NCLGS Unveils Comprehensive Model Legislation For iGaming

The National Council of Legislators from Gaming States (NCLGS) has unveiled a comprehensive draft for its model Internet Gaming Act (IGA), a regulatory framework designed to provide states with legislative guidelines for implementing online gaming. Published on November 26, this draft serves as a potential roadmap for jurisdictions aiming to integrate iGaming into their existing regulatory ecosystems.

Currently, only seven states have legalized and regulate iGaming, each of them through frameworks with some similarities and differences: Connecticut, Delaware, Michigan, New Jersey, Pennsylvania, Rhode Island, and West Virginia.

The draft IGA emphasizes the importance of maintaining public trust in the integrity of gaming operations. Key objectives outlined include fostering a safe and fair environment for players, minimizing societal risks, and increasing state revenue. The document underscores the necessity of strict oversight, robust licensing structures, and adherence to public policy “that will foster public confidence and trust in the integrity of the regulatory process and the fairness of internet gaming operations.”

NCLGS, which collaborated with the UK Gambling Commission on drafting the model legislation, asserts that the introduction of online gaming must complement existing licensed casino and racino operations, without undermining them. By introducing mechanisms to reduce illegal gambling and increase state revenues, the proposed act aspires to bring transparency and accountability to the growing online gaming sector.

Regulatory oversight

Central to the draft is the establishment of a Gaming Regulatory Authority (GRA), or the appropriate state regulator, tasked with licensing, supervising, and overseeing all aspects of online gaming operations.

Whether through existing state regulatory agencies or newly established ones, the GRA will focus on maintaining strict controls to prevent criminal influence, protect consumers, and ensure the fairness of iGaming platforms.

The draft emphasizes several key regulatory mandates:

• Licensing Requirements: All online gaming operators, platform providers, and suppliers must undergo stringent licensing and background checks to demonstrate their suitability and integrity.
• Anti-Money Laundering (AML) and Know Your Customer (KYC) Controls: Operators must implement rigorous systems to ensure compliance with financial and identity verification standards.
• Responsible Gaming: A significant focus is placed on promoting responsible gaming practices, including establishing player health programs and offering self-exclusion options.

Taxation and technology to drive the ecosystem

To create a sustainable iGaming model, the NCLGS proposes a flexible tax rate ranging between 15% and 25% of licensee operators’ adjusted gross revenue, leaving states with the autonomy to decide exact figures based on their unique needs. These funds are intended for specific community purposes, including public welfare programs, and problem gambling prevention initiatives.

The draft prioritizes technological innovation while safeguarding consumers. Measures such as mandatory age and location verification, limitations on deposits, and automated triggers to detect problematic gaming behaviors are integral to the proposed framework. The incorporation of AI tools to monitor and mitigate risky gaming activity is a notable feature.

Additionally, strict advertising guidelines prohibit marketing that targets individuals under 21, appears in child-oriented media, or employs misleading language like “risk-free.” Operators are also mandated to display clear messaging about responsible gaming resources.

Acknowledging the potential for interstate gaming markets, as seen in some poker-centric games, the draft encourages states to form reciprocal agreements with other jurisdictions. These agreements would enable cross-border gaming activity, provided they comply with federal and state laws.

A new era for online gaming

A dedicated Player Health Program is another cornerstone of the draft, designed to increase awareness of problem gambling, provide treatment resources, and promote best practices. A percentage of gaming tax revenue will support these initiatives, ensuring a comprehensive approach to player well-being.

The draft recognizes the challenges posed by illegal online gambling, emphasizing the need for robust enforcement mechanisms to deter unlicensed operations. Penalties for violations, including tampering with odds or equipment, range from fines to license revocations and even imprisonment for severe infractions.

By providing a thorough and adaptable framework, the IGA positions itself as a critical tool for states considering the legalization and regulation of online gaming. It could also help the larger industry and become part of the framework of global regulations.

NCLGS will convene for its winter meeting at Caesars in New Orleans from Dec. 12-15.