Everyone Had Something To Say During Lengthy Sports Betting Hearing

Massachusetts finally conducted its inaugural sports betting hearing midway through the year, and it turned out to be quite a remarkable event.

During a span of six hours, the Joint Committee on Economic Development and Emerging Technologies dedicated their time to listen to lawmakers and interested parties provide testimony on a total of 19 bills related to sports wagering.

The inaugural virtual meeting this year aimed to initiate the process of gathering ideas from various bills and creating a unified legislative agreement on the language pertaining to sports betting.

Main talking points in Massachusetts hearing

Licensing

Throughout the hearing, various entities including Massachusetts casinos, horse racetrack stakeholders, simulcast betting license holders, fantasy sports platforms, as well as bars and restaurants, all indicated their keenness to partake in sports betting.

Fees

During the hearing, fees were not extensively discussed; nevertheless, the bills propose initial licensing fees ranging from $100,000 to $10 million.

The committee seems to be aiming for a minimum of seven-figure licensing fees. During the discussion, Chair Rep. Jerry Parisella inquired about the governor’s suggested fees of $500,000 for an initial license and a $100,000 application fee, suggesting that the committee desires even higher fees.

Senator Brendan Crighton, the author of Bill S 257, is confident that his proposed legislation could generate a minimum of $80 million in licensing fees for the state of Massachusetts even before the commencement of the first legal bet.

College wagering

Excluding all college sports wagering, Gov. Charlie Baker’s proposition differs from most Massachusetts bills that allow wagering on college sports but not on in-state college teams. This particular approach appears to align better with lawmakers’ preferences and comfort levels.

Crighton emphasized that for any sports betting legislation to be effective, it is crucial to incorporate betting on college sports. According to him, excluding college sports would hinder the ability to attract individuals towards the regulated market while diverting them from their existing platforms.

Crighton mentioned that he believed the exclusion of Massachusetts colleges and universities would not have an impact on the state’s competitiveness with neighboring states or offshore applications. This is because Massachusetts college teams are not particularly prominent in major sports.

Jerry York, the ice hockey coach of Boston College, expressed his disapproval towards college betting.

Extent of mobile market

The committee must decide on the optimal number of sports betting apps for the state, with proposed bills ranging from a minimum of three to an unlimited number.

During the committee’s inquiry, Jeff Morris, an executive at Penn National Gaming, suggested that a state like Massachusetts would benefit from having around 10 to 15 mobile apps. This viewpoint was supported by other professionals within the industry.

How to allocate revenue

Negotiating the allocation of funds is often a challenging task when it comes to any new source of income.

The most comprehensive plan for generating revenue from sports betting was devised by Senator Adam Gomez and Representative Orlando Ramos. Their proposal, which included municipalities, garnered widespread support from local leaders across the state.

The revenue is allocated in the following manner in their bills.

• The general fund receives a contribution of 35%.
• Municipalities will receive a 20% allocation proportionate to the money wagered in each of them.
• The Distressed Restaurant Trust Fund receives 5% of the total amount.
• The Public Health Trust Fund will receive a 12% allocation.
• The Youth Development and Achievement Fund receives a 5% contribution.
• 10% of the funds will be allocated to the Transformative Development Fund specifically for Gateway Cities.
• A portion of 5% will be allocated to support the Municipal Police Diversity Training Fund.
• The Gaming Local Aid Fund receives a contribution of 5%.
• A percentage of 3 will be allocated to the Players’ Benevolence Fund.

Expanding sports betting to restaurants and bars

Gomez and Ramos have attracted significant attention with their suggestion to incorporate restaurants, bars, and fraternal organizations into the scope of sports betting. As per S 264 and H 531, these establishments that currently provide keno services would be eligible to host sports betting kiosks.

There are two main objectives to be achieved through this: supporting small businesses and facilitating the involvement of minority-owned businesses.

Senator John Velis added his signature as a co-signer to the bill S 264.

Velis stated that it is evident that the bars, restaurants, and private clubs have suffered severe devastation due to COVID-19. He emphasized that the proposed solution is a straightforward means to offer support to many of them.

Ramos argued that the casino and cannabis industries could have been crafted more inclusively by the legislature, with a greater focus on incorporating minority-owned businesses.

Ramos emphasized the importance of providing equitable opportunities for black and brown businesses to thrive in the lucrative multimillion-dollar industry. He highlighted that our proposed bill enables bars and restaurants to offer in-person betting, which ensures a level playing field. Excluding this provision would result in monopolizing sports betting solely to casinos and online apps, which, as far as I am aware, are not owned by black and brown entrepreneurs.

More on inclusion and diversity

The bills presented by Ramos and Gomez also incorporate a racial equity aspect.

The responsibility of creating regulations that consider diversity, equity, and inclusion is assigned to the Massachusetts Gaming Commission. The Commission is entrusted with determining the most suitable approach to fairly distribute the licenses.

“We have the chance to draft a bill that promotes fairness and equality, enabling people of color to benefit from the opportunities presented by the emerging industry. It is widely acknowledged that a racial wealth gap exists not only within our Commonwealth but across the nation. Similarly, a racial income disparity persists in both our state and country. It is essential to acknowledge that legislation has played a significant role in shaping this divide, with past laws continuing to impact us today. Therefore, we must utilize legislation as a means to bridge this gap and create a more equitable society.”

Maryland also took steps to promote minority ownership within a new industry.

Border towns losing money to states with sports betting

New Hampshire, Rhode Island, and the upcoming Connecticut and New York have legalized sports betting, encircling Massachusetts.

According to Rep. Shawn Dooley, Plainridge Park Casino, located in his district, shares a border with Rhode Island. The representative further highlighted that Rhode Island casinos have been attracting customers by promoting their sportsbook offerings.

Those who wish to visit a casino in Massachusetts but also want to participate in sports betting are currently choosing to leave the state. Instead of patronizing a Massachusetts casino located nearby, they are driving approximately five to six miles further to place their bets at one of the two Rhode Island casinos situated right on the border. Introducing sports betting in Massachusetts would help bridge the gap and provide a fair competition with the Rhode Island casinos.

Accompanying him was a town administrator from Plainville, who mentioned that when Massachusetts residents venture into Rhode Island to place bets, it adversely affects local small businesses as they also end up having dinner there.

New Hampshire Governor Chris Sununu has publicly ridiculed Massachusetts for its lack of sports betting while highlighting the fact that 30% of the wagers received by DraftKings in New Hampshire originate from Massachusetts residents.

Representative Bradford Hill expressed his support for sports betting, stating that as a defender of the New Hampshire border, he believes it is essential to implement it. He mentioned that their constituents are currently crossing over to New Hampshire to place bets, which highlights the need for action. Additionally, he mentioned that they have faced ridicule from their counterparts up north due to the lack of progress in this area.

If Massachusetts fails to take action on sports betting, Ayesha Molino of MGM Springfield warned that the casino would soon see a decline in customers as they would prefer to gamble in Connecticut.

Massachusetts sports teams support wagering

Massachusetts sports teams are in favor of the legalization of sports betting; however, unlike other states this year, they are not seeking participation. Instead, they anticipate reaping ancillary advantages from the practice.

Sam Kennedy, president of the Boston Red Sox, emphasized the significance of sports betting in enhancing fan involvement. He stated that legal and regulated sports betting offers a secure platform for fan engagement, which is particularly crucial during these trying times of a pandemic. Furthermore, Kennedy stressed the immense value of advertising and sponsorship revenue, emphasizing the importance of every single dollar earned.

According to Rich Gotham, the president of the Boston Celtics, their data reveals that sports fans who engage in betting tend to consume six times more sports content compared to those who do not bet.

Gotham stated that although direct participation is not possible as per league regulations, there are indirect advantages to be gained from heightened fan engagement and sponsorship deals with gaming companies.

The Red Sox and Celtics, along with Major League Baseball, the NBA, PGA Tour, MGM, DraftKings, and FanDuel, form a coalition of prominent stakeholders.

Potential revenue on table for MA sports betting

In the executive budget proposal, Baker incorporated a mere $35 million of sports betting revenue, despite studies demonstrating that the state could potentially obtain a higher amount.

In a report by the Massachusetts Gaming Commission in 2018, Crighton referenced a study stating that sports betting would generate over $400 million in gaming revenue. With his proposed 15% tax rate, this would result in an annual contribution of over $60 million to the state.

According to Joe Weinert, an executive at Spectrum Gaming, the organization anticipates generating gaming revenue ranging from $350 to $500 million.

However, is the revenue necessary for Massachusetts? Lawmakers excluded sports betting from the budget partly because the state has recovered from the economic slump caused by COVID-19. The state’s coffers were bolstered by federal assistance.

Crighton expressed that many people underestimated our revenue projections for this year, attributing it to the influx of federal funds. However, he believes that we should not solely rely on these one-time federal revenues. Instead, he emphasizes the importance of considering this as a sustainable long-term source of income that can be allocated to various deserving programs across the state.

During a legislative session, Jason Robins, the CEO of DraftKings, a Massachusetts-based company, expressed to lawmakers that the legalization of sports betting would not only generate revenue but also yield a minimum of one thousand employment opportunities.

We eagerly anticipate further expanding our local workforce, contingent on the authorization of sports betting in our home state. As I mentioned during my testimony in May 2019, DraftKings is unable to establish certain positions in Massachusetts until sports betting becomes authorized. Consequently, we have relocated numerous teams and hundreds of employees to various office locations within the United States over the past two years. This move allows us to cater to our customers in states where sports betting is legally permitted.

Poll shows MA residents support sports wagering

A recent poll revealed that 61% of Massachusetts voters are in favor of legalizing sports betting, just prior to the hearing.

If the funds generated from sports betting are allocated towards education, the percentage increases to 72%.

The poll of 500 voters was conducted by David A. Paleologos Associates on behalf of the Encore Boston Harbor and the Plainridge Park Casino Commission.

Reaching a consensus on sports betting language

Legislators discussed the possibility of creating a comprehensive bill by incorporating elements from all 19 bills introduced into the committee.

The committee conducted hearings and formulated a consensus bill two years ago, however, that legislation failed to make any progress.

This committee bill should gain traction after years of deliberation and mounting pressure from neighboring states with legalized sports betting.

However, reaching an agreement on language will require additional time and hearings. While Massachusetts’ formal session concludes on Nov. 17, the legislature will not officially adjourn until Jan. 4, 2022.