CHEYENNE – State lawmakers have long discussed whether to extend legalized gambling in Wyoming beyond horse racing. This could be the year it finally happens.
At the Capitol, everybody seems to want it. The Wyoming Taxpayers Association has come out in support of regulated gaming, stating it presents a revenue opportunity for the state that is equitable and fair. The Wyoming County Commissioners Association, industry, even the Northern Arapaho Tribe has come out in support of a gaming commission, albeit with the caveat they all have a seat at the table.
For lawmakers, the reasons are simple: With one fell swoop, the state could potentially set itself up for tens of millions of dollars in new revenue while granting legal certainty to a law enforcement community faced with conflicting information on what type of gaming is now legal. Still, it remains unclear what the legislation might ultimately look like – or even what the scale of gaming in Wyoming could one day be.
Over the summer, the conversation was clear-cut enough. Video gambling terminals, while not technically legal, were expanding across Wyoming, mostly in bars. Law enforcement, unsure of what it could and could not do, needed guidance. And the state – now starved for revenue – saw an opportunity to earn some extra income from a vice it could no longer control.
Sometime last week, that conversation got much more crowded – far removed from the nearly-empty meetings that were seen during interim legislative meetings in Thermopolis and Dubois.
With Monday the deadline for bills to make it out of committee, lawmakers were rushing this weekend to get something finalized.
“I think it’s recognizing reality,” said Speaker of the House Steve Harshman. “We have dark machines that our attorney general said are illegal – we think a thousand in Wyoming – and we think there might be eight, $900 million churning in it – maybe $200 million in losses to the playing public. And no way of knowing.”
A gold rush
After last year’s legislative session, regulated gambling was still something of a niche issue. Firms like Bankshot and Cowboy Skill – the main players in early discussions of gaming regulations last session – sent limited representation to meetings of the Joint Committee on Travel, Recreation and Cultural Resources. The conversation was limited in scope: legalizing skill games like video gaming terminals and cards, and establishing the fair share of taxes and regulation they would be subjected to.
But as an opportunity opened up for legalized gaming, more and more industries rushed to get a foot in the door.
The Wyoming Petroleum Marketers Association entered the fray, advocating for language to allow skill games in truck stops around the state. Early last week, a number of Las Vegas-based gaming firms – like the slot machine manufacturer Ainsworth Game Technology and the casino conglomerate Golden Entertainment – hired lobbyists to sit in on legislative hearings. Online sports betting companies like DraftKings and FanDuel, which have been active in statehouses nationwide since a 2018 U.S. Supreme Court ruling allowed states to legalize the practice, came to the table to back legislation sponsored by Harshman and Rep. Tom Walters, R-Casper.
Even the rodeo industry – which pioneered sports betting in Wyoming in the 1960s with the monetization of saddle roping – has gotten in on the action, successfully advancing legislation out of committee to bring all rodeo sports under the umbrella of the state’s Pari-Mutuel Commission. That body – if other legislation proposed in the interim passes – could eventually become the state gaming commission, creating a new system that could allow legal betting on major rodeo events such as Cheyenne Frontier Days.
The committee is already hedging its bets on an overarching gaming commission bill – which leadership has lobbied hard for – passing, having already drafted a “back-up” bill on Tuesday night (House Bill 234) that it will hold back should the gaming commission fail on the House floor, something Rep. Bob Nicholas, R-Cheyenne, described as a way for the committee to “bet on two horses.”
It might be needed. Last week alone, the House Appropriations Committee passed several bill with regulatory frameworks to cover every type of betting, leaving some to wonder whether an omnibus gaming bill could come out of the House this session. While some types of gambling – like skill games and rodeo – could be covered under the state gaming commission, others – like sports betting – could be covered under a different agency entirely, with gaming company representatives suggesting regulation under the state’s lottery corporation or the Department of Revenue.
Meanwhile, the existing gaming operators – many of whom have sunk tens of thousands of dollars to get their machines in compliance with current state law – are in an uneasy alliance to change the definition of legal gaming in Wyoming, a process that has been playing out at the committee level.
However, the entry of Las Vegas gaming firms has further complicated things. On Thursday, members of the House Appropriations Committee huddled behind closed doors for nearly two hours, leaving a room of lobbyists waiting. What games should even be regulated – a focus of the Legislature for nearly two years – was re-litigated once again, with Nicholas announcing to the audience that lawmakers could potentially be working through the weekend to get a gaming commission bill to the floor by Monday with set definitions, a set regulatory framework and set expectations.
“That’s kind of the process,” Walters said in a brief interview Thursday afternoon.
The chaos of the process, understandably, left some frustrated.
“This is the largest undertaking of an expansion of gaming in Wyoming history,” Byron Oedekoven, executive director of the Wyoming Association of Sheriffs and Chiefs of Police, reminded committee members Thursday afternoon. “And we’re trying to do this before we gavel in at 2:45, with plans to work Saturday and Sunday, and potentially come up with a bill by Monday.”
Pressure is on
The dizzying pace of the gaming debate has been surprising.
Legislation to create a gaming commission was killed several times over the past year, only to be revived by members of leadership who – despite the odds against it – have refused to let the concept die. Even areas like legalized sports betting looked likely to fail until the Speaker of the House – watching from the sidelines – applied the gentle pressure needed to pass the legislation by a 4-3 vote.
There is much pressure to get something done. Unregulated gaming has continued its aggressive expansion across the state (one firm told the Star-Tribune they currently operate 538 machines in the state, with an anticipated market saturation of 1,300 if the gaming commission bill passes), leaving Wyoming in a position where it’s losing millions of dollars in revenue at a time when the money is desperately needed.
Meanwhile, overseas black market sports betting sites – which are notoriously lacking in consumer protections – continue to attract consumers’ attention, leaving Wyoming out in the cold on tens of millions of dollars in potential revenues, according to a 2017 Oxford University study on the economic impacts of legalized sports betting. Even with Wyoming now lacking an adequate apparatus to regulate gambling, lobbyists for the sports betting industry – and legislative leadership itself – believes the opportunity is too good to pass up.
“This, I believe, is a grand opportunity for Wyoming – which is looking at revenue – to step back, look at all these options, and find the right home for this,” Dave Picard, a lobbyist representing both FanDuel and DraftKings, said Tuesday night.
Some are worried the Legislature could be trying to do too much all at once. Among the most frustrated was Rep. Albert Sommers, R-Pinedale, who was apprehensive at sponsoring numerous bills regulating gaming at the same time. Others, like Nicholas, said they preferred setting up a gaming commission prior to pursuing regulations for areas like sports betting, maintaining more time was needed to study the impacts.
The emergence of outside influence into the conversation has created its own issues. While both bills to enact a gaming commission were homegrown, the others – the sports betting legislation in particular – mirror regulations propped up in other states, a sort of “Frankenbill” encompassing pieces of bills considered in Maine, Indiana and New Jersey. Though the language in those bills, some thought, could potentially be adopted into a larger piece of legislation, others felt the process was moving far too fast for careful consideration.
“We need to walk before we run, and we need to get the gaming commission set up first before we move ahead with this,” Sommers said.
Risk and reward
The question remains: How big could gaming in Wyoming eventually get? Skill games have already attracted out-of-state attention, leaving in-state firms poised to expand aggressively upon legalization in order to keep others out of the market.
Nic George, president of the Amusement and Music Operators of Wyoming – which operates dart and billiards tournaments around the state – said that his family’s company, Wyoming Amusement, has already expanded to as many markets in the state as it possibly can. The company has only been limited by concerns related to law enforcement, specifically whether their products are actually permitted.
But the new, out-of-state players like Golden Entertainment argue that the in-state firms – with the gift of time — have been stacking the deck to benefit their businesses and block out-of-state firms looking to compete in Wyoming’s market. The in-state firms, meanwhile, argue that the out-of-state companies have swooped in like vultures, looking to take advantage of their hard work.
“If they want to legalize both [video game terminals and skill games] then we would be happy to compete in that market so long as they level the playing field by removing skill games for some period of time,” Sean Higgins, the executive vice president of government affairs for Golden Entertainment, said in an interview. “But I don’t think the skill game companies would have the same opinion if you did that, and that should tell you something. We’re not afraid to compete, but we want to compete on a level playing field.”
While local players have confidence they will have an immediate advantage against out-of-state firms in building market share, that assumption also relies on the state establishing reasonable tax rates and low enough permitting costs for “mom and pop” operations to get in on the action.
Right now, Wyoming’s proposed bill has a tax rate of roughly 16 percent – considered on the higher end of the competitive market. Others have gone lower, like Iowa (6.75 percent), or higher, including monopolistic states such as Rhode Island, Delaware and Montana. Others, like Golden Entertainment – the latest player in the conversation – see tax policy as a way to establish a competitive advantage, and have proposed amendments to raise Wyoming’s tax rate on those games to 42 percent: a sweeter deal for the state but one that could put smaller, local operators at a disadvantage.
“You have to ask, is theirs the best option? Or is theirs the convenient option because they happen to be here, so you may as well regulate them?” Higgins said. “That’s been their M.O. in every jurisdiction, and we don’t believe that’s the right way to operate.
“We want everyone to profit,” he added. “And at the end of the day, ours is just a better model.”
But too high a threshold – and too narrow regulation – can have a price. Pennsylvania – which legalized video game terminals in 2017 – anticipated revenues of nearly $14 million annually from gaming alone and imposed a $100,000 permitting fee to operate. Since the first machines began to appear last summer, however, that high barrier of entry – as well as the state’s 36 percent tax rate – has stunted their earning potential. To date, those video gaming terminals, primarily owned by large corporations that can afford the start-up costs, generated just $1.2 million in revenue for the commonwealth last year. Meanwhile, Pennsylvania’s narrow definitions have allowed other forms of illegal gaming to continue its rapid expansion into places like laundromats and convenience stores, prompting the state’s gaming control board to join a lawsuit against the skill game company Pace-O-Matic.
Even if Wyoming determines how to regulate and tax all the different machines coming into the state, the question of where the money will ultimately end up is an open-ended one. The Wyoming County Commissioners Association, which has expressed support for regulation, has been clawing for a share of the revenue to offset what it described as the negative social implications of legalized gaming as well. It has thrown its own amendments into the mix for consideration, while cities have maintained that all the revenues associated with gaming operations should be limited to their respective jurisdictions.
With numerous other states having already created some form of gaming commission, Wyoming does have an opportunity to get things right. It’s just a question of when.
“Freedom from choice is not freedom of choice,” said George, the Amusement and Music Operators of Wyoming president. “If people want to play those games, they’re going to go play them. But it is within the Legislature’s purview to make sure it’s safe.”