Sponsor Rep. Matt Duffield (R-Russellville) and Saracen Casino Resort chief market officer Carlton Saffa presented House Bill 1861 to the House Judiciary Committee on Thursday. The bill would regulate online gaming in Arkansas and make it a felony for any unregulated entities to operate online casinos in the state. 

Offshore casinos offer various types of online gaming, including blackjack, roulette and craps. HB 1861 would allow in-state casinos to offer those games on their sports betting apps.

Arkansas voters approved a constitutional amendment in 2018, Amendment 100, that authorized four casino licenses in Arkansas for casino gaming and sports betting. Only three licenses were actually awarded; the fourth was intended for a casino in Pope County that will now likely never be built.

In an interview with the Arkansas Times last month after HB1861 was filed, Saffa said it was largely a defensive move by Saracen to weed out unregulated, untaxed offshore online casinos. 

“Unregluated and untaxed casinos are live in Arkansas at great risk to consumers,” Saffa said. “These games are operated by shadowy offshore entities, many with links to China.”

Duffield said the legislation acknowledges that online gaming is happening in Arkansas, and the section of the bill targeting illegal offshore operators is largely symbolic because many of the entities exist outside the country and the state lacks the jurisdiction to stop them. Saffa told us in a previous interview that there is evidence of illegal offshore casinos retreating when they are pushed out by law or cease-and-desisted by regulators in markets where there is a legitimate alternative. 

Duffield said the bill “tightens up the Wild West of online gaming by regulating it,” and expanding interactive gaming would create “millions of dollars in tax revenue.” 

Saffa said illegal offshore casinos represent an “existential threat” to casino business in Arkansas. “At its core it protects Arkansas consumers and makes sure that the money stays in our economy,” he said of Duffield’s bill. 

The bill also includes parameters to allow casinos to run interactive drawings for Arkansas universities’ name, image and likeness (better known as NIL) collectives used to pay student athletes. Schools don’t have to use casinos to run these drawings, and Duffield said the NIL component is the least important part of the bill. “Kicking China out and bringing this business into the economy is the priority,” he said. 

Both the drawings and interactive games would be subject to approval by the Arkansas Racing Commission.

Rep. Ashley Hudson (D-Little Rock) raised concerns that the legislation could have unintended consequences for the Arkansas Scholarship Lottery, which channels proceeds from Powerball, Mega Millions and other games into scholarship dollars. 

Both Saffa and Duffield cited a study commissioned by the lottery in Maryland that didn’t find a negative impact on lotteries located in states that have approved online gambling. Saffa said Saracen has always been very lottery friendly. 

Sharon Strong, executive director of the Arkansas Scholarship Lottery, said the organization does have concerns when new channels are introduced that would take up market share in the gaming industry. “This bill would allow for the casinos to have [interactive] gaming, but it wouldn’t allow for the lottery to have anything digital, so there wouldn’t be a channel or a tool for the lottery to be able to compete or match that effort.” 

Walter Ebel, a lawyer representing Oaklawn, spoke against the portion of the bill that would allow for interactive gaming for the three casinos in Arkansas, even though Oaklawn would stand to profit from the legislation.  

He said the Hot Springs casino believes authorizing interactive gaming would have an adverse impact on physical casinos and tourism. He said people betting would have less money to spend in the counties they’re actually in and that the local portion of the casino tax from each wager goes to the county where the casino is located. Authorizing interactive gaming, he said, would put mini casinos in every county in Arkansas without the permission of the counties. He argued that it might be contrary to Issue 2, which Arkansas voters approved last year, repealing the casino license in Pope County and requiring countywide voter approval for new casino licenses. 

Enid Valentine, an advisor to the Arkansas Problem Gambling Council board, warned lawmakers about the dangers of unregulated offshore gambling markets. She said the number of people gambling on these sites is rising dramatically and the problem gambling hotline has fielded thousands of calls in the last year. Here’s a story by The New York Times that details how some of these sites operate. She said the unregulated offshore sites target people with gambling tendencies. Regulating it would protect Arkansans, she said. 

This is a loaded issue with a lot of money on the line, not just for casino operators but for the state, Duffield said.

“In my view I’m not certain it’s advantageous for me to ask members of this committee today for a hard ‘yes’ or hard ‘no’ for a topic that doesn’t need to have a rushed answer,” he said. “I would like to ask for an interim study on this bill so we can have further discussion and come to a solid conclusion we feel comfortable with, and that we’re not gonna be rushed through the process here at the end of session.”