Hawaii introduces new bill to legalize online gaming

A new internet gaming bill was introduced in Hawaii on Friday.  The bill is one of the many different pieces of legislation being introduced across the nation as a swell of bills concerning gaming is coming to the forefront in 2017.

The bill identifies that “tens of thousands” of Hawaii residents are already using illegal online gambling on unregulated internet web sites.  The bill is meant as a way “[t]o protect Hawaii residents who gamble on the Internet, and to capture revenues generated from internet gambling in Hawaii…”

The legislation will seek to create an “internet-only lottery and gaming corporation, which shall be a public instrumentality…”  It will be subject through a “system of audits and reports.”

The bill goes on to define its scope on what the internet lottery and gaming corporation may do:

(1)  Offer internet wagering on games of chance and games of skill, including lottery, poker, and casino games, to individuals over the age of eighteen years; provided that the corporation shall not offer internet wagering on any sporting event or sporting contest;

(2)  Enter into agreements with other state gaming entities for the offering of multistate games, consistent with state and federal law;

(3)  Utilize the broad reach of its internet gaming platform to offer legally compliant free-play games and sweepstakes with Hawaii related prizes to individuals outside of Hawaii, for the purpose of attracting tourists and providing free exposure for Hawaii and Hawaii businesses to domestic and overseas markets;

(4)  Conduct no more than two land-based gaming entertainment events annually, related to the corporation’s internet game offerings, for the purpose of attracting tourists to Hawaii; provided that the corporation shall not have the authority to conduct any other form of land-based gambling; and

(5)  Engage in other activities consistent with the purpose of this chapter and rules adopted hereunder, and with state, federal, and international laws.

Notably, the bill does not attempt to define a “game of chance” versus a “game of skill.”

The introduction of the bill comes a year after it ruled Daily Fantasy Sports illegal gambling.  Just a year ago, the state’s Attorney General defined Daily Fantasy Sports as contests that constitute gambling under Hawaii law.  Could we see the state revisit this in light of the proposed law?

What will the Supreme Court do in The Slants case?

The U.S. Supreme Court heard oral arguments in the case of whether a Portland, Oregon-based rock band can trademark the name, The Slants.  The long, winding case history stems from whether an Asian American rock group could call itself a traditionally derogatory name.

According to the band’s leader, the name was meant to empower and retake the meaning of the racial slur which refers to the physical eye trait of many Asians.

The Court seemed weary of the portion of the 1946 Lanham Trademark Act which prohibits the registration of a trademark that “may disparage…persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt, or disrepute.”  Some of the justices believed that it would engage the government in determining “viewpoint discrimination” as there would need to be a determination on whether a trademark was positive or negative speech.  The example of whether an entity could trademark The Slants are Superior was used as an example.

The justices noted that negative or even offensive speech is eligible for copyright protection but the Lanham Act precludes this happening for trademarks.

Justice Anthony Kennedy noted, “So the government is the omnipresent schoolteacher?”

On the other side, the justices took issue with The Slants attorney as they indicated that the band was free to call themselves the name but they are asking the government to endorse it via a federally registered trademark.

They also found it hard to reconcile the issue that the trademark office could deny registration that denigrated an individual or a competitor’s product yet still be protected under the First Amendment.  A hypothetical which would allow trademark rights to a libelous mark in which a court may find such cause of action and subsequent damage might still be protected under the First Amendment.  The circular application of law did not make sense to the justices.

The written opinion will not be out until June and its hard to make a call on how this will turn out.

The NFL’s Washington Redskins will be interested onlookers as their “Redsins” mark was cancelled under the same section of the Lanham Act as cited here before the court.  If the Court strikes down the portion of the Lanham Act, the Redskins will certainly seek to reapply its mark.

The issue seems to hinge on whether the justices believe the application of the Lanham Act seeks to overreach in dragging the government into determining what is discrimination versus reconciling the Lanham Act and the First Amendment.

Washington state unlikely to pass DFS law in 2017

For those hoped 2017 would be the year that Washington State would legalize Daily Fantasy Sports, it appears that the hope has faded just 18 days into the new year.

A Senate Commerce Committee hearing on a Daily Fantasy Sports bill which would classify DFS as a game of skill did not provide any timeline as far as movement and senate committee chair Michael Baumgartner indicated that there would be no chance that Daily Fantasy Sport will move this year.

The bill would classify DFS as a game of skill and not gambling for purposes of the Gambling Act.  It defines a fantasy competition and provides certain conditions regarding prizes and the determination of the contest winner.

The hearing was the first for the bill although some committee members noted it was similar to one introduced last year.

Senate Bill 5169 would classify Daily Fantasy Sports as a game of skill rather than that of chance which would exempt it from any classification of gambling. According to the proposed bill, “[a]ll prizes and awards offered to winning participants are established and made knwon to the participants in advance of the game or contest and teh value of the prizes and awards is not determined by the number of participants or the amount of any fees paid by participants.”  Ensuring the classification of skill, the proposed legislation notes that wins “reflect the relative knowledge and skill of the participants and are determined predominantly by accumulated statistical results of the performance of individuals in multiple real world sporting or events…”

Testifying in favor of the bill was former state attorney general Rob McKenna who now works at a law firm representing DraftKings and FanDuel.  McKenna indicated that there were 40 states that allow Daily Fantasy Sports.  Ohio would soon be the 41st state with legislation pending.  McKenna is hopeful that Washington the 42nd state.

The committee asked McKenna about how other states have addressed regulation to which he referred them to states such as Colorado, Virginia and Maryland.

In addition to McKenna, Maureen Greeley, the Executive Director of the Evergreen Council of Problem Gambling testified before the committee that warned of gambling addiction and the concern about regulation.

It was clear that without a lot of detailed questions regarding the bill, that the committee is taking baby steps in learning the intricacies of Daily Fantasy Sports and without the education, it’s unlikely that we’ll see DFS legal in Washington in 2017.

For more background on the battle for DFS in Washington state, I wrote a piece last year.

U.S. Supreme Court hears oral arguments in Lee v. Tam

Can an Asian American rock band trademark the name, The Slants was at issue before the U.S. Supreme Court on Wednesday afternoon.  The much talked about case which may affect the NFL’s Washington Redskins trademark looks at whether the USPTO can preclude from trademarking names that might disparage.

A text of the oral argument can be found here.