A Stately Rollout for Sports Betting
As the number of states offering legalized sports betting creeps toward double figures, the topic itself dominated the stage at last month’s G2E show.
And for good reason; interest is high and, as with everything that runs through statehouses, it’s complicated. The conference reaffirmed that anything resembling a national rollout of sports betting will take three to five years, as reworking the patchwork quilt that is regulated American gaming is more often a painstaking process than not.
For instance, with sports betting potentially in the offing last year the state of Mississippi cleared the way by repealing the portion of its gaming law that prohibited sports betting as long as it was limited to casinos. That important step resulted in a tale of two sports betting markets in the neighboring states of Mississippi and Louisiana, as was made clear in the G2E session “Changing the Game: the Legal and Regulatory Impacts of a PASPA repeal.”
With the Supreme Court repeal of PASPA in mid-May, Mississippi needed just 10 weeks to roll out sports betting on August 1, just before the NFL preseason. “It has worked very smoothly,” said Jay McDaniel, deputy director, Mississippi Gaming Commission. “We have 28 commercial operators, 21 of which have a sports book. We are limited geographically; we don’t have Internet or remote wagering statewide but you can do it on-property. Operators were prepared as were regulators. In the first two months, I think results have exceeded expectations of our operators. Annual earnings are expected to be around $40 million, which is good for our state, which is a small population state.”
Mississippi’s results have been buoyed by the absence of sports betting in its Louisiana feeder markets. Senator Daniel Martiny introduced legislation to legalize sports betting last year at 16 casino locations, but the bill faced a couple of hurdles.
“This was not a fiscal session so there were no taxes associated with the bill,” explained Trudy M. Smith, confidential assistant, Louisiana Gaming Control Board. “The only financial piece that was addressed was $1 million on the cost side.”
Then came along racetracks and video poker, who wanted in on the market. “So it went from 16 casino locations to 964 bars, 537 restaurants, 13 racetracks and 202 truck stops. In other words it went from regulating 16 locations to over 1,700 locations, which increased the cost figure to over $25 million with no taxes to offset it,” said Smith. “And then you had the overlay of anti-gambling and anti-expansion of gambling. But Senator Martiny is committed to bringing it back, and I think that the next session, which will be a fiscal session where we can add the taxes back in and work out a more feasible plan.”
Mississippi came up again in, “Sports Betting: The Path Forward for Indian Country,” as the Mississippi Band of Choctaw Indians were the first tribe to offer legal sports betting in the country.
“What’s important and different about that is there is no exclusivity provision in their compact,” said Stephen M. Hart, a partner at Lewis Roca. “North Dakota is another one; their compact says that ‘as long as PASPA doesn’t prohibit,’ and of course PASPA doesn’t prohibit anything anymore. New Mexico could also start offering sports betting today. Their compact says they can do all Class III gaming, and certainly sports betting is Class III gaming. Off-reservation, online or mobile might be more complicated. The big complication for Indian tribes and sports betting right now is exclusivity. It’s a very important concept but it’s very tough when it comes to sports betting.”
Hart added that all of the state-level folks who negotiate compacts and do that kind of work “got stars in their eyes” and thought this would be worth billions and zillions of dollars. “As discussions go forward and you try to correct that, it’s not easy,” he said.
Steve Bodmer, general counsel, Pechanga Band of Luiseño Indians, agreed. California is presently pondering an initiative that observers surmise may have come from the cardrooms or Las Vegas gaming interests. “To me, that’s not important,” said Bodmer. “The question we need to think about is where does tribal exclusivity reside with respect to sports betting? If you would like to offer sports betting as an amenity in California, you have to reopen the Constitution for one sole purpose: to add sports betting and is that for tribes only or do you allow competitors?”
All of which will certainly be worked in the fullness of time, but we know from experience that there are many sands in that particular hourglass.”