Massachusetts Latest State to Advance Online Poker Regulation

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Monday, April 29th, 2013 | Written by Shane Larson

Another U.S. state has jumped on the online poker regulation bandwagon. The state in question: Massachusetts, where lawmakers tacked online poker onto a budget bill that cleared the Massachusetts House last week by a wide margin.

There are still a number of hurdles for online poker in Massachusetts. While online poker is included in the House budget, the House is far from the final word on the matter. The online poker amendment will have to survive the Senate budget process, the combined House and Senate committee process and – of course – any action by Gov. Deval Patrick.

How would online poker work in Massachusetts?

Remember that both the amendment in question and the larger budget bill it’s attached to are both works in progress, so much could change between now and the point at which Massachusetts actually introduces regulated poker. This bill also has no connection to the online poker rooms currently accepting players from Massachusetts.

Having said that, let’s talk briefly about the key points of Massachusetts’ proposal to regulate online poker. The state seeks to limit the number of license holders to a maximum of three, which would mirror the amount of land-based casinos permitted in the state. The cost to receive this license would be at least $10mm, although that number could grow by the time final regulations are adopted. The bright side of that substantial fee for license holders is that it is wholly applied to their tax payments related to online poker, so they’re basically paying taxes upfront in order to receive a license as opposed to paying a unique fee for the privilege.

One of the most interesting aspects of the Massachusetts online poker bill is a condition that requires license holders to be operating online games within thirty days of having their license approved. If they fail to meet this deadline, operators are faced with a massive $25mm penalty fine. Perhaps that’s a nod to the relatively slow pace of online poker rollouts in Nevada and New Jersey.

What is the next step for online poker in Massachusetts?

While it’s certainly encouraging to see online poker survive the House budget vote, this is far from the final step for regulated online poker in Massachusetts. The budget process of the state is a winding and lengthy one, and it’s easy to see online poker being left by the wayside in Senate negotiations or once the bill reaches Patrick’s desk.

The next immediate step is for the Massachusetts Senate to generate their own version of a state budget bill for fiscal year 2014. This should occur sometime in May – keep an eye on our poker news section for any and all updates on the story.

Would sites like PokerStars be allowed to take part in the Massachusetts online poker industry?

As the bill currently stands, no. Companies that accepted U.S. players after the passage of the UIGEA are not allowed to participate as license-holders or suppliers under proposed online poker regulations in Massachusetts. That means sites like PokerStars would be shut out, but poker rooms that exited the American market post-UIGEA – such as 888Poker and William Hill – would get the green light to do business in Massachusetts.

Of course, there’s always the chance that so-called “bad actor” provisions in bills like this could be eliminated during negotiations (as was the case in New Jersey) or challenged in court (as Nevada’s clause prohibiting PokerStars may eventually be). But as things are in the status quo, PokerStars and similar sites will not be able to participate in the Massachusetts market for regulated online poker.