Massachusetts House Passes Sports Betting Bill, Calls Out Senate

The Massachusetts House of Representatives got the ball rolling on sports betting legislation. Now we’ll see if the Senate knows what to do with a ball.

The House sent a message to the upper chamber Thursday by passing sports betting legislation by a margin of 156-3.

Bill H 3977 came together this week out of the Economic Development and Ways and Means committees.

Facing another football season in which Massachusetts residents will cross the borders to surrounding states to bet on sports, the House wants to move quickly to legalize sports betting. However, it’s unclear if the Senate will oblige.

“I know that my constituents who partake in sports betting would rather place these bets in their homes and in their home state, and would rather have any revenue collected go to benefiting their home state of Massachusetts,” said Rep. Andres Vargas, vice-chair of the Economic Development Committee.

MA House sports betting bill details

Rep. Jerald Parisella, chair of the Economic Development Committee, went over the details of the bill on the House floor. They include:

• Appoints the Massachusetts Gaming Commission to oversee sports wagering.
• Legalizes retail and mobile sports betting for the state’s three commercial casinos and up to three horse/greyhound racetracks.
• Casinos can have up to three online skins, while tracks are limited to one skin.
• Licenses cost $5 million every five years, with an initial additional fee of $1 million.
• Online operators also pay $5 million for a Category 3 license, whether they partner with a gaming facility or not. An amendment adopted on the floor clarifies that Category 3 licensees are not required to partner with or have any relationship with a Category 1 (casino) or 2 (racetrack) licensee.
• Sets the tax rate at 12.5% for retail wagering and 15% for online wagering.
• Allows wagering on college sports and esports.
• Online operators pay $1 million annually into a Public Health Trust Fund for programs addressing compulsive gambling.
• For in-state sporting events, operators must pay 1% of bets placed on the game to the facility to pay for security and other measures to protect the athlete and integrity of the games.

Bill includes wagering on college sports

Wagering on college sports has been a contentious topic during previous Massachusetts hearings on sports wagering.

Gov. Charlie Baker has repeatedly excluded college betting in his own proposed legislation. It’s unclear whether he will sign a bill with college wagering.

The House bill includes all college wagering, including bets on in-state colleges. Local colleges asked for exclusion, but House members made the case that it is necessary to include wagering on college sports.

“College sports bets are likely to account for 25% of sports betting revenue in Massachusetts according to a gaming analyst,” Vargas said. “If we fail to legalize this segment of the market, bettors are likely to either continue crossing the border to place college bets or stick to the illicit market entirely.”

Parisella added that March Madness is the second-most wagered-upon sporting event behind only the Super Bowl. And that it’s safer for college betting to take place under state regulation.

“We believe it’s appropriate to allow college betting for a number of reasons,” Parisella said. “First of all, it brings it out of the shadows. We want to make sure things like the shavings scandal that happened at Boston College a number of years ago doesn’t happen.”

Proposition bets won’t be allowed on college players. Additionally, college venues are included in the 1% venue fee for security and integrity.

Sports teams could have avenue toward participating

The House adopted an amendment offered by Rep. Jay Livingstone to have the commission study the feasibility of professional sports teams or facilities offering retail and online sports wagering.

The study shall include:

• The ability of professional sports teams or their designee to operate sports wagering.
• Whether sports wagering should be operated by a professional sports team, facility, or an independent third party.
• The economic, public health, and safety impacts of authorizing sports wagering at a facility that hosts professional sports.
• The effect on minors, problem gambling, and viewer experience at a professional sports event.

Livingstone’s original amendment attempted to create a fourth category license for professional sports facilities. The study is due no later than Dec. 31, 2022.

Minority and small business inclusion gets deeper look

Allowing bars and restaurants to have sports betting kiosks was a hot topic at last month’s committee hearing.

Sen. Adam Gomez and Rep. Orlando Ramos framed it as a way to include small- and minority-owned businesses.

The House bill opts to order the commission to conduct a study on the feasibility of allowing retail locations to operate sports betting kiosks. It is due Dec. 31, 2022.

Rep. Vargas explained:

“There’s evidence that such a form of betting would capture a larger share of black-market bettors and could benefit business owners of color. This is in addition to the potential for more revenue and increased business to restaurants and bars. However, retail sports betting kiosks are complicated and require further vetting, and as such the bill takes a careful approach to study this specific issue while ensuring the rest of the market is legalized in a timely fashion so that we don’t miss another season of lost revenue.”

In an amendment adopted on the floor, Ramos added a study on participation of businesses owned by minorities, women, and veterans in the sports wagering industry. It’s due July 1, 2022.

Revenue projections for Massachusetts sports betting

Parisella explained that sports betting will bring significant revenue to the state.

Taking into account the $5 million licensing fee, he said the state could expect $70 to $80 million in revenue before the first bet is placed.

Annually, he cited projections of $60 million in state tax revenue, which could go higher at market maturity.

The bill distributes state sports betting revenue as such:

• 40% to the Workforce Investment Trust Fund
• 33% to the Gaming Local Aid Fund
• 20% to the Youth Development and Achievement Fund
• 6% to the Public Health Trust Fund
• 1% to the Players’ Benevolence Fund

“What might be most appealing to each of us is a large percentage of these revenues will go to local aid, providing supplemental dollars to every city and town,” Rep. David Muradian said.

The ball is in the Senate’s court

It’s not the first time the House has passed sports wagering language. The chamber put it in the economic development bill last year only to have it drop out during conference committee negotiations with the Senate.

Members of both parties participated in last month’s Joint Economic Development and Emerging Technologies Committee hearing.

That’s the perfect setup for the chambers to craft a joint sports betting bill. But House members opted to move on their own to get the Senate’s attention.

Multiple House members made comments trying to spark action on sports betting in the Senate. Rep. Bradford Hill said:

“I hope that the Senate takes it up in an early fashion so that we can finally start placing bets on sports here in the Commonwealth and that we don’t miss another football season, another college basketball season, World Series, Super Bowls, which we have now missed at least three of those opportunities. We need to get this done. This is the first step.”