Casinos, Gaming, and Unclaimed Property Considerations

The U.S. gaming and casino industry is massive and growing. As recently as the 1980s, land-based casino gaming was limited to Nevada and Atlantic City, New Jersey. Today, it is legal in forty-three states, according to the American Gaming Association (AGA).

In the past eight years, the largest legal gaming expansion has occurred in the sports betting and online gaming markets. A 2018 Supreme Court decision held that the Professional and Amateur Sports Protection Act was unconstitutional (PASPA), paving the way for legalized sports betting in states beyond Nevada, which had been exempted from the PASPA. Forty states now permit some form of sports betting, in-person or online, according to the AGA. Daily fantasy sports, a nuanced variation of sports gaming, is permitted in all but six states. Eight states allow online casino gaming beyond sports betting, including poker, blackjack, and slot machines

Although the terms “gaming” and “gambling” are often used interchangeably, there are technical differences. “Gambling” generally refers to wagering on games of chance, while “gaming” covers skill-based games. These differences matter most when it comes to state regulations. Some states exempt games of skill from their gambling regulations, for example.

Generally, when winnings are redeemable for cash, state unclaimed property provisions apply, unless the law specifically includes specific exemptions. However, as with state-by-state variations in what types of gaming are legal, the applicable unclaimed property laws are complex.

In addition to the typical sources of unclaimed property found in other businesses, such as uncashed paychecks, vendor refunds, and credit balances, there are several property types that are unique to the gaming industry, including customer gaming accounts, uncashed gaming payout checks, and unredeemed wagering vouchers.

Treatment of these properties varies by state. For example, in Nevada, more than $20 million in wagering vouchers remains unredeemed annually. The state does not treat these vouchers as traditional unclaimed property for owners to claim in perpetuity. Rather, slot machine payout tickets and similar vouchers include an expiration date – typically 180 days – after which the casino operator retains 25% and remits the other 75% to the state’s general fund.

In New Jersey, inactive online gaming accounts are subject to a one-year dormancy period as established by the Division of Gaming Enforcement. Funds are split 50/50 between the casino operator and the state’s casino control fund. However, pending legislation would change the dormancy period to three years, and 100% of the funds would be escheated to the state under the state’s Uniform Unclaimed Property Act.

Other unclaimed property considerations for gaming and casino operators include:

• The proper escheat state for complex company ownership and management structures and joint ventures.
• The treatment of unclaimed property where the gaming account or wallet differs from the owner’s home state.
• How gaming regulations apply to gaming activities that offer crypto or other virtual currencies.
• The treatment of “game-related digital content” under the gaming laws, which is exempt from the unclaimed property laws in those states that have adopted the Revised Uniform Unclaimed Property Act of 2016.
• The treatment of dormant gaming accounts that are flagged for fraud or are suspended or frozen under self-exclusion programs.
• Whether unclaimed property laws cover promotional balances.
• Redemption policies, forfeiture rules, and last-activity triggers for uncashed slot tickets and gaming chips.

Navigating these considerations and other nuances requires a team that understands the intersection of the unclaimed property laws and gaming laws, how they may conflict, and how to manage any risk involved. Fortunately, MarketSphere Unclaimed Property Specialists can help. To discuss how we can help ease your unclaimed property burden, contact us today.

*Content contained in this article is considered accurate as of the publish date.