NCLGS Releases Draft Model Internet Gaming Act

The National Council of Legislators from Gaming States (NCLGS) has unveiled its much-anticipated draft of the Model Internet Gaming Act (MIGA), a document designed to guide state lawmakers in creating legislation for legalizing and regulating online casino gaming. This move signals a significant step toward a more uniform and regulated iGaming landscape across the United States, with the organization calling for public feedback before finalizing the model.

The goal of the MIGA is to provide a comprehensive framework that simplifies the legislative process for states interested in expanding into online gaming. According to NCLGS President and West Virginia Delegate Shawn Fluharty, the model aims to protect consumers, generate new state revenue without tax increases, and curb illegal gambling operations. Fluharty emphasized the importance of collaboration among regulators, legislators, and industry stakeholders to ensure the model legislation meets the diverse needs of different states while maintaining a high standard of consumer protection.

The draft model will be a focal point at the upcoming NCLGS winter meeting in New Orleans on December 14, where it will be discussed in detail. However, due to timing constraints, the council will not vote on the model during this session. Instead, the vote is scheduled for early 2025, after a public comment period ending December 31. Legislators looking to introduce iGaming bills in the new year can use the draft as a foundation, even before the official adoption.

Key Principles and Tax Recommendations
The MIGA outlines several core principles aimed at ensuring that online gaming complements, rather than undermines, existing land-based casinos and racinos. The model emphasizes the need for strict regulation to build public trust, shrink black-market gambling activities, and maximize state revenues. It also calls for severe penalties for unauthorized online gaming operations, reinforcing the importance of regulatory oversight.

Tax recommendations in the draft propose rates between 15% and 25% for online casino gaming revenue, considerably lower than the rates some states have recently considered. For instance, Maryland’s Senate passed a bill with a 55% tax rate on digital games, while New York proposed a 30.5% rate. By contrast, the draft argues for a more balanced approach, citing the average tax rate of 19% among states with legal iGaming. According to NCLGS, a competitive tax rate encourages innovation and technological growth while avoiding barriers to market entry.

Additionally, the draft addresses licensing by suggesting flexible approaches tailored to each state’s size and population. It recommends a five-year term for licenses and outlines options for states to limit the number of operators or skins, potentially through a competitive bidding process. The model also allows temporary licenses for operators in good standing in other states, streamlining market entry for established players.

Responsible Gaming and Consumer Protections

Recognizing the risks associated with online gaming, the draft includes robust measures to promote responsible gambling. These include prohibiting credit card use for deposits, capping daily deposits at $20,000, and mandating a Player Health Program to raise awareness and provide resources for problem gambling. Operators would also be required to designate a responsible gaming lead to liaise with regulators and ensure compliance.

The model sets strict advertising standards, such as banning terms like “risk-free” and restricting advertisements on college campuses. It also requires operators to share transactional data with in-state colleges and universities upon request, ensuring transparency without compromising user privacy.

These measures reflect growing concerns over the social impact of iGaming. The draft incorporates lessons from the federal SAFE Bet Act and existing state frameworks to strike a balance between consumer protection and industry growth.

The Model Internet Gaming Act was developed by the NCLGS Committee on Model Internet Gaming Legislation, led by Delegate Fluharty and comprising lawmakers from states with varying gaming landscapes, including Michigan, Pennsylvania, and New Hampshire. Industry experts, legal advisors, and consultants also contributed to the process, which faced delays due to the complexity of integrating stakeholder recommendations. The initial draft exceeded 100 pages, necessitating further refinement before its release.

Delegate Fluharty praised the collaborative effort, highlighting the importance of public input during the comment period. He expressed optimism that the model would serve as a catalyst for thoughtful and effective iGaming legislation across the country.

We believe the regulatory framework set forth herein may be a useful tool for consideration as states embrace the vast potential of internet gaming.

What Comes Next?

The draft MIGA’s public comment period offers stakeholders and citizens an opportunity to weigh in on the proposed framework. Once finalized, the model could significantly influence state-level legislation, setting a standard for regulatory consistency and consumer safeguards. As the NCLGS prepares for its winter meeting and eventual vote, the draft represents a milestone in the evolving landscape of U.S. iGaming policy.

By providing a clear and adaptable roadmap, the MIGA could help states navigate the complexities of legalizing online gaming while fostering innovation and protecting players. Whether it achieves its goal of unifying state approaches remains to be seen, but the initiative marks a pivotal moment in the push for a modern, regulated iGaming industry in the United States.