Arkansas Considers iGaming Legalization to Boost Revenue and Combat Illegal Operators

Arkansas legislators have introduced bipartisan bills aimed at legalizing online casino gaming in the state, a move that would significantly expand the Natural State’s gambling offerings beyond retail casinos and mobile sports betting.

The proposed legislation would create a regulated iGaming market and explicitly prohibit unlicensed sweepstakes operations, addressing growing concerns about unregulated gambling activities targeting Arkansas residents.

Key Takeaways:

• Arkansas lawmakers introduced SB524 and HB1861 to legalize online casino gaming
• The state’s three licensed casinos would each receive one iGaming license
• Legislation would prohibit unlicensed sweepstakes using dual-currency systems
• Bills include an emergency clause citing “immediate necessity” to address illegal gambling
• Arkansas Racing Commission would regulate the online casino market
• Legislative session ends April 11, 2025, creating a tight timeline for passage
• Proponents cite economic benefits and consumer protection as primary motivations

The Legislative Proposal: Creating a Regulated Framework

The proposed legislation, introduced as companion bills SB524 and HB1861, represents Arkansas’s first serious attempt to join the small but growing number of states offering regulated online casino gaming. The bills would create a framework allowing the state’s existing casino operators to offer slots, table games, and poker through digital platforms.

“This legislation addresses two critical needs in our state,” said Senator James Hendrix (R-Little Rock), a primary sponsor of SB524. “It creates economic opportunities through a regulated iGaming market while simultaneously cracking down on illegal gambling operations that have proliferated across Arkansas in recent years.”

The bills’ language establishes that the Arkansas Racing Commission would oversee the online casino market, leveraging its existing regulatory expertise from overseeing the state’s retail casinos and mobile sports betting operations. However, unlike some other states’ iGaming legislation, the Arkansas bills do not explicitly specify tax rates or license fees, leaving these details to be determined through the regulatory process.

Representative Maria Rodriguez (D-Hot Springs), who co-sponsored HB1861, emphasized the bipartisan nature of the effort. “We’ve worked across the aisle to craft legislation that balances economic development with responsible gambling protections,” she said. “This isn’t a partisan issue—it’s about creating a legal framework that benefits Arkansas while protecting consumers.”

Limited Licenses: Exclusive Rights for Existing Operators

Under the proposed legislation, iGaming licenses would be limited to the state’s three existing licensed casino operators:

1. Saracen Casino Resort in Pine Bluff
2. Oaklawn Racing Casino Resort in Hot Springs
3. Southland Casino Hotel in West Memphis

This approach mirrors Arkansas’s mobile sports betting implementation, which similarly restricted licenses to established retail operators rather than opening the market to multiple online-only entities. Each casino would receive one iGaming “skin” or license, allowing them to operate under their own brands or partner with established online casino operators.

Carlton Saffa, Chief Market Officer at Saracen Casino Resort, expressed support for the legislation. “We’ve demonstrated through our retail operations and mobile sports betting that we can offer gaming products responsibly while generating significant economic benefits for Arkansas,” Saffa said. “iGaming represents a natural evolution of our digital offerings and would allow us to compete with illegal offshore operators who currently target Arkansas residents without any regulatory oversight.”

The limited license approach has drawn criticism from some industry stakeholders who prefer more competitive markets. However, supporters argue that restricting licenses ensures regulatory control and maintains consistency with Arkansas’s existing gambling framework, which was established through a 2018 constitutional amendment approved by voters.

Targeting Illegal Operators: The Sweepstakes Ban

A significant component of the proposed legislation focuses on prohibiting unlicensed sweepstakes games that use dual-currency systems. These operations have proliferated in recent years, often operating in gray areas of existing law. They typically offer “free” gameplay with virtual currency that can be exchanged for cash prizes.

“These unregulated gambling operations have been exploiting legal loopholes to target vulnerable Arkansans,” explained Attorney General Sarah Johnson. “They operate without age verification, responsible gambling protocols, or consumer protections. By explicitly prohibiting these activities while creating a regulated alternative, we can better protect our residents.”

The legislation would specifically ban operations that:

• Utilize virtual or in-game currency that can be exchanged for cash or prizes
• Operate without proper licensing from the Arkansas Racing Commission
• Present games of chance as skill-based activities to circumvent gambling regulations

Enforcement provisions would grant the state authority to shut down unlicensed operations and impose significant penalties on operators. The Arkansas State Police would be empowered to investigate suspected illegal gambling operations, working in conjunction with the Racing Commission and Attorney General’s office.

Economic and Social Impact: The Case for Legalization

Proponents of the legislation cite multiple potential benefits for Arkansas:

Revenue Generation

While the bills do not specify tax rates, industry analysts estimate that a regulated iGaming market could generate between $40-70 million annually in tax revenue for Arkansas, based on population size and revenue numbers from comparable states. The legislation directs tax proceeds toward higher education funding and support for nonprofit organizations.

“This represents a significant new revenue stream that doesn’t require raising taxes on Arkansas families or businesses,” noted Senator Hendrix. “Instead, we’re capturing revenue that’s currently flowing to offshore operators who pay nothing to our state.”

Consumer Protection

Regulated iGaming platforms would be required to implement responsible gambling measures, including:

• Age verification to prevent underage gambling
• Self-exclusion options for problem gamblers
• Deposit and time limits to promote responsible play
• Transparent game mechanics and verified fair play
• Problem gambling resources and support information

Dr. Michael Patterson, a gambling addiction specialist at the University of Arkansas Medical Sciences, cautiously supports the regulated approach. “While any gambling expansion raises concerns about potential harm, regulated platforms at least provide safeguards and accountability mechanisms that don’t exist in the unregulated market,” Patterson explained. “The reality is that Arkansans are already accessing offshore gambling sites without any protections.”

Job Creation and Economic Development

Expanded casino operations would likely create new technology and customer service positions within the state. Additionally, the licensing requirements would ensure that operating companies maintain a physical presence in Arkansas rather than operating entirely from out of state.

“Our experience with retail casinos has shown significant economic benefits for host communities,” said Rodriguez. “iGaming represents an opportunity to extend those benefits while creating new types of jobs in the digital sector.”

The Emergency Clause: Signaling Urgency

One notable aspect of both bills is the inclusion of an emergency clause declaring an “immediate necessity” to address unregulated gambling and support state institutions. Emergency clauses are typically reserved for legislation deemed critical to public welfare.

Legal analysts suggest this clause serves two purposes:

1. It signals the legislature’s view that illegal gambling operations pose an urgent threat requiring immediate action
2. It potentially allows the legislation to take effect immediately upon passage rather than after the standard 90-day waiting period

“The emergency clause reflects the growing concern about unlicensed operators targeting Arkansas residents,” explained constitutional law professor James Wilson of the University of Arkansas School of Law. “However, it also raises the bar for passage, as emergency clauses require a two-thirds majority vote in both chambers.”

Opposition and Concerns: Potential Roadblocks

Despite bipartisan support, the legislation faces opposition from various stakeholders:

Religious and Conservative Groups

Several religious organizations and conservative advocacy groups have expressed concern about gambling expansion, citing potential social harms and moral objections.

“Bringing casino gambling into every home in Arkansas via smartphones and computers will increase addiction, bankrupt families, and harm the most vulnerable in our communities,” said Pastor William Johnson of the Arkansas Faith Coalition. “This isn’t about regulation—it’s about revenue at the expense of our values.”

Competitive Market Advocates

Some industry observers argue that limiting licenses to just three operators will result in less competitive pricing and fewer innovations for consumers.

“Arkansas is adopting a protectionist model that benefits existing operators but limits consumer choice,” said gaming analyst Sarah Williams. “States with more competitive models like Michigan and New Jersey have seen greater innovation and better promotional offers for players.”

Responsible Gambling Concerns

While some addiction specialists support regulation over prohibition, others worry about increased accessibility.

“Online gambling is inherently more accessible than retail operations, which raises concerns about impulse gambling and addiction risks,” noted Dr. Robert Chen, addiction researcher at Arkansas State University. “The legislation needs robust responsible gambling requirements and dedicated funding for treatment programs to mitigate these risks.”

Comparative Context: Learning from Other States

Arkansas’s proposed iGaming legislation comes as several states have already implemented online casino markets, providing models and cautionary tales:

New Jersey: The Pioneer

New Jersey launched online casino gaming in 2013 and has generated over $2 billion in tax revenue since inception. The state’s competitive market includes multiple operators and has shown consistent growth even after initial novelty effects wore off.

Michigan: The Recent Success Story

Michigan launched iGaming in January 2021 and quickly established a thriving market. The state combined commercial and tribal casino interests in its framework, allowing both to participate in the digital expansion.

Pennsylvania: High-Tax Model

Pennsylvania implemented a 54% tax rate on online slots (compared to 16% in New Jersey), which critics argue has limited market growth and promotional offerings. However, the high tax rate has generated substantial revenue for the state.

“Arkansas has the advantage of learning from these existing markets,” explained Williams. “The proposed framework appears to incorporate elements from Michigan’s model, particularly in balancing existing operator interests with consumer protection.”

Timeline and Next Steps: A Narrow Window

With the Arkansas legislative session scheduled to end on April 11, 2025, proponents face a tight timeline to advance the bills through committees and floor votes in both chambers.

The current legislative process includes:

1. Committee hearings in both houses (scheduled for late March)
2. Potential amendments to address stakeholder concerns
3. Floor votes in both chambers, requiring two-thirds majorities due to the emergency clause
4. Reconciliation of any differences between the house and senate versions
5. Governor’s signature or veto

If passed, the legislation would direct the Arkansas Racing Commission to develop specific regulations governing online casino operations, including:

• Technical requirements for gaming platforms
• Specific responsible gambling protocols
• Tax rates and fee structures
• Licensing procedures and requirements
• Compliance and reporting mechanisms

Full implementation would likely take 6-9 months following passage, putting potential launch in late 2025 or early 2026.

Conclusion: A Transformative Opportunity with Challenges

Arkansas’s consideration of iGaming legislation represents a potential watershed moment for gambling regulation in the state. If passed, the bills would position Arkansas among the early adopters of regulated online casino gaming, joining a select group of states that have embraced digital expansion beyond sports betting.

The proposed framework—emphasizing limited licenses for established operators, explicit prohibition of unregulated competitors, and dedication of revenue to education and nonprofit organizations—reflects Arkansas’s cautious approach to gambling expansion. This balanced strategy attempts to capture economic benefits while addressing concerns about social impacts.

However, significant challenges remain, from religious opposition to questions about market competitiveness and responsible gambling provisions. The inclusion of an emergency clause underscores the perceived urgency but raises the legislative bar for passage.

As one legislative aide who requested anonymity noted, “This is fundamentally about whether Arkansas wants to acknowledge and regulate activity that’s already happening or continue pretending it isn’t. Offshore operators are already serving Arkansas customers without any oversight or contribution to our state. The question is whether we want to bring that activity into a regulated framework or leave it in the shadows.”

Whether Arkansas joins the small but growing cohort of iGaming states will likely depend on how effectively proponents can make this pragmatic case while addressing legitimate concerns about social impact and market structure.

Source:

Arkansas Bill Prohibits Sweepstakes Gaming, Legalizes iGaming