Everyone Had Something To Say During Lengthy Sports Betting Hearing

Midway through the year, Massachusetts finally held its first hearing on sports betting. And it was a doozy.

Over six hours, the Joint Committee on Economic Development and Emerging Technologies heard testimony from lawmakers and interested parties on 19 sports wagering bills.

The virtual meeting marked the first step this year to take the ideas from each bill and build a legislative consensus on sports betting language.

Main talking points in Massachusetts hearing

Licensing

During the course of the hearing, Massachusetts casinos, horse racetrack interests and simulcast betting license holders, fantasy sports sites, bars and restaurants all expressed interest in participating in sports betting.

Fees

There wasn’t much talk about fees at the hearing, but initial licensing fees in the bills range from $100,000 to $10 million.

It appears the committee will target at least seven figures in licensing fees. Chair Rep. Jerry Parisella asked the governor’s representative about his proposed fees of $500,000 for an initial license with a $100,000 application fee, indicating that the committee wanted to “aim higher.”

Sen. Brendan Crighton, whose S 257 sits at the high end, believes his bill would bring at least $80 million in total licensing fees into state coffers before the first legal bet is placed in Massachusetts.

College wagering

Gov. Charlie Baker’s proposal excludes all college sports wagering. Most Massachusetts bills do include college wagering but prohibit wagering on in-state college teams. This seems to be the direction with which lawmakers feel most comfortable.

“Any sports betting legislation must include betting on college sports,” Crighton said. “If we do not include college sports, we will not be able to bring folks into the regulated market and away from their current platforms.”

Crighton added that he didn’t think exempting Massachusetts colleges and universities would affect the state’s competitiveness neighboring states or offshore apps. After all, Massachusetts college teams aren’t that prominent in the main sports.

Boston College ice hockey coach Jerry York spoke in opposition to college betting.

Extent of mobile market

The committee needs to determine how many sports betting apps are best for the state. Bills introduced range from three to unlimited.

Jeff Morris of Penn National Gaming, responding to a question from the committee, proposed that 10 to 15 mobile apps made the most sense for a state the size of Massachusetts. Others from the industry agreed with this figure.

How to allocate revenue

For any new form of revenue, where the money goes often a difficult negotiation.

Sen. Adam Gomez and Rep. Orlando Ramos came up with the most thorough plan for sports betting revenue. And their inclusion of municipalities gained support from local leaders around the state.

Their bills allocate the revenue as such:

• 35% to the general fund
• 20% to municipalities based on the amount of money wagered in each
• 5% to the Distressed Restaurant Trust Fund
• 12% to the Public Health Trust Fund
• 5% to the Youth Development and Achievement Fund
• 10% to the Transformative Development Fund for Gateway Cities
• 5% to the Municipal Police Diversity Training Fund
• 5% to the Gaming Local Aid Fund
• 3% to the Players’ Benevolence Fund

Expanding sports betting to restaurants and bars

Gomez and Ramos garnered a lot of attention with their proposal to include restaurants, bars, and fraternal organizations. Under S 264 and H 531, these businesses that already offer keno could have sports betting kiosks.

This would serve two purposes: benefiting small businesses and providing an avenue of participation for minority-owned businesses.

Sen. John Velis co-signed on to S 264.

“I don’t have to tell you that the bars, restaurants, and private clubs have been absolutely decimated by COVID-19,” Velis said. “This is a simple way to help a number of them out.”

Ramos contended that the legislature missed opportunities to better include minority-owned businesses when creating the casino and cannabis industries.

“That tells us that we have to be intentional in allowing black and brown businesses a fair opportunity to benefit from this new multimillion-dollar industry,” Ramos said. “Our bill allows for bars and restaurants to offer in-person betting. If we do not allow this provision into the final bill, it would monopolize sports betting to casinos and online apps, none of which to my knowledge are owned by black and brown owners.”

More on inclusion and diversity

The Ramos/Gomez bills also include a racial equity component.

They direct the Massachusetts Gaming Commission to create regulations that take into account diversity, equity, and inclusion. It’s left to the Commission to determine how best to equitably distribute the licenses.

“This is our opportunity to create a bill that would be fair and equitable and give people of color an opportunity to capitalize on this new industry. We all know that there’s a racial wealth gap here in the Commonwealth and throughout the country. There’s a racial income gap in the Commonwealth and in the country. And a huge part of that, let’s be honest, is legislation. Laws of the past that continue to haunt us today. … It was legislation that helped create this gap, and we have to use legislation to help close this gap.”

Maryland made a similar effort to ensure minority ownership in a new industry.

Border towns losing money to states with sports betting

Massachusetts is surrounded by legal sports betting in New Hampshire, Rhode Island, and soon to be Connecticut and New York.

Rep. Shawn Dooley explained that Plainridge Park Casino, in his district, borders Rhode Island. And Rhode Island casinos are stealing customers by advertising that they have sportsbooks.

“People who want to go and play at a casino, but also want to do a couple of sports bets, are leaving Massachusetts, literally driving past a Massachusetts casino, going five-to-six miles down the road, and going to bet at one of the two Rhode Island casinos that are right on the border. … By implementing sports betting, that would … at least level the playing field with this casinos in Rhode Island.”

He brought along a town administrator from Plainville, who added that Massachusetts residents who go into Rhode Island to place a bet end up having dinner there as well, hurting small businesses.

On the other end of the state, New Hampshire Gov. Chris Sununu has openly mocked Massachusetts for not having sports betting. According to DraftKings, 30% of the wagers it takes in New Hampshire come from Massachusetts residents.

“As a defender of the New Hampshire border, I would love to see the sports betting take place because we’re seeing similar action of our constituents who are going right over the New Hampshire border and placing bets on these games,” Rep. Bradford Hill said. “We’ve been ridiculed by our friends up north because we haven’t yet put this into place.”

Ayesha Molino of MGM Springfield added that her casino would soon lose customers across the border to Connecticut if Massachusetts doesn’t move on sports betting.

Massachusetts sports teams support wagering

Massachusetts sports teams support legalization of sports betting but are not following the trend this year in other states by asking to participate. Instead, they expect ancillary benefits from sports betting.

“Sports betting is an important tool to increase fan engagement,” said Sam Kennedy, president of the Boston Red Sox. “Legal, regulated sports betting provides a safe way to engage fans. And especially today in the wake of a pandemic, every single dollar of advertising and sponsorship revenue is extremely important.”

Rich Gotham, president of the Boston Celtics added that their data shows sports fans who wager consume six times the sports content as none-betting consumers.

“While we can’t participate directly due to our league rules, we can benefit indirectly from the increased fan engagement, and through sponsorship dollars with gaming companies,” Gotham said.

The Red Sox and Celtics are members of a coalition of major stakeholders that also includes Major League Baseball, the NBA, PGA Tour, MGM, DraftKings, and FanDuel.

Potential revenue on table for MA sports betting

Baker only included $35 million in sports betting revenue in the executive budget proposal. Studies show the state could likely get more.

Crighton cited a study in a 2018 Massachusetts Gaming Commission report that sports betting would create more than $400 million in gaming revenue. At the 15% tax rate in his bill, that equates to and more than $60 million to the state annually.

Joe Weinert of Spectrum Gaming said his organization projects between $350 and $500 million in gaming revenue.

But does Massachusetts need the revenue? One of the reasons lawmakers left sports betting out of the budget was that the state has rebounded from the COVID-19 economic downturn. Federal aid boosted state coffers.

“As our revenue projections have exceeded what a lot of folks thought they would be this year as we see federal money coming in, people kind of dismiss our revenue argument about this,” Crighton said. “… I don’t think we can look at one-time federal revenues coming our way. This is a long-term sustainable source of revenue that could go to a wide range of much-deserved and needy programs across the state.”

Jason Robins, CEO of DraftKings with its headquarters in Massachusetts, told lawmakers that legalizing sports betting will not just bring in revenue but create at least a thousand jobs.

“We look forward to increasing our local hiring even more but that is dependent on sports betting being authorized in our home state. As I raised in my testimony in May 2019, until sports betting is authorized in Massachusetts, DraftKings cannot locate certain jobs in the Commonwealth. Over the past two years, we have shifted multiple teams and hundreds of employees to other US office locations in order to serve our customers in states where sports betting is legal.”

Poll shows MA residents support sports wagering

Ahead of the hearing, a poll showed that 61% of Massachusetts voters support legalizing sports betting.

If revenue from sports betting goes to education, that number jumps to 72%.

Encore Boston Harbor and the Plainridge Park Casino Commission commissioned the poll. David A. Paleologos Associates conducted the poll of 500 voters.

Reaching a consensus on sports betting language

Lawmakers spoke of the committee taking pieces of each of the 19 bills introduced and forming an omnibus bill.

Two years ago, the same committee held hearings and came up with a consensus bill. But that legislation went nowhere.

After years of discussion and facing increased pressure from neighboring states with legal sports betting, this committee bill should have legs.

But it will take more time and hearings to agree on language. Massachusetts’ formal session ends Nov. 17, though the legislature doesn’t officially adjourn until Jan. 4, 2022.