No Limits To Online Operators In Massachusetts Sports Betting Legislation

Sports betting legislation passed by the Massachusetts House of Representatives doesn’t include any limit to the number of online operators.

Rep. Jerald Parisella, who chairs the committee from which the bill originated, confirmed the open-market approach with Play MA.

“Typically in the industry, the online operators will pair up with a physical entity,” Parisella said. “We sort of did the New Jersey model where casinos get three mobile apps and one each for the tracks, but there is no limitation to somebody going it alone. Our thought process was if some MIT wiz kid comes up with an innovative sports betting app, meets our standards and can produce the $5 million fee, we’ll let him see how it goes.”

The House passed the bill July 22. The Senate assigned H 3993 to the Committee on Ways and Means.

How would MA online sports betting landscape look?

The House bill creates three classes of sports wagering licenses:

• Three commercial casinos make up Category 1 licensees. Each may have three online sports betting skins.
• Two (possibly expanding to three) racetracks make up Category 2 licensees. Each may have one online sports betting skin.
• Category 3 licenses go to online operators.

Online operators must pay $5 million for a five-year license with another $1 million initial fee plus $1 million annually toward programs addressing compulsive gambling.

The fees are the same whether they operate on their own or partner with a physical entity. So why would online operators join with a brick-and-mortar facility?

“From discussions I’ve had with folks, they do tend to partner with the established entities,” Parisella said. “I think there can be some symbiotic relationship with online operators. We’ll see how the market plays out. I do believe DraftKings will partner up with one of the casinos.”

Parisella added that he has heard no pushback from casinos on allowing untethered mobile sports wagering licenses.

Sports teams requested to be involved late

DraftKings may be more likely to partner with a professional sports team, if that is a possibility. It recently became the official daily fantasy sports partner of the Boston Red Sox.

A surprise amendment on the House floor asks for a study on whether the state should permit online and retail licenses for sports teams or facilities.

Direct participation in sports betting by professional sports teams has gained momentum in 2021. Both Arizona and Maryland included them in the group of sports betting licensees. Teams are also included in pending legislation in Ohio.

But Massachusetts sports teams specified at the June hearing that they weren’t interested in participating but still supported legalizing sports wagering. They cited increased fan engagement, sponsorship revenue, and increased advertising dollars as reasons for their support.

“The sports teams kind of came into it late in the process,” Parisella said. “We already had a bill developed, and then they expressed interest in getting involved. In the early meetings with them and the hearing, they hadn’t expressed interest. If it makes sense for them to become part of it, I think that’s something we can take into account.”

College wagering could be sticking point

Parisella believes the biggest area of contention with the Senate could be the House’s inclusion of wagering on college sports.

Sen. Eric Lesser, his counterpart as chair of the Economic Development and Emerging Technologies Committee, opposes inclusion of college sports. So does Gov. Charlie Baker.

Parisella makes a common-sense argument for including college wagering:

“I think if we don’t have college included, a lot of consumers are going to pick the option that allows them to do both, bet on the pros and college. I don’t think they’re going to one app to bet on pros and another app to bet on college. If we don’t have college, they’re going to continue going to New Hampshire, Rhode Island, Connecticut, or choose the offshore books or just go to their neighborhood bookie.”

For local colleges, Parisella hopes an unprecedented 1% integrity fee for bets placed on a game played in the state helps to alleviate concerns.

“It gives them the tools necessary if they feel they need to increase security or ensure integrity at games,” Parisella said. “I haven’t heard of a lot of issues in states that have college betting, but this adds an extra step to help college teams and pro teams beef up security.”

Path forward for Massachusetts sports betting

Parisella and Lesser could have worked together as heads of the joint committee and come to an agreement on sports betting language. Instead, the House tried to move on the issue and urge the Senate to follow.

“Time is of the essence, so we wanted to get something passed as soon as possible,” Parisella said. “We felt it was important to get something that we thought was a good bill passed, and hopefully our colleagues in the Senate will take it up fairly quickly. Football season is a popular time for sports betting. Whether it will happen in time for Tom Brady coming back to Gillette Stadium in Week 4, probably not.”

The Senate hasn’t shown any indication of being in a rush to pass sports betting. Earlier this year, the upper chamber nixed including sports betting in an economic development bill after the House did in its version.

The Senate may choose to ignore the House bill and pass its own sports wagering legislation. In that case, the issue goes to a conference committee with Lesser and Parisella appointing the members.

There’s also plenty of time in the legislative session, if the Senate doesn’t mind letting another Super Bowl and March Madness pass. The current Massachusetts legislative session goes into 2022, ending in July.

But Parisella does believe that the Senate is prepared to act on sports wagering this session.

“I think at the end of the day that we’ll work out an agreement with the Senate,” Parisella said. “I’ve talked to a number of senators who feel the time has come for sports gaming in Massachusetts. We’re surrounded by it in New Hampshire and Rhode Island, and Connecticut and New York are coming with it as well.”