A Look at Mississippi Gaming Regulations

Mississippi is yet another river state that has implemented riverboat gaming legislation. The state followed the structure of Iowa and Illinois to create their governing body. In addition to gambling on the Mississippi River and its tributaries, gaming is also permitted on Oxbow Lakes that border the river, in three Gulf Coast counties and in the Mississippi Sound. This all became effective as of April 1^st, 1990.

The state of Mississippi permits all forms of gambling including charitable bingo. New games are subject to review and approval by the Mississippi Gaming Commission. Although all forms of gambling are legal, counties cannot automatically open casinos. They must file a notice of intent.

If no petition is signed within 30 days, the country Board of Supervisors must create a resolution approving legalized gambling within their county borders. On the other hand, if 20 percent or 1,500 registered voters of that county (whichever is less) file a petition against gaming in that area, an election must be held. This must occur within 60 days of the certified petition. The state gaming body then evaluates whether the site for the casino is too close to a residential area or church.

The Mississippi Gaming Commission comprises only three board members that serve four-year tiered terms without compensation. Commission members may only serve two terms with one member being a resident for at least five years. The Governor and the Senate work to appoint the commission members.

The Commission regulates, licenses and adopts new laws. An executive director serves full-time to administer legislature and makes recommendations to the Commission. There are many rules the Gaming Commission enforces including:

• Procedures to apply for gaming licenses
• Payment for background checks of applicants
• Size of a gaming area
• Credit and debt collection procedures by casinos
• Acceptable games
• Procedures for hearings

Gaming is only permitted by those that are at least 21 years old and on the grounds of a casino. Although local governments have little input into the issuance and gaming regulations, they can create zoning restrictions that isolate gaming to a specific area within a town, city or county.

The gambling tax structure in Mississippi is fairly standard. Those boarding a gaming vessel are charged $3.50 by the government. 60 percent goes to the state, 20 percent to the county and 20 percent to the city. Gaming establishments pay a 4 percent sliding tax on the first $50,000 in revenue, 6 percent on $84,000 and 8 percent on anything over $134,000. Local governments can impose a tax of up to 3.2 percent.

Mississippi gaming laws are similar to other boarding river states that permit land-based casinos as well as riverboat gaming. As the economy continues to decline along with the gaming industry, perhaps regulations may loosen to spark new business.

The Legalization of Internet Gaming

Large U.S. casinos are seeing dollars signs with the potential to legalize Internet gambling but neighborhood casinos are seeing problems. Small, local casinos in Nevada comprise most of the gaming halls in the state of Nevada which has the world’s largest concentration of casinos. There is already enough competition amongst land-based casinos; adding legalized Internet gaming could be disastrous.

Why this is an Issue

Local casinos make their money through convenience of reaching a small, localized market and building strong, lasting relationships with their customers. Adding online properties to the mix will result in the biggest brands acquiring the most customers thus phasing out smaller competitors. It’s a simple matter of economies of scale. Those that offer the largest service will continue to expand, grow and attract more customers.

Supporters of Legalization

The primary supporters of the legalization of gambling include foreign-based gaming websites, celebrities, no-name poker players, a few U.S. casino companies and recently the American Gaming Association (AGA) who is lobbying for tough licensing requirements. A select few in Congress have argued that prohibition is ineffective and U.S.-based players are simply spending their money overseas which is continuing to hurt the American economy.

The Las Vegas Culinary Union supports the legalization of online poker. Additionally, gaming giant Harrah’s Entertainment supports online gaming.  Harrah’s commissioned a study in 2009 that concluded the legalization of online gaming could triple the industry as opposed to hinder it. The study was based on the continued growth of Internet poker rooms; European growth and U.S. retail chains that have boosted sales following the launch of Internet stores.

In the past 10 years, it is proven those businesses that have not adopted the Internet as a medium of growth have died out and those supporters have shown vast growth and expansion. This is an excellent opportunity for older casinos to cater to the younger crowd using technology as its medium.

The Opposition

Few U.S. casinos have someone in Washington lobbying for legalization. 14 California tribes that own and operate major casinos are against the bill stating the tribal members will suffer because of extra competition. Additionally, the nation’s largest poker room, Commerce Casino, is against online wagering. The Nevada Resort Association has not yet taken a position on the matter. They represent large casinos at the state level.

The legalization of online gaming has been a long, heated debate. The mechanisms in place to stop problem gamblers or those underage have been minimal. On the other hand, through prohibition the U.S. is losing out money that is being pumped into foreign markets. The country is at crossroad and a firm decision must be made.

A Review of Iowa Gaming Laws

Believe it or not, Iowa has gaming regulations consistent with Nevada and New Jersey although most of their laws are geared toward riverboat gambling. In Iowa in 1989, casino gaming was legalized aboard historical river excursion vessels on the Mississippi River, Missouri River and other waterways within the state. At the same time, the state legislature developed the Iowa Racing and Gaming Commission.

The Iowa Racing and Gaming Commission

The primary function of the Commission is to oversee pari-mutuel wagering as well as riverboat gaming. The Commission is fairly standard with five members appointed by the Governor of Iowa and reviewed by the Senate. Each member serves an office term of three years. The requirements for the position are by political party, gender and region in the state. The state requires approval from the counties where the riverboat will be based.

Similarity to Large Gaming States

Iowa has modeled their gambling structure after major gaming states like Nevada and New Jersey. The Nevada gaming model has always been regarded as lenient. On the other hand, New Jersey is much stricter. The New Jersey model requires an assessment of the cost of regulation as well as taxes. This was not possible in Iowa due to the high cost for the types of casinos permitted in the state.

Instead, Iowa focused on harsh regulations with regards to security, surveillance and cash control. Also, a networked slot machine data system was a requirement for the tracking of slot games. The state felt they found a balance between regulation and cost-effectiveness. However, casino operators still believed the cost was too high due to the high-priced state police agents aboard each vessel.

Casino Taxes

The tax structure is similar to other states offering riverboat gaming. Operators must pay an annual fee of $5 per person per voyage including the crew. Also, the state levies a $0.50 per head tax with a maximum of $250,000 per boat. Individual counties can implement a $0.50 local tax per passenger. The revenue is on a gradual scale with 5 percent for the first million dollars, 10 percent on the next two million and 20 percent on all revenue above three million.

Iowa initially used the best laws from New Jersey and Nevada to find the proper balance of regulation and cost-efficiency. In such a short time they have implemented a model gaming system for the rest of the country to follow.

A Closer Look at Indiana Gaming Regulations

Indiana is one of the newest states to partake in the riverboat gaming trend. As of 2010, the state of Indiana only allows riverboat gaming, racetrack wagering and the Hoosier lottery. Although new, the structure of the gaming commission is consistent with other neighboring states.

As a result, a limited number of gaming licenses are issued each year. The state permits up to 11 gaming licenses to be issued only to counties along the Ohio River, Patoka Lake and Lake Michigan. All other areas of the state that contain a body of water cannot acquire a license.

The Indiana Gaming Commission reports directly into the Governor and is a segment of the executive branch. The commission board consists of seven total members appointed by the Governor. The requirements of the board members include:

• One member must have a background in law enforcement
• One member must be a CPA
• One member must be a lawyer in Indiana
• Three members must be from a county on the Ohio River
• Three members must be from a country on Lake Michigan
• The final member can be from any other county

The seven members of the board serve a three-year staggered term. Also, to keep balance within the commission, no more than three board members can be of the same political party. Although separate from the Indiana Gaming Commission, the State Police are also involved by conducting background checks and investigations for those applying for a gaming license.

The commission also controls racetrack wagering, the Hoosier lottery and charitable gaming. The riverboat gaming companies must pay the commission $3 per person admission tax from each vessel on a daily basis. Additionally, adjusted gross revenues are taxed at a 20 percent state tax rate.

One interesting rule implemented by the commission in 2003 is the Voluntary Exclusion Program. This allows citizens to be excluded from any gaming-related activities, mailers and hand-outs from a casino. The individual can sign-up in person at any Indiana casino or an Indiana Gaming Commission office. The terms are for one-year, five-years or a lifetime.

The Indiana Gaming Commission follows a similar structure to other riverboat gaming states. Although limited, the commission has a tight hold with strong regulations to ensure compliance. Due to the newness of the gaming concept to Indiana, perhaps in the future they will expand their authority to permit land-based casinos into the state.