A busy week in gambling legislation saw Illinois approve a tax on prediction market contracts, Colorado enact new responsible gaming measures, and Rhode Island move to expand its sports betting market.
Key Takeaways
* Illinois established a tax framework for sports event prediction markets, a first for any state.
* Colorado implemented a prohibition on gambling-related push notifications from operators, also a state first.
* New York lawmakers advanced measures to limit minors’ exposure to gambling advertising and strengthen age verification for sports betting accounts.
* The Rhode Island Senate again approved legislation aimed at expanding the state’s sports betting market beyond its current structure.
* New Jersey committees moved to prohibit online micro betting, citing concerns about impulsive wagering.
* Pennsylvania lawmakers introduced a bill to create a regulatory framework for skill games, addressing their current legal status.
* Federal legislation was proposed to study the economic and public health effects of gambling.
Illinois Establishes Prediction Market Tax
Illinois lawmakers approved a new tax on sports-event prediction market contracts as part of the state’s FY2027 budget package. The legislation imposes a 1.75% tax on exchange wagers, increasing to 3.5% after the first 5 million contracts annually. It also creates licensing and taxation requirements for Daily Fantasy Sports (DFS) operators. This measure arrives amid ongoing litigation involving prediction markets, including a lawsuit from the Commodity Futures Trading Commission against Illinois in April and previous challenges from Coinbase regarding state efforts to restrict prediction market activity. The new tax could lead to additional legal challenges. Illinois is the first state to enact a tax on sports event prediction market contracts.
Colorado Strengthens Responsible Gambling and Oversight
Colorado Governor Jared Polis signed SB 131 and SB 163, two measures designed to strengthen responsible gambling protections and regulatory oversight. SB 131 expands responsible gambling requirements and consumer protections for bettors. These include a first-in-the-nation ban on gambling-related push notifications and text messages from operators, along with deposit limits. SB 163 increases oversight authority and compliance responsibilities within the state’s gaming framework. Colorado is the first state to prohibit gambling-related push notifications from licensed operators, a move that could influence other states, including Pennsylvania, where lawmakers have announced plans to introduce similar legislation.
New York Advances Responsible Gambling Measures
New York lawmakers have been active in advancing responsible gambling initiatives. The New York Assembly passed the “No Gambling Ads for Kids Act,” legislation intended to limit minors’ exposure to gambling-related advertising. This proposal would prohibit licensees from displaying gambling advertisements to users under 18 years old. The restrictions also include sports betting, prediction markets, sweepstakes casinos, and loot boxes. Earlier this year, New York’s Attorney General, Letitia James, sued Valve over loot boxes, alleging they constitute illegal gambling. This measure now moves to the Senate for consideration. New York is the nation’s largest online sports betting market, meaning advertising restrictions adopted there could influence similar discussions elsewhere.
The Senate also passed S 7908, a bill to strengthen protections against underage sports betting. This bill would require the New York State Gaming Commission to create an exclusion list, allowing individuals (including parents or guardians of minors) to block the use of identifying information for mobile sports wagering accounts. The bill would also strengthen age verification requirements and prohibit reliance solely on self-reported ages when determining customer eligibility to wager. This measure now moves to the Assembly for consideration. The bill aims to create new safeguards to prevent minors from accessing mobile sports wagering accounts using another person’s identifying information.
Rhode Island Senate Passes Sports Betting Expansion
The Rhode Island Senate passed a bill that would expand the state’s sports betting market. The state currently operates under a monopoly system with one operator, Sportsbook Rhode Island, though Bally’s is expected to launch a second online sportsbook later this year. S 3118 would require the Division of Lottery to issue an open invitation for sports-wagering vendor contracts by January 1, 2027. The division would then award additional contracts until Rhode Island has no fewer than four and no more than six sportsbooks operating in the state. The bill would also give licensees more authority over marketing, advertising, and promotions, subject to an approved marketing plan and Division rules. Senate Majority Leader Sen. Frank A. Ciccone sponsors the bill. Ciccone led a similar effort last year, when a comparable bill passed in the Senate but did not advance in the House.
New Jersey Targets Micro Betting
The Assembly Tourism, Gaming, and the Arts Committee advanced A3258, a bill that would prohibit online micro betting. Micro bets, which have grown in popularity, allow bettors to wager on live in-game outcomes, such as the next football play or baseball pitch. Critics argue that micro bets can encourage impulsive gambling by allowing bettors to place a high volume of wagers within a short period. This legislation follows a companion Senate bill that advanced from committee earlier this year, which proposes prohibiting micro betting at both online platforms and retail sportsbooks. New Jersey is among the first states to move against micro betting, a product that has received increased scrutiny from problem gambling experts and advocates over addiction concerns.
Pennsylvania Lawmakers Introduce Skill Games Bill
Pennsylvania lawmakers introduced HB 2557, a proposal that would create a regulatory framework for skill games. The bill would require centralized monitoring, player identification, self-exclusion programs, responsible gambling safeguards, and age verification measures. It would also impose loss limits and location restrictions on the machines. The bill does not establish a tax rate for skill games, focusing instead on regulatory standards and consumer protection requirements. HB 2557 marks the latest attempt to regulate skill games in Pennsylvania. The state is home to tens of thousands of these machines, currently operating in a legal gray area. The issue remains the subject of ongoing litigation between manufacturers and state authorities, with the Pennsylvania Supreme Court expected to weigh in. Lawmakers have attempted numerous times to pass a regulatory measure without success.
Federal Study on Gambling Disorder Proposed
At the federal level, Representatives Dan Goldman (NY) and Blake Moore (UT) introduced the bipartisan Gambling Disorder Health Study Act. This legislation directs federal agencies to study the economic and public health effects of gambling. The proposal would examine issues including gambling advertising, addiction, and consumer harm. It would appropriate 10% of the federal excise tax revenue on state-authorized wagers to fund this study for up to three fiscal years. This proposal reflects growing interest in Washington regarding gambling’s broader social and public health impacts.
I remember the first time I saw Kai Tak, Hong Kong’s gambling city, I thought I was in a fairy tale. All the lights blinking, the music and the monumental buildings, what 9-year-old wouldn’t think they’ve come to a magical place? It was my father who brought me, dragging me along and when inside I was hit by the smell of frying duck. As soon as I hit 21 I returned to Kai Tak, A bit nervous to see if my mind had embellished the memory, but it hadn’t. Kai Tak was still a magical place. I decided I wanted to spend as much time as I could at this place, so I did.
