Massachusetts Gambling Regulation

As a commonwealth state and the landing site of the Mayflower, Massachusetts has a rich history with gambling. It dates back to the mid-18th century, when the first public lotteries were authorized to cover the expenses associated with King George’s War. Lotteries in their modern form became legal in the early 1970s but it was not until 2011 that authorized casino gaming arrived in the state.

At the moment of writing, Massachusetts is home to three brick-and-mortar gaming venues. Wynn Resorts and Blue Tarp Redevelopment operate casino resorts in the cities of Everett and Springfield, while Penn National Gaming is responsible for the operation of a slot-only parlor in Plainville. The three venues support over 1,640 jobs and generated $1.02 billion in combined gross gaming revenue as of 2021.

Massachusetts lacks tribal gaming at the time of publication, although this might change in the future. Residents can legally place pari-mutuel wagers on horse races or engage in lotteries and charitable gaming.

Legal wagering on sports is still unavailable here – local punters must travel to neighboring states like New York and Connecticut to have a flutter. Authorized sportsbooks can soon arrive in Massachusetts, with several bills pending in the Commonwealth. Online gambling, including poker, remains illegal for the time being in nearly all of its forms except for daily fantasy sports.

Gambling Laws in Massachusetts

Massachusetts has had a turbulent history with gambling but this makes sense considering it started as a Puritan colony where even dancing was frowned upon. The Massachusetts Bay General Court adopted an ordinance as early as 1631 that prohibited gambling, stating that “all persons whatsoever that have cards, dice, or tables in their houses shall do away with them […] under pain of punishment”.

While a lot has changed since then, those who engage in unauthorized gambling activities in the Bay State are still subject to punishment. The Massachusetts General Court has authorized various forms of gambling under license, including charitable gaming, horse race betting, and state-sanctioned lotteries, all of which are available in landbased form. Commercial casinos are legal under the Expanded Gaming Act of 2011. The Massachusetts General Laws contain various provisions related to gambling and the sanctions for its unauthorized provision.

Massachusetts General Laws

The Expanded Gaming Act of 2011

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Massachusetts General Laws

Chapter 4, Section 7 of the Massachusetts General Laws (MGLs) contains a definition of illegal gambling, describing it as any percentage or banking game that involves the use of dice, cards, tiles, electronic or mechanical devices. The participants in such games are risking money, property, or other things of value.

The definition does not cover authorized forms of gaming such as pari-mutuel betting on horse racing, bingo, lotteries, charitable gaming, and dog races. As for the general definition of gambling, you will find it in Chapter 23K, Section 2 of the Massachusetts General Laws. The statute describes it as an activity played by patrons in a specifically designated gaming venue.

Legal gambling games are those played for money with dice, cards, tiles, electronic, electrical and mechanical devices at venues authorized by the local regulator, the Massachusetts Gaming Commission. The sanctions imposed for illegal gambling are outlined in Chapter 271. Keeping or playing at a common gambling house is punishable with fines and imprisonment of up to three months according to the Massachusetts legislation.

Non-profit organizations can periodically hold casino nights, bazaars, and raffles with permission provided they have been functioning for at least two years before applying for permits. The profits they derive from such events should go exclusively toward charities and educational funds. The organizers must receive a permit from a clerk of the city where the event is to take place. No more than three such events can be organized within a single calendar year. The duration of the events is limited to five hours.

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The Expanded Gaming Act of 2011

Commercial casino gambling became legal in Massachusetts after the Expanded Gaming Act came into effect in November 2011. Signed into law by then-Governor Deval Patrick, the legislation paved the way for the creation of the Massachusetts Gaming Commission (MGC) whose purpose is to implement regulations and license such activities.

Under Massachusetts law, no more than three commercial casinos can operate within the state simultaneously, along with one slot-only facility. The legislation identifies three geographically diverse areas in Massachusetts where a casino resort can operate. The three regions in question are:

• Region A comprises the counties of Worcester, Suffolk, Essex, Middlesex, and Norfolk.
• Region B is made up of the Franklin, Hampden, Berkshire, and Hampshire counties.
• Region C consists of the Plymouth, Dukes, Bristol, Barnstable, and Nantucket counties.

The Expanded Gaming Act contains various provisions that aim to ensure a fair and transparent license bidding process. Some of the principles outlined there are meant to mitigate the negative effects of gambling on local communities. Others tackle the allocation of tax funds for education, infrastructure, health care, and debt reduction.

The Act distinguishes between two types of operating permits, Class 1 for commercial casino resorts and Class 2 for the slot-only facility. The local regulatory agency can issue only one Class 1 permit per region. A single Class 2 license was available and it went to Penn National Gaming in 2014. The company subsequently opened Plainville’s Plainridge Park Casino in June the following year.

Region C is the only area that lacks a Class 1 license at the moment of writing. The situation is more complex here due to the Mashpee Wampanoag Tribe’s plans to operate casino gaming within its reservation. Section 91 of the 2011 Act granted the Massachusetts Governor the right to enter into a compact with a federally recognized tribe and put off the bidding process for the Class 1 permit in this region.

The state government agreed on a compact with the sovereign nation in the summer of 2012. The Mashpee Wampanoag intended to build a massive casino resort in Taunton, comprising two restaurants, three hotels, and around 3,000 slots.

However, the project encountered various legal obstacles over the years and remains in limbo at the time of publication. The other two Class 1 permits were granted to Wynn Resorts for the Encore Boston Harbor Casino and Blue Tarp Redevelopment for MGM Springfield. MGM Springfield and Encore Boston Harbor opened doors to customers in August 2018 and June 2019, respectively.

Gambling Fees and Taxes in Massachusetts

The licensee fees for authorized Class 1 casino resorts in Massachusetts amount to at least $85 million. The gambling operators should make a capital investment of $500 million or more. Casino resorts are taxed at a rate of 25% of their gross gambling revenue. They pay an additional $600 annual fee for every gambling machine they operate on their premises. Gaming suppliers are subject to a $15,000 license fee, which they must pay once every three years.

Plainridge Park Casino holds a Class 2 license, which enables it to operate a maximum of 1,250 slot machines. The license fee imposed on such facilities stands at $25 million, with minimum capital investment requirements of $125 million. The slot parlor contributes 49% of its net gaming revenue in the form of taxes.

Like the two casino resorts, the Plainridge Park facility is subject to annual fees of $600 for every slot it operates. All gross revenue taxes it pays go toward the Massachusetts General Local Aid Fund. Local towns and cities use the tax money to improve the infrastructure and fund police and fire protection services. The casinos’ tax money is allocated as follows:

Winning players from Massachusetts are subject to withholding tax rates of 5% under Section 3402 of the Internal Revenue Code. The withholding tax is in place for gambling profits in excess of $600. Players can deduct the gambling losses they incur at authorized casinos but only to the extent of their profits.

Legal Status of Sports Betting in Massachusetts

Massachusetts is yet to join the ranks of states with legal wagering on professional and collegiate sports events. Sports betting remains illegal in the Commonwealth at the moment, with wagering on horse races being the only exception. Authorized racecourses can offer pari-mutuel betting on live horse races under Chapter 128A of the Massachusetts General Laws.

Most Recent Sports Betting Bills

Proposed License Types

Proposed License Fees

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Most Recent Sports Betting Bills

Several bills that aimed to legalize sports wagering were proposed over the years, but all of them ran into roadblocks and faced resistance in the Massachusetts Senate. House Bill 3993 (H3993) and Senate Bill 269 (S269) are two of the most recent pushes for sports betting legalization in the Bay State.

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Proposed License Types

S269 proposes three types of licenses. Category 1 licenses are required for the provision of in-person wagering at gambling establishments plus up to three mobile apps. Category 2 permits would allow licensees to operate in-person betting at live horse racecourses or via a maximum of one mobile app. And finally, Category 3 licenses would authorize sports betting via mobile apps and other digital sources.

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Proposed License Fees

S269 proposes the following application and license fees for the above permits:

• Category 1 licenses – $1 million for application, $2.5 million for the initial license issuance, and $1 million for renewal
• Category 2 licenses – $1 million upon application, $1.5 million initial license fee, and $500,000 for renewal
• Category 3 licenses – $2 million upon application, $7.5 million as an initial license fee, and $3 million for renewal

All permits outlined in S269 would have a maximum duration of five years. Racecourses and landbased gaming establishments can partner with Category 3 license holders for the provision of remote sports wagering. Speaking of which, the MGC can grant no more than six Category 3 permits. H3993 proposed a similar licensing structure with three types of sports betting permits but slightly different license fees.

Both proposed bills suffered the same fate. They passed in the Massachusetts House of Representatives only to encounter obstacles in the Senate that prevented them from progressing any further. The Legislature of the Bay State will meet for another formal session in 2022 and hopefully approve a bill that would bring regulated sports wagering to Massachusetts.

Online Gambling in Massachusetts

As you can probably tell by now, the Massachusetts gambling industry is yet to reach its full potential. The state has only three commercial gaming venues and no tribal-land casinos. Online gambling goes unauthorized in the Bay State for the time being. This applies to nearly all forms of interactive gambling, from online casinos to poker and sports wagering.

Daily fantasy sports are the only exception from the overall ban, with DraftKings and FanDuel being two of the biggest sportsbooks to accept customers from Massachusetts. The latter was among the first states in the country to authorize daily fantasy sports (DFS) under Session Law 2016, Chapter 219. Like regular gamblers, DFS players are subject to withholding taxes provided their winnings exceed $600.

Residents who seek to wager over the internet face two options. They can travel to a nearby state with regulated online gambling like Delaware and New Jersey or join one of the offshore sites that service US residents without authorization from the state authorities. The Massachusetts legislature has not adopted any technical measures to safeguard local players from unlicensed remote operators or block their access to such websites.

Who Regulates the Massachusetts Gambling Industry?

The 2011 Expanded Gaming Act led to the establishment of the Massachusetts Gaming Commission (MGC), which regulates authorized gambling operations in the Bay State. The MGC consists of five full-time members and each of them serves a five-year term with the option of being reappointed afterward. The maximum term each commissioner can serve must not exceed ten years.

The Commission observes for compliance with the Expanded Gaming Act and issues the licenses of approved gambling operators. The Gaming Enforcement Division (GED) is part of the Attorney General’s Office and has the task of enforcing sanctions for violations of the state gambling laws. It conducts investigations into various gambling-related transgressions, including money laundering and corruption.

Conclusion

The Massachusetts brick-and-mortar gambling industry witnessed an expansion in the past decade. The state is presently home to two luxurious commercial casino resorts and a slot facility in Plainville with over 1,200 slots, video poker, and electronic gaming machines. State laws allow for the issuance of one more commercial casino license, which remains unclaimed at the moment of writing.

The Encore Boston Harbor, MGM Springfield, and Plainridge Park facilities have so far collectively contributed over $1 billion in tax money to the state. Online gambling remains unlawful for the time being, with daily fantasy sports being the only exemption from the general prohibition.

With that said, the situation is likely to take a positive turn in the future. Legal sports wagering has received support both from Governor Charlie Baker and the House of Representatives in the past. It only needs to overcome the obstacles in the Senate for locals to gain access to authorized online sportsbooks.