Legislatures take the lead to define future of sports betting
In one three-day span late in December, the D.C. Council approved a sports betting framework unlike any previously seen, legislators in Michigan passed an online gambling bill meant to pave the way for sports betting in that state, and outgoing Sen. Orrin Hatch and Senate Minority Leader Chuck Schumer introduced a 101-page bill that would require states that allow sports betting to meet minimum federal standards.
The final stretch of 2018 turned a spotlight on the all-important next phase for sports betting, a state-by-state rollout that could expand from the current eight states to as many as 20 by year’s end.
“This next year is all about this whole state situation and how it unfolds,” said Scott Butera, who joined MGM as president of interactive gaming in June after serving as commissioner of the Arena Football League and CEO of Foxwoods Resort and Casino. “It’s about which states get it right and which don’t. What state can’t get out of their own way and what state is really open? What states are going to be successful? That’s next year’s big deal. The one real governor in growing sports betting is going to be the states.”
The decision to offer sports wagering, placed in the hands of individual states by a Supreme Court ruling issued in May, is only the first in a complex series of choices. States also must decide whether to allow for wagering by mobile device, as in Nevada, New Jersey, Pennsylvania and West Virginia, or to restrict it to casinos and other retail locations, as have Mississippi, Delaware and Rhode Island. They must set a tax rate. And they must decide who will oversee regulation — a mostly political choice that will shake out based on the existing gaming structure, and whether the greatest power resides with a state’s commercial casinos, tribal casinos, lottery commission or horse tracks.
“This is how the gaming industry works,” said Sara Slane, senior vice president for the American Gaming Association. “Every state has their own unique dynamic and has their own specific gaming program. It’s not a one-size-fits-all. So I do anticipate that you’re going to see different models put in place throughout the country.”
The latest major development on that front came in the nation’s capital, where D.C. lawmakers approved a bill that will allow for both brick-and-mortar sportsbooks and mobile sports betting, but in an unprecedented framework that has been panned by both the casino industry and Washington Wizards and Capitals owner Ted Leonsis, who has been a vocal proponent of sports betting.
The D.C. bill would offer licenses to retail sportsbooks to be located at four sites — Capital One Arena, Nationals Park, Audi Field and the recently opened St. Elizabeths East Entertainment and Sports Arena — the operators of which presumably would be chosen by the team owners who control those venues. Those licenses, priced at $250,000 and good for five years, give operators exclusivity within two blocks of the venue.
The bill also allows for licenses to be issued for other retail locations.
All of this is further complicated by the fact that the D.C. Council also made its lottery the exclusive provider of mobile betting, which means that bettors will have to switch apps, and betting accounts, depending on where they are when placing bets.
“If you’re coming into D.C. every single day and then going back home to Virginia or Maryland, you may be using your app through the lottery, but then you go to a Caps game and you have to go into your MGM app,” Slane said. “But then once you get back outside you can’t use the MGM app anymore. It’s very bizarre. I’m pessimistic. I don’t think it’s going to be successful. I think over time consumers are going to be confused and frustrated.”
D.C. marked the first example of the sports industry and gaming industry coming together on a concerted lobbying effort, as the NBA, MLB and PGA Tour joined with the Washington Capitals, Wizards and Nationals and the sportsbooks of MGM Resorts, DraftKings and FanDuel all signed on to a series of recommendations for inclusion in the bill.
“I hope that [cooperation] was not just specific to D.C.,” said Butera, who pointed to the casino chain’s sponsorship of three leagues and the sportsbooks’ agreement to work together on integrity policies as precursors to working together on legislation this year. “I think it’s a model going forward. MGM Resorts is a very different platform than DraftKings or FanDuel. And we’re certainly all in a different business than the leagues and teams. But what we do know is that if sports betting is approved in the right way that allows for open competition and brick and mortar and mobile, we can all benefit from that. And it’s in our collective interest to try to make that happen.”
While the alliance of sports and gaming interests were proponents of giving teams control of betting in and around their venues, they opposed the exclusive setup that D.C. gave to its lottery operator. The sports coalition also failed to get approval for a 0.25 percent fee they wanted to collect from bets on their respective sports, a request that has been denied in all eight jurisdictions that passed sports betting legislation last year.
It’s one of the few ways in which all the states have taken the same approach.
“It’s impossible to predict what legislation in various states is going to look like because it’s subject to political considerations and regional and cultural preferences,” said Joe Asher, CEO of William Hill U.S. “What works in one state may not make sense for a different state. Those are policy choices that are left to the legislatures to decide. There might be competing interests in some states and there will be factors completely unrelated to sports betting that play a role in how things play out.”
Thus far, interest has been tied closely to geography. With New Jersey, West Virginia and Pennsylvania up and running, other Northeastern states, including New York, are likely to follow soon. The move in D.C. will hasten consideration in Virginia and Maryland. Mississippi has sparked interest in Louisiana. Michigan will accelerate movement in Ohio and Illinois, which will spur Missouri.
“Depending on the gaming framework that already exists in each one of those states, when legislatures are considering how to proceed with sports betting, they’re going to look at the current structure that’s in place in their state and then tailor it to fit what’s there,” Slane said. “It’s just not going to be one congruent model across the country.”