skilled players.
The Gaming Act also established a Public Health Trust Fund, which supports social service and public health programmes addressing problem gaming, including gambling prevention and addiction services, substance abuse services, educational campaigns to mitigate the potential addictive nature of gambling and any studies and evaluations necessary, including annual research (MGL c 23K § 58).
The Sports Wagering Act contains a number of RG provisions specific to sports wagering operations in the Commonwealth. Specifically, the Sports Wagering Act requires the Commission to establish a sports wagering self-exclusion list and promulgate regulations pertaining thereto (MGL c 23 N, § 13(e)(2)). In addition, the MGC’s forthcoming regulations must include protections for patrons placing wagers and the promotion of social responsibility and responsible gaming (MGL c 23 N, § 4(d)(2). Finally, mobile applications and digital platforms authorised for sports wagering must prominently display the telephone number and website for a problem gambling hotline overseen by the department of public health (MGL c 23 N, § 4(d)(3)).
The MGC has published a responsible gaming framework, which outlines various strategies to encourage responsible gaming, including committing to corporate social responsibility, supporting positive play and ensuring responsible marketing. Gaming establishment licensees must develop a written responsible gaming policy and responsible gaming plan.
Definition of Money Laundering
Massachusetts’s anti-money laundering legislation was updated under the Gaming Act (Mass. Gen. Laws Ann. c 267A, § 1 et seq). Money laundering is defined as:
Penalties for Money Laundering
Money laundering is punishable by up to six years' imprisonment or a fine of USD250,000 or twice the value of the property transacted, whichever is higher. The Expanded Gaming Act also included provisions prohibiting persons engaged in enterprise crime from using that activity to obtain any interest or involvement in licensed gaming operations (MGL c 271A, § 1 et seq). Persons guilty of enterprise crime can be punished by imprisonment in the state prison for up to 15 years or a fine of up to USD25,000, or both, if they knowingly:
AML Requirements and Legislative Instruments
Federal law also provides for a robust set of AML laws applicable to casinos. The primary federal AML statute, the Bank Secrecy Act (BSA), was passed as part of the Currency and Foreign Transactions Reporting Act of 1970. Under the BSA, the "financial institutions" that must comply include casinos and most other forms of gaming establishments with annual gaming revenue in excess of USD1 million.
Under the BSA, gaming establishments must keep copious records and report cash transactions, and must report suspected money laundering or other financial crimes. The Financial Crimes Enforcement Network (FinCEN) possesses broad authority to administer the BSA, and the FinCEN regulations and guidance establish best practices for record-keeping, compliance programmes, customer due diligence and suspicious activity reporting applicable to gaming establishments.
Other more recent federal statutes have further expanded AML compliance for financial institutions and the power of law enforcement to prosecute financial crimes. These include:
The BSA and related federal statutes require gaming establishments to implement and maintain an effective AML compliance programme, including record-keeping, processes for due diligence to "know your customer" (KYC), specified forms of currency transaction reports, and suspicious activity reports (SARs). All gambling and financial transactions over USD10,000 must be reported, including cheque cashing, competitions for travel or other incentives, and the name and address must be verified by a passport, driver’s licence or other acceptable documentation. As a baseline, casinos must set up procedures for record-keeping and data storage to keep pace with an indefatigable set of regulatory requirements.
Violation of the BSA may result in fines ranging from USD500 for simple negligence to the greater of USD100,000 or 50% of the amount of the subject transaction for wilful violations. Fines go up to USD1 million on certain international money laundering violations. Criminal penalties range from as many as five years in prison and a fine of USD250,000 for simple offences up to ten years in prison and a fine of up to USD500,000 for wilful violations. In addition, property involved in any BSA offence is subject to forfeiture.
Lastly, the Internal Revenue Service (IRS) has also issued regulations for transaction reporting, including the reporting of winnings and requiring the identification of payees.
Pursuant to the Sports Wagering Act, sports wagering operators are required to report all suspicious or illegal wagering activities to the Commission, including the use of funds derived from illegal activity and wagers designed to conceal or launder funds derived from illegal activity (MGL c 23 N, § 11(e)).
Please see 8.1 AML Legislation.
Consumer protection is generally regulated by the OAG, including the protection of consumers from unfair and deceptive business practices in advertising under the Massachusetts Consumer Protection Law (MGL c 93A). The OAG regulations (940 CMR 3.00 et seq) govern all advertising in the Commonwealth.
Gaming licensee advertising is further subject to the regulations of the MGC, 205 CMR 150.00 et seq.
The OAG has also published specific regulations for advertising carried out by DFS operators (940 CMR 34.07–34.09).
Under the consumer protection regulations, an "advertisement" is "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 customer or prospective customer in any manner whatsoever" (940 Mass. Code Regs. 3.01).
The OAG advertising regulations address a broad swathe of specific practices that have historically taken advantage of the consumer, and generally proscribe false advertising and misleading or fraudulent statements made in connection with advertising.
The MGC Regulations add a specific prohibition against any gambling advertising, marketing or promotional communications specifically targeting persons under the age of 21 (205 Mass. Code Regs. 150.03).
The DFS regulations contain a section on "fair and truthful advertising" (940 Mass. Code Regs. 34.07). DFS advertisements must not depict minors, students, or schools or colleges, nor suggest any endorsement or affiliation therewith. Advertisements must include information to promote responsible gaming, directing consumers to a reputable source for information on problem-gambling assistance. Lastly, the terms and rules for any promotions, contests or bonuses must be made clear and available to all users.
Please see also 9.6 Recent or Forthcoming Changes for advertising requirements specific to sports wagering.
See 9.3 Key Legal, Regulatory and Licensing Provisions.
In addition to action by the OAG, Section 93A of the Massachusetts General Laws (MGL c 93A) provides potent civil remedies for consumers who fall victim to false or misleading business practices, and expressly authorises class action litigation. Consumers may obtain injunctive relief, actual damages, treble damages for wilful violations and attorneys’ fees. Consumers are also empowered to bring class action lawsuits. DFS operators are expressly required to obey the OAG’s general regulations in addition to the specific DFS regulations, and are similarly exposed to civil suits under Section 93A for violations.
Gaming licensees are subject to discipline for false or misleading advertising, or for subjecting minors to advertising or marketing efforts.
Under the Sports Wagering Act, the Commission’s forthcoming sports wagering regulations must prohibit:
A Category 1 licence may not be transferred without majority approval of the MGC. The person seeking the licence must independently qualify for a licence (Mass. Gen. Laws Ann. c 23K, § 19). Similarly, a Category 2 licence may only transfer with approval of the MGC. After five years of the initial issuance of the Category 2 licence, the MGC may only approve a transfer if the licensee experiences a change in ownership or fails to maintain suitability, or in other circumstances that impact its ability to successfully operate a gaming establishment (Mass. Gen. Laws Ann. c 23K, § 20).
If a transfer of interests results in a change of control, the proposed transferee must provide the MGC with a written agreement to assume all obligations of the licence (205 Mass. Code Regs. 129.01).
The Sports Wagering Act also prohibits the transfer of an operator licence, or any direct or indirect interest in the licence, without the majority approval of the Commission. The Commission has been tasked with promulgating regulations governing this process, which may include assessment of a fee to reflect the cost associated with reviewing the proposed transfer (MGL c 23N, § 5(h)).
A transfer of control or sale of a licensee must be approved in advance by the MGC, and the transferee should expect to satisfy requirements equal to those of the original licensee (205 CMR 129.00). A licensee must also report any new lender or owner holding more than 5% ownership, as such persons ordinarily must be qualified by the MGC if they are not passive investors. See 4.7 Application Requirements.
As noted in 4.7 Application Requirements, persons, including passive investors, may need to be considered independently qualified under the MGC Regulations if they acquire more than 5% of the common stock of a gaming establishment licensee. However, this requirement may be waived for institutional investors holding less than 15% of the stock of a gaming licence applicant, or holding, intermediary or subsidiary company. The qualification requirement is also waived for persons who acquire a debt instrument issued by a licensee in a public or private offering but have no ability to control or influence the licensee’s affairs and the acquisition of the instrument is in the ordinary course of business and not part of a plan to avoid the regulation’s requirements (205 Mass. Code Regs. 116.03).
The MGC is empowered to impose and collect fines and sanctions, including the suspension or revocation of licences. The MGC is authorised to conduct evidentiary hearings and adjudicate licence actions and fines. Criminal activity is reported by the MGC to the OAG or State Police. The MGC also has the authority to include persons who have committed crimes or engaged in cheating at gambling on an exclusion list, and gaming licensees must not admit such persons to gambling premises nor accept wagers from them.
Administrative sanctions are administered by the MGC. There is a limited history of enforcement or significant disciplinary action in Massachusetts.
After a licensee is notified of a fine or disciplinary matter by the MGC, they may request a hearing and appeal within the MGC. From there, further proceedings or appeals may be raised by the licensee in the Massachusetts Superior Court. An unpaid fine would typically result in further disciplinary action by the MGC. If unpaid, the MGC may seek to obtain a judgment from the court.
The Gaming Act sets forth the maximum fines that may be imposed for violations of the Gaming Act as follows.
Please see 11.3 Financial Penalties and 3.5 Key Offences. In addition, the Gaming Act sets forth the maximum prison sentences – in either the house of correction or state prison – that may be imposed on individuals for violations of the Gaming Act (MGL c 23K, § 37).
There are no recent trends regarding social gaming in the state.
There are no recent trends regarding esports in the state. However, the promotion and further study of esports were encouraged in the Special Commission’s 2017 report.
There are no recent trends regarding fantasy sports in the state.
There are no recent trends regarding skill gaming in the state.
For the time being, Massachusetts does not have specific legislation or regulation on blockchain, other than subjecting "marketplace facilitators" who disseminate virtual currency to sales or use tax collection. Legislation has been introduced to create a commission to study blockchain technology and its application. This is a typical precursor to the adoption of a regulatory programme.
A Category 1 licensee must pay a daily tax of 25% on gross gaming revenues. A Category 2 licensee must pay a daily tax of 40% on gross gaming revenues; they must also pay a 9% daily assessment of gross gaming revenue to the Race Horse Development Fund.
The Sports Wagering Act also imposes an excise tax upon sports wagering operators at the following rates:
See 2. Jurisdictional Overview.