Author Archives: kylew

Florida’s Sports Betting Saga Continues in State Supreme Court

Just the other week we reported that gamblers—specifically sports bettors—in the state of Florida had a reason to celebrate as the longstanding challenge to legalized sports betting waged by pari-mutuel operators was struck down by a Federal Appeals Court. This meant that online sports betting was once again given the green light in the Sunshine State, or so we thought.

Not going down without a fight, two pari-mutuel companies this week asked the Florida Supreme Court to weigh in on the matter. The matter in question is a deal reached between Governor Ron DeSantis and the Florida Seminole Tribe which would see online sports betting operations commence statewide, albeit with some interesting caveats. According to the pari-mutuel companies, the deal, or compact, violates a 2018 amendment to Florida’s constitution which stipulates that any expansion of gambling in the state must be voter-approved.

There is a lot more that goes into the complaint filed by the pari-mutuels but all this means for sports bettors is further delays. In all likelihood, Florida will not see online sports betting in 2023 and will be lucky to get in on the action by late 2024. With any luck, Florida may see a light at the end of the tunnel in time for the 2024/2025 NFL and NCAA football seasons. This is nothing more than wishful thinking though, because no clear timeline exists for when the dust will settle in Florida.

A New War but Similar Battle Tactics

As has been the case for more than 2 years now, owners of the states horse and dog racing tracks (known as pari-mutuels) have been fighting the compact signed between the State of Florida and the Florida Seminole Tribe. At the crux of their argument is that the compact simply isn’t legal. Being that voters must approve something like legalized online sports betting being offered statewide, it is difficult for one to argue with the pari-mutuels complaint.

You might be wondering how online sports betting was ever able to be offered by the Seminoles if the law is as cut and dry as it is. The answer to that has less to do with where online sports bets will be placed, but rather where they will be processed. The deal Florida and the Seminoles reached hinged on every single sports bet placed in the state of Florida running through computer servers that were situated on protected Tribal Land. In essence, because the bets are not placed until they are processed, and they are only to be processed on Native lands, sports betting is not taking place in Florida; only on the Native lands therein. This loophole allowed legal online sports betting to exist for a short period of time, but it was not long before the non-Native operators of gambling companies in Florida decided to challenge the deal in court.

What Happens Next?

State court systems being what they are, no one is expecting to hear a decision from Florida’s Supreme Court anytime soon. In fact, it would be surprising if we heard from the court before next summer. There is little doubt in the minds of people in Florida and elsewhere that online sports betting will exist in some form before long, but this prolonged legal dispute is only pushing that official start date back further.

Now, many years later, we are in what seems to be the exact same position we were in back in 2021 when the original challenge was presented. What this boils down to, and the question Florida’s Supreme Court needs to answer, is whether exposing a loophole is against the law or not. The Federal Supreme Court determined that this question is one only Florida can address.

The Lone Bettor Responsible for Changing Washington DC Sports Betting

Many people wonder how sportsbooks and sports betting operations in general could ever lose money or go out of business. After all, their profit is built into the design of their business, right? In its simplest form the answer to this question is a resounding yes, but the reality for Washington DC’s lone sports betting operator, GambetDC, is that sometimes things are not as simple as they seem.

Washington DC is unknown to most people in the sports betting world because most people are not aware sports betting exists there. In other instances, people assume that Washington DC falls under either Maryland or Virginia, where online and in-person sports betting is legal. The reality is that the tiny District of Columbia has a longstanding sports betting industry, albeit one that is fragmented, struggling financially, and antiquated. The antiquated aspect of GambetDC’s operation was exploited earlier this year by a single bettor who profited thousands and, at the same time, prompted a change in the way DC sports betting exists.

Deviations in Betting Lines Exploited

For this story to make sense, you need to know a bit more about how sports betting in Washington DC works. Similar to most states where sports betting is legal, DC sports betting can only exist within a well-defined geographic area. Making matters a bit more confusing than most states is the fact that even within DC, certain parts of the city are off limits for one reason or another. This presents a situation where sports betting might be legal on one block but not legal two streets over. Confusing as this may be, there are still plenty of restaurants, bars, and other establishments with GambetDC betting kiosks, and Abunai, a small poke restaurant, is one of them. 

This small restaurant in Northwest Washington DC was the betting headquarters of a sharp bettor who would eventually be the reason for a change in DC sports betting rules. Very quickly, the restaurant’s staff noticed a patron who was there nearly every day, but never ordered a single dish. On its face this seems strange, but no one questioned it as this bettor’s patronage was changing the restaurant’s fortunes for the better. 

The reason this anonymous bettor loved Abunai so much was because he realized that their GambetDC betting terminal (and all others like it in DC) offered betting lines that were sometimes markedly different from those found on sites like FanDuel or BetMGM. These deviations were exploited time and time again, profiting the DC bettor hundreds of thousands of dollars. Another flaw in GambetDC that allowed for this to go on for so long without any questions being raised was the anonymity associated with betting in DC. Unlike any other jurisdiction where you are forced to register and create an account when betting online or at a kiosk, GambetDC did not have such requirements. If this same situation was playing out in the online sports betting market of nearby Virginia, a bettor performing as well as the bettor in DC would have his account flagged and wagers capped. In other words, a sportsbook would limit how much a person can wager on a single event/bet. What this meant in the nation’s capital is that the anonymous DC bettor was not ever able to have his wagers capped, and he profited as a result. 

Betting Rules Changed in a Hurry

Once the D.C. Lottery’s Regulation and Oversight Division finally caught on to their old systems being exploited, they moved to quickly cap the anonymous bettor’s wagers. Not only that, they have moved to more tightly restrict the wagering limits for all bettors. If you try to place sports bets in Washington DC today, there will be a much larger and more noticeable number of restrictions in place.

Though sports betting legalization has been a boon to the bottom lines of many states’ coffers, the same cannot really be said about Washington DC. To put it simply, the sports betting industry in the District is struggling, and has been for some time now. Adding more restrictions and limits to betting is exactly what DC does not need, especially if it wants to see monthly betting revenues that exceed even $5 million.

Seminole Tribe Receive Massive Ruling from Federal Appeals Court

For those residing in Florida, the topic of legalized online sports betting–and sports betting in general–has been one no one really likes talking about. After all, for the shortest period of time bettors in Florida were able to place sports bets before legal proceedings put all betting on hold. That was back in 2021, and while Florida still does not have a legal, online sports betting system in place, the state moved one step closer to legal sports betting being a reality this week.

Just this week, a Federal Appeals Court denied a request from the owners of the state’s non-Tribal casinos and racetracks for a rehearing regarding the deal that gave full sports betting authority to Florida Native American tribes, namely the Seminole tribe.

A Deal Nearly Three Years in the Making

In 2021, Florida Governor Ron Desantis and the Florida Seminole Tribe signed a 30-year deal that would see the Seminoles be the lone offeror of sports betting in the state, online or in-person. In the Fall of 2021, with the NFL season already underway, this was a big deal because it meant that millions of sports-crazed Floridians would be able to bet on sports both in-person and from their phone. Even though Florida did not officially legalize sports betting, this deal was allowed to go forward because all bets would be processed by servers that were housed on tribal land belonging to the Seminoles.

As quickly as the deal was signed however, the owners of casinos and racetracks around the state banded together to fight it. Fight it is exactly what they did, and it did not take too long for US District Judge Dabney Friedrich to rule that the deal violated the Indian Gaming Regulatory Act because it allowed for gambling to take place off of tribal lands. She called the idea that the deal was legitimate because the bets ran through tribal servers on tribal lands a “fiction”, and that gambling would really be taking place in all corners of Florida, not a select few hundred square miles.

The Final Blow to Non-Tribal Operators

A three-judge panel was formed to take a closer look at this situation and, back in June, ruled that Judge Dabney Friedrich was incorrect when she ruled that the deal between the State of Florida and the Seminole Tribe violated the Indian Gaming Regulatory Act mainly because the Act allows for gambling both on and off tribal lands. In other words, it does not restrict gambling to only tribal lands.

Despite this June ruling, pari-mutuel racetrack owners and casino owners asked for a rehearing on the matter. That request was denied this week and little explanation was offered for the denial.

The Seminole Tribe released a statement saying that they were “pleased” with the ruling, but there is no immediate word on if, or rather when, they will be accepting bets on their Hard Rock Sports Betting app, which existed for a short period of time in 2021 before being turned off just before the turn of 2022. With that said, the fact that the NFL and college football seasons are well underway has many thinking that the Seminoles are going to reactivate the app and begin accepting bets again before too long.

Brazilian Soccer Betting Fraud Warrants Government Intervention

Thanks to a longstanding history of soccer betting fraud coupled with more recent actions by players, the government of Brazil is taking a closer look at the systems currently in place aimed at preventing betting scandals.

These new measures are coming in response to shocking discoveries made in May. Then, the Brazilian soccer world was rocked as it was announced that a lengthy investigation revealed a large number of players were involved with match-fixing. The fallout of that investigation is still unfolding, but it is clear that Brazil is seeking to take drastic steps in order to stamp out match-fixing of any type.

A Number of Changes Proposed

In the report released last week, which was signed by special advisor to Minister Fernando Haddad, Fernanda Cimbra Santiago, it was explained that because of “recent episodes of manipulation of results in sports betting,” the Brazilian ministry should be able to ban or suspend betting on certain events. The report pointed to both live, in-game wagering as well as wagering done before games/matches begin.

As one might expect, the report singles out leagues, competitions, and teams that have been found guilty of match-fixing, but does not neglect to mention that this oversight should be broad-reaching, covering more than those leagues and teams with a history of foul play.

A Total Ban on In-Game Betting Considered

Because many of the incidents of match-fixing came by way of live, in-game wagers, there has been some talk in Brazil that sportsbooks should ban live betting entirely, even if only for certain teams and competitions.

This does not seem likely to happen, however, as live betting makes up almost a quarter of revenue for Brazilian sportsbooks. If the ministry that oversees betting and betting regulation wishes to continue making money, live betting must continue to exist, and exist in abundance. This is where things become more difficult to manage. While most countries in Europe and South America have an abundance of leagues upon which people can place wagers, few have more leagues than Brazil. Because the umbrella of “professional soccer player” is one that encompasses thousands of people, only a fraction of them make significant money. As a result, the temptation to participate in match-fixing in order to make extra money is a very real one. How this can be changed or remedied is anyone’s guess, but further scrutiny of wagering activity is certainly a good place to start.

A more sensible suggestion that was made relates to sportsbooks requirements to report suspicious wagering activity to the appropriate authorities within a 5-day period of time. This reporting is typically followed by most sportsbooks in Brazil and across the world, but it is not presently something Brazilian sportsbooks are required to do by law.

There is little known about where Brazilian authorities will land with changes regarding how they regulate betting on Brazilian soccer, but it is evident that this is no small issue for the soccer-loving country and their lawmakers.

New Colorado Online Sportsbook’s Harvard and NFL Roots

Whenever there is talk about a new state establishing online sports betting the first question on the minds of most relates to which operators will be present. All too often, the answer to that question consists of the same names, including BetMGM, DraftKings, and FanDuel to name a few. Rarely do we see a new entrant to the industry that is truly new.

Colorado is set to alter that status quo with the launch of Novig, a sports betting exchange that traces its roots not to Las Vegas and Atlantic City, but Harvard University. Despite Novig’s unorthodox origins, the company led by two recent Harvard grads is set to launch Colorado operations in October and has just secured nearly $6.5 million in seed funding, much of which came from prominent sources.

Unlikely Beginnings and Unlikely Investors

Novig founders Kelechi Ukah and Jacob Fortinsky do not appear, on paper,

to align with most people’s idea of online sports betting site founders. At not even 30 years old they are younger than most other online gambling operators, but what stands out most is that the two met at Harvard during their undergraduate studies; undergraduate studies that could not be further removed from the sports betting world.

Fortinsky focused his education on philosophy and political science whereas Ukah focused his studies on science and math. Upon the conclusion of their respective undergraduate degrees, both Ukah and Fortinsky had ample opportunities to pursue successful careers but have instead chose to pause all of those plans in pursuit of a venture that most are surprised to learn originated within the hallowed halls of Harvard University. That is because a small sports betting venture started by Fortinsky in March 2021 has now raised over $6 million in seed funding from some of the biggest names in investing and sports, including investor Paul Graham and NFL Hall of Famer Joe Montana.

A Sportsbook Built by a Sports Bettor

Despite what it may look like on its face, the story of Novig is not simply one of two Harvard-educated geniuses leveraging their connections and education to make some money in a growing industry. Instead, the idea of Novig was born of Jacob Fortinsky’s affinity for betting and frustration with the offering of most online sportsbooks.

Fortinsky’s frustrations had less to do with the sports markets or bet types being offered by online sportsbooks and everything to do with how modern sportsbooks operate. His issue was with the vig charged by all online sportsbooks in order to ensure they turn a profit. Though the percentages taken from bettors by sportsbooks does vary, it is always there.

In an interview with Forbes, Fortinsky explained what he thinks about how online sportsbooks operate by saying, “It felt very inefficient, outdated, exploitative. The number one reason why people stop sports betting or don’t start sports betting is there’s a fundamental understanding that the house always wins. The game is sort of rigged against the everyday bettor. You’re just a pawn in their game, effectively. I felt like there’s a lot of opportunity to create a more fair, transparent and efficient system.”

It was this line of thinking that led Fortinsky and Ukah to create a sportsbook where odds are determined by the bettors, not the sportsbook. In many ways, Novig operates more like a stock market than a traditional online sportsbook to ensure that bettors get the most value for their bets.

A New Way of Betting

At Novig, bettors will be able to “buy” and “sell” bets similarly to the way traders can buy and sell stocks. Sites like this are already popular in Europe, where sports betting has existed prominently for decades, but there are few examples within the US market outside of New Jersey.

For most bettors on Novig, there will be no fees charged for bets. Though there are exceptions in the form of fees charged to some high-dollar net winners, Novig is breaking the mold by giving bettors the power and control to determine their winnings.

Extensive beta testing has been done in Colorado, and by almost every measure it was a success. With only 200 users, Novig saw more than 15,000 orders (bets) placed over the course of just two weeks. What’s more, interest in Novig is skyrocketing such that Novig can hardly keep up with the number of prospective Colorado users trying to become beta testers themselves. Novig expects to be fully live in Colorado sometime in October and is then setting its sights on the east coast, first with New Jersey and then Ohio.

Whether Novig sets a trend in the US and paves the way for more, similar sportsbooks remains to be seen, but for bettors there is no question that this is a positive. Be it overtly or subtly, it stands to reason that the existence of no-vig sportsbooks will put pressure on the vig practices of existing online sportsbooks.

The Latest on Sports Betting in Ohio

Since the overall ban on sports betting was struck down in the United States many years ago, a plethora of states have quickly moved to both legalize the activity and implement both online and in-person betting operations. Pennsylvania, New York, and New Jersey all come to mind when thinking of states the passed legislation and began accepting bets in what seemed like the blink of an eye.

On the other side of the coin however, there are states like Ohio and Maryland, both of which passed legalized sports betting legislation without too much trouble but still, to this day, have not accepted a single online wager. Maryland recently moved to allow casinos and racetracks to accept in-person wagering, but Ohio has been treading water for the better part of a year now. Finally, there seems to be light at the tunnel for Buckeye state sports bettors.

Online Betting in Time for Super Bowl 57?

Online sports betting was officially legalized in Ohio last December, but Ohioans have been waiting nearly three quarters of a year without receiving much guidance with regard to when bets can be placed. This week it was announced that online sports betting in Ohio will be live in January of 2023, meaning that bettors should be able to place wagers on both the collegiate football National Championship as well as the NFL’s Super Bowl.

Bettors will be greeted by a number of online operators, but it seems that in-person sports betting will be a major deal in Ohio as well. Just this week, it was reported that Kroger’s, a national grocery store that has a massive presence in Ohio, has applied for more than 40 betting licenses. According to reports, the grocer outlet is going to set up betting kiosks inside their stores, meaning you can both shop for food for the game and bet on the game all in one location.

What About Maryland?

The news this week is great for residents of Ohio, but for Marylanders it comes as a sort of slap in the face. While Ohio legalized sports betting less than a year ago, Maryland is going on nearly two years since sports betting legislation was passed. That bill was signed into law back in November of 2020 and even though sports betting is now legal at the state’s few casinos, online betting is still shrouded in mystery.

We wish we could convey some good news with regard to a projected starting date for online sports betting in Maryland, but there is no concrete date set. The going estimation is that online sports betting will go live in the second half of 2022, however we are already more than halfway through the second half of the year and there is no end to the waiting in sight.

On the bright side, Marylanders can expect up to 50 mobile betting operators to exist in the state, a number that dwarfs most other states with legal online betting.

Sports Betting To Finally Launch In Michigan

Residents of Michigan may be noticing an increase in sports betting advertisements from companies such as FanDuel, DraftKings, and other top sports betting platforms. Offers such as free sign up bonuses mark the introduction of legal sports gambling to the state.

Next Steps

A year ago, Governor Gretchen Whitmer signed legislation to legalize sports gambling and online betting in Michigan. Under the new legislation, sportsbooks have had to seek individual partnerships with brick-and-mortar casinos across the state. This may account for the long wait residents have had to endure before they can place their first legal sports bets in the state. Last month, the Joint Committee on Administrative Rules waived the 15-day review requirement for approval of the final rules regulating online gaming. It is now up to the platforms themselves to obtain official licensing and launch to bring online sports betting to Michigan. Residents will have to continue to wait for an official launch date from the Michigan Gaming Control Board. According to Executive Director Richard Kalm, the official launch date will depend on how quickly the major platforms can come under the state’s regulatory requirements. “The platform providers’ ability to meet the requirements of the laws and rules will determine which entities can be licensed for launch first,” he said.

Residents of the state can expect a similar sports betting experience to other states in the U.S. that have legalized the practice. Residents will need to be over the age of 21 to place a legal sports bet. Platforms will also utilize geolocation technology and identity verification to ensure that bettors are in compliance with state law. Once the platforms are licensed, they will offer wagers on all professional and college sporting events from soccer to baseball and basketball. The sports betting legislation provides for dedicated revenue from the practice to the state’s School Aid Fund and the First Responder Presumed Coverage Fund. An 8.4% tax will be placed on winnings from retail sports bets and a range from 20% to 28% on all online sports wagers.

A Potential Revenue Builder

Initial projections show a huge revenue boost for the state which has been hit hard by the Covid-19 health restrictions and related shutdowns. The three commercial casinos in the state are currently closed in accordance with health guidelines. The tribal casinos in Michigan are not required to adhere to those same health guidelines however, two have voluntarily closed down. The three commercial casinos, MGM, MotorCity, and Greektown, were operating under reduced capacity prior to the most recent closures. As of the year end, the revenues for all three were down roughly 54% from the same period last year.

In states where sports gambling is already legal, the data reflects that patrons are utilizing the freedom to place their bets online, in the face of casino closures. In states such as New Jersey and Pennsylvania sports gambling has made up 43% and 28% respectively of all gambling revenue. Industry experts expect that Michigan could experience a similar boost once it gets its own sports betting industry up and running.

Will Oklahoma Legalize Sports Betting?

Amid the Covid-19 related shutdowns, many states are looking for new and lucrative ways to raise state funds. While many states have approved the practice of legalized sports betting, with three new states approving ballot questions this past November, odds look bleak as to whether Oklahomans will see a change in their state law anytime soon.

Not a New Issue

The question of legalized sports betting has come up in Oklahoma before. Unfortunately support for deciding the issue has time and time again failed to gain any traction in the state legislature. The issue was placed on the back burner again as the Governor and the state legislature hashed out a hotly debated tribal gaming issue. In October, Governor Kevin Stitt elected to forgo an appeal of a federal court ruling that allowed tribal gaming compacts to automatically renew for 15 years. At the time, Governor Stitt was trying to negotiate a higher “exclusivity fee.” Currently, tribes in the state pay between 4% and 10% of gross revenue for the exclusive right to operate Class III gaming. The months long battle involved disputes between state legislators, Governor Stitt, and the federal government over the Governor’s power to unilaterally renegotiate these fees. That dispute has largely been resolved and the tribal gaming compacts are generally considered to be renewed. Perhaps this frees up lawmakers to take up the sports betting issue.

Bi-Partisan Cooperation Required

“There’s no clock ticking on when this needs to get done,” says Matthew Morgan, Chairman of the Oklahoma Indian Gaming Association. “I guess it could come up [in the] next legislative session, but it may not.” He went on, “I don’t think you’d see most tribal leaders in a hurry to get this done. It needs to be done correctly. And that’s probably going to take time.” That time may have gotten longer in the wake of the recent tribal gaming compact dispute. According to Morgan, any discussion over legalized sports betting would need to begin with a mending of the strained relationship between the Governor’s office and tribal leaders in the state. “That relationship between the governor and tribal leaders needs to be repaired,” he said.

“The governor has been supportive of negotiating with Oklahoma’s tribes in good faith to expand opportunity for all parties and remains committed to working with all Oklahomans on top ten solutions that deliver a stronger, more prosperous future for our state,” said Baylee Lakely, spokeswoman for Governor Stitt. In the Governor’s version of compact negotiations, he included a provision for “event wagering” however those provisions were rejected by the Oklahoma Supreme Court along with Stitt’s authority to unilaterally renegotiate the gaming compacts. Lakely went on, “in April 2020, Governor Stitt negotiated new gaming compacts with the Otoe-Missouria Tribe and Comanche Nation. The new gaming compacts demonstrated the state could offer unique, thoughtful opportunities for each tribe while also achieving fair-market rates, as high as 13%, for Class III gaming operations. Among other provisions, the compacts stated sports betting would be permitted to the extent it was authorized by law.”

Under current Oklahoma law, legalized sports betting would likely require approval by the legislature in order to go operational. “I’ve consistently said that I think sports betting or wagering is a potential negotiating point for the state in its compact negotiations with the tribes,” said Greg Treat, Senate Pro Tem in the Oklahoma Senate. “If an overall compact agreement is reached that is beneficial to all Oklahomans, I will consider it.”

Cautious Optimism for the Future

Morgan agreed with Senator Treat’s analysis, “I think he reads the landscape correctly. It has to be an agreement that benefits everyone.” He went on to caution that legalized sports gambling is not a silver bullet for state revenues. “You’re hoping for 3 to 4 percent at the end of the day. I don’t like people talking that ‘We’re going to get hundreds of millions of dollars’ but it would help,” he said. When asked on his opinion of the chances on legalized sports betting in Oklahoma he said, “I don’t like to predict … I think tribal leaders are willing to have that conversation, but it has to benefit everyone. And there has to be respect. And it was to be in the parameters of what our markets will bear. That conversation has to be precise of what that will look like. Sports betting, whatever form it might be … a very important aspect is: What would that revenue fee-sharing look like? Everything helps, when the state’s looking for money, when tribes are looking … something like sports betting could help.”

Massachusetts Sports Betting Rejected in 2020

After two days of negotiations and deliberations, the state Senate in Massachusetts has concluded its work on the state budget. The budget, totaling nearly $46 billion, will control the fiscal year which began roughly four and a half months ago. Yet again, sports betting has been left out of the legislative list of priorities.

The budget was approved unanimously. However, vigorous debate on Wednesday evening pointed to a less than absolute partnership on the part of lawmakers to agree on what steps need to be taken to move Massachusetts out of the current economic downturn. “The budget, I think, is a really strong, responsive budget to the situation at hand and trying to really help the residents of the commonwealth, said Karen Spilka, Senate President. The next step is to send the state budget to a conference committee including a group of three senators and three representatives. They will compromise and finalize any discrepancies before putting a final version before both branches of the state legislature for a vote.

Michael Rodrigues, Chairman of the Senate Ways and Means Committee said he is optimistic that deliberations will be speedy and effectual. But many note that serious issues still remain undecided. Policing reform, climate change policy, and health care reform have all been stuck behind heated debate in various conference committees.

“I think we realize that we need to get it done. It is the middle of November and we have six or seven weeks left in the session. I believe we will get it done,” said Splika of finalizing some of these unresolved issues.

Where is Sports Betting?

One major issue on the minds of many Massachusetts residents is the legislature’s continued inaction on legalized sports betting. Minority Leader Bruce Tarr introduced an amendment to the state constitution to legalize sports betting. It was rejected outright, without a roll call vote. The amendment would have legalized sports betting in Massachusetts, allowing casinos, racetracks, and online platforms to become licensed sports book operators. His amendment set aside registration fees and other revenue from the industry to the state’s economic recovery fund. This would help jump start the recovery out of the current downturn caused by the Covid-19 pandemic.

Initial estimates state that annual state revenues from sports betting in Massachusetts could well exceed $20 million and reach as high as $35 million. Currently, the two casinos in Massachusetts add roughly $21 million to state coffers each month.

While the state House of Representatives approved legalized sports betting in an economic development bill, the state Senate has been far less keen to introduce the practice to Massachusetts.

A Call for Legalization

This past Friday, every major sports franchise in Boston as well as market leaders in the gambling industry penned a letter to the state legislature. In their letter, they attempt to get across the importance of legalized sports gambling and the benefits that Massachusetts can expect from the practice.

“Massachusetts has already lost jobs that could have been housed here by not acting sooner on sports betting. As other states legalized and launched sports betting, DraftKings has had to locate certain jobs outside of Massachusetts. The Covid-19 pandemic also has hit our casinos hard, and MGM-Springfield has had to layoff and furlough hundreds of workers in Western Massachusetts,” reads the letter. “A legalized sports betting framework would not only allow us to preserve jobs, we fully anticipate that DraftKings, MGM, and others will be creating additional jobs in Boston, Springfield, and other regional hubs. Conversely, if sports betting is not passed, we anticipate that additional jobs will be lost and others still will be housed in states other than Massachusetts.”

Next Steps For Maryland Sports Betting

Voters in the state of Maryland approved ballot question number two, which authorized the inclusion of sports and event gambling to the state’s commercial gaming industry. When the votes were tallied, over 66% of Maryland voters were in favor of the sports gambling measure.

Where We Go From Here

Moving forward, the Maryland General Assembly is slated to take up the issue during their 2021 session. Still to be decided are questions such as the regulatory framework, an application and licensing system, and how the industry will be taxed.

“The devil’s in the details, and there will be many details to come,” says Gordon Medenica. Medenica is the Director of the Maryland Lottery and Gaming Agency, which is in charge of oversight and regulation of casinos and the greater commercial gaming industry in Maryland. Many in the Lottery and Gaming Agency were optimistic that the measure would pass and began drafting a loose framework for regulating the new state gambling activity. “We have a vague sense of who the players will be, how it would be structured. All of that is dependent on what the actual structure will be that the legislature will decide upon when they reconvene in January.” The legislature will still need to rule on how many licenses will be up for grabs, how the taxes will be collected and where those funds will be directed in the context of the broader state budget.

State Revenues

According to the strict text of the sports betting measure, the gaming expansion would be “for the primary purpose of raising revenue for education.” However, the language does not specify if that means the state’s Education Trust Fund, the “lockbox” where current casino and lottery tax revenues are kept, or to some, as yet unnamed, new education initiative. Current estimates state that the revenues generated by taxing sports gambling in Maryland could exceed $18 million assuming a tax rate of 20%.

“People need to understand the difference for the top line versus the bottom line,” says Medenica. “There’s a lot of wagering activity, but it doesn’t translate into a lot of hold, or profit, at the end of the day.”
In relation to the state revenues generated by lottery and casino taxes, over $1 billion, these are relatively low numbers. But both state policy makers and leaders in the casino industry agree that the push for legalized sports betting in Maryland was not about the money. The overarching goal was putting a stop to illegal operators in favor of pushing sports bettering traffic to legitimate casinos and racetracks. Once there to place their sports wagers, the hope is that patrons will stick around to gamble on races, slot machines, and table games.

Where to Wager

Another question that has been left on the table is where sports gambling will be offered. Both race tracks and casinos in the state are vying for greater control over the new activity and each feel that they should be the only situs approved for accepting sports wagers. One of the major casino operators, Cordish Gaming which owns Live Casino & Hotel in Hanover, has relaxed its firm stance against the race track industry being issued licenses. Last month, the CEO of Cordish Gaming Group, Joe Weinberg, said that the company feels that licenses “should be limited to the casinos and to the Maryland Jockey Club.” The Maryland Jockey Club operates the race tracks located at Laurel Park and Pimlico Race Course.

The Chief Marketing Officer at Live Casino, Jake Joyce, said in a statement, “the aid Maryland receives through sports betting will depend entirely on how it is implemented. The way to maximize new taxes for the Education Trust Fund is to have sports betting controlled by existing, licensed gaming entities in the state. These operators should be required to invest in facilities and systems that ensure it is done right and grows other important gaming taxes for the state.”

Live Casino & Hotel has already begun work on a brand new ‘Sports & Social’ sports betting facility. The $12 million concept will host over 50 large screen televisions, bars, casino games, and both self service terminals and live teller kiosks for placing sports bets. In addition, the casino has already announced a partnership with national sportsbook, FanDuel.

Other large state casinos have expressed an eagerness to bring the first sports book to the state. Horseshoe Casino in Baltimore, is looking forward to applying for a sports betting license. The casino announced, “we look forward to working with state legislators in a program that will ensure Maryland casinos remain competitive with those in neighboring states in order to maximize revenues for Maryland schools.”

An Online Option

According to Medenica, the expectation is that a significant portion of sports betting transactions will be conducted online. However, the legislature has yet to signal a legal framework is being created as of yet. “The experience in New Jersey, where sports wagering is already legal, suggests that 80% of sports betting occurs on mobile, and is dominated by some very large players.” Medenica went on, “certainly, it is our sense that it would be best to allow major licensees to offer some mobile alternative.” While the New Jersey model is acting as a guide, Medenica is pooling the collective knowledge of twenty-one states, including Washington D.C., in helping to determine what decisions will work best in Maryland.

One of these decisions will be how many “skins” a sports betting operator will be allowed to host. While New Jersey allowed each operator to conduct three different skins, according to Medenica, “a good lesson we have learned is that’s probably way too many.”

What to Expect

When the first legal sports bet will be placed in Maryland depends largely on how fast state legislators reconvene. In addition, exactly how comprehensive that legislation turns out to be will go a long way in determining the length of the licensing process. Medenica thinks that Maryland residents will be able to walk into sports books by the Fall of 2021.

“I think if we had a very clean, straightforward bill that just granted the right to the casinos and the horse tracks, all of them already have relationships with back end betting providers and they could get up and running very soon. But to the extent that the bill becomes very complex and involves a lot of licensing and compliance procedures, that certainly will add costs and time and delay.”