Game On: Lawmakers Push for 15%-25% Tax to Boost iGaming Growth!

Exciting news is brewing in the world of internet gaming! The National Council of Legislators from Gaming States (NCLGS) has rolled out a groundbreaking model legislation aimed at states looking to embrace online gaming. With proposed tax rates ranging from 15% to 25% and a firm ban on sweepstakes, this could reshape the gaming landscape across the nation!

Just in time for their winter meeting taking place from December 12-15 in the vibrant city of New Orleans, the NCLGS has presented this draft, affectionately dubbed “The Model Internet Gaming Act.” Designed with state legislators, regulators, and stakeholders in mind, this document is primed for public input until December 31—your voice matters!

According to the NCLGS, their mission is clear: to carve out an effective, comprehensive, and transparent regulatory framework that boosts public confidence in the integrity of online gaming operations. This level of oversight is not just a safety net; it’s a promise to players that fairness and accountability are non-negotiable!

Understanding the diversity of gaming interests across states, the committee emphasizes the need for a tailored approach. Each state has unique concerns, and the proposed framework is a versatile tool to help them tap into the tremendous potential of internet gaming while maintaining local integrity.

This model legislation aims to complement existing casino and racino facilities, ensuring that they thrive alongside the burgeoning online gaming industry. It also takes a strong stance against illegal wagering practices, including sweepstakes, which have been a source of contention in many states.

“Our goal is to cultivate public trust while diminishing illegal gaming activities and enhancing state revenues,” the report boldly states.

At the heart of the draft is the creation of a Gaming Regulatory Authority responsible for overseeing internet gaming operations. In states with existing gaming regulators, they will take the lead, ensuring that everything runs smoothly and transparently.

The draft proposes a competitive tax rate between 15% and 25%, striking a balance that maximizes revenue while enabling states to compete effectively with other gaming jurisdictions.

“A balanced tax rate encourages technological innovation and paves the way for new market entrants,” the draft highlights.

However, not everyone is on board. Brendan Bussmann, a leading casino industry consultant, voiced concerns over the proposed 15% floor, suggesting that states with lower rates, like Nevada, would find it unfeasible. “Setting a tax floor only hampers competition,” he argues. “Gaming policy should be as unique as the state itself, promoting innovation and growth.”

The draft tackles illegal gambling head-on, categorizing any game or promotion that awards prizes based on chance through digital platforms as unlawful if it utilizes a dual-currency payment system. This includes popular games resembling casino classics like slots, video poker, and sports wagering.

To curb illegal wagering, the draft proposes hefty fines—ranging from $10,000 to $100,000—against anyone promoting sweepstakes games, with repeat offenders facing even stricter penalties, including potential jail time. The Gaming Regulatory Authority will have the power to conduct investigations and ensure compliance.

Bussmann insists, “Sweepstakes need to be banned now—this isn’t just about regulation; it’s about fairness!”

The NCLGS also makes it clear that this draft does not extend to tribal gaming, which operates under separate regulations. Furthermore, operators will be expected to actively promote responsible gaming practices, with the Regulatory Authority working to implement standards that cross state lines.

Since emerging from the pandemic, momentum is building for online gaming to expand beyond the current seven states where it’s legal—New Jersey, Pennsylvania, Michigan, Connecticut, Delaware, West Virginia, and Rhode Island. Meanwhile, Nevada allows online poker only.

Industry analysts are optimistic about potential states for expansion, with New York, Indiana, Illinois, and Iowa leading the charge, followed closely by Maryland, Ohio, Colorado, Louisiana, and Kansas.

Proponents of igaming face challenges, particularly concerns from lawmakers about the impact on physical casinos and potential addiction issues—concerns that the gaming industry is eager to dispel.

As state budgets shift from surplus to deficit post-pandemic, the urgency for revenue streams like online gaming is more pronounced. Bussmann notes that challenges are looming for states like Maryland and New York as they prepare for tight budgets in 2025.

“The free money from the feds is gone, and states will need to adapt,” Bussmann warns. “Look at places like Colorado and Louisiana—they could be ripe for igaming expansion.”