The Massachusetts Senate passed sports betting legislation Thursday, but it’s not yet a victory for sports wagering fans in The Bay State. Not even close.
The Senate passed H 3993, a bill already passed by the House in last year. But first, the Senate added a Ways and Means Committee substitute that creates many huge differences with the House bill.
Among the biggest differences: Sports wagering licensees/skins, betting on college sports, tax rate and advertising rules. In each aspect, the House bill is more industry-friendly.
Over six hours of discussion, Senators defeated or withdrew many amendments that would have brought their bill closer to the House version.
Senate passage sets up a future conference committee that will meet with a large chasm to overcome. But the conference committee will have the benefit of time. Massachusetts’ formal legislative session runs to July 31.
Senate passage still a notable event
Massachusetts has discussed sports betting legislation since 2018. The past two years, the House advanced sports wagering language only to get no action from the Senate.
Senate passage at least sets up the opportunity for the chambers to discuss the differences between their bills.
“Massachusetts is obviously not the first state now to legalize sports betting, but it most notably won’t be the last,” said Sen. Eric Lesser, who crafted the language used by the Senate. “But I think because we waited, we learned a lot. We learned what works, what doesn’t work, what we need to do to make sure we have a competitive market, and a high-quality product for consumers, mitigating problems around addiction and risky behavior.”
Michael Rodrigues, chair of the Ways and Means Committee, lauded the bill’s problem gambling measures.
“More so than any other state, this bill implements robust preventive measures for problem gambling and provides significant support for consumers who find themselves in over their heads,” Rodrigues said. “With this legislation, we are bringing sports betting into the light of day.”
But Sen. Bruce Tarr, the minority leader, pointed out many of the bill’s issues:
“This bill does demand improvement in the way that it handles the taxation rate, the way that it deals with advertising and the way that it deals with collegiate sports, to name a few. Mr. President, hopefully we’ll be able to address those things through amendment so that we’ll get to a bill that actually does promote the commercial viability of sports wagering in the commonwealth in a way that is sustainable.”
Those amendments were not adopted.
Senate says no on college sports bets
Three Senators offered amendments to include wagering on college sports. Ultimately, all three were withdrawn.
But Sen. Patrick O’Connor spoke on the issue. O’Connor also lobbied for esports and Olympics wagering to make the bill.
He said that the commonwealth will miss out on 25% of potential revenue without college sports. And he added that many bettors won’t come out of the black market without college wagering.
“If we do not allow college sports and do not allow the Olympics, folks in our community are still going to find a way to bet on this through offshore and illicit markets without the integrity of the consumer protections that we are promoting here today,” O’Connor said.
O’Connor’s amendment excluded wagering on in-state college sports teams.
The House bill included wagering on college sports.
Tax rate remains high
The Senate bill taxes online sports wagering at 35% and in-person betting at 20%. That creates a large gap with the House at 15% and 12.5%.
Tarr pitched an amendment to bring the Senate bill close to those House numbers.
“The economics are very simple,” Tarr said. “If you want to have a successful sports wagering business in the Commonwealth of Massachusetts, the rates that are in the bill have to be abandoned and we have to adopt the more realistic rates that are reflected in this particular amendment.”
Rodrigues argued that three of the four states surrounding Massachusetts — New York, Rhode Island and New Hampshire — have a tax rate of 50% or higher. In each example, sports betting is run through the state with a limited amount of operators.
Rodrigues particularly pointed to New York’s 51% and Pennsylvania’s 36% as higher tax rates in successful markets.
“Given these examples, I find it hard to believe that a tax rate that is lower than Pennsylvania and New York, and lower than three of our four neighboring states, would make Massachusetts uncompetitive,” Rodrigues said. “Remember, one of the missions of this particular bill was to provide the best benefit for the commonwealth’s citizens and taxpayers, not the best benefit for the online gaming operators who want to work here.”
The Senate defeated the amendment 35-4.
Senate limits sports wagering licenses and skins
The Senate limited sports wagering licenses to one in-person and online skin for three casinos and six regional sportsbooks to be built throughout the state.
The House bill allows each casino to have three online skins. And three racetracks each get retail sportsbooks with one skin.
Sen. Mark Pacheco wondered why his colleagues wanted to turn their back on an existing gaming industry in the state by keeping out racetracks.
“These facilities have been creating jobs and paying taxes in the Commonwealth of Massachusetts for generations,” Pacheco said. “It is outrageous to me that we would think of not providing them the opportunity of continuing to move forward and play a role in this new gaming opportunity when gaming is a specialized area itself.”
Pacheco said he will send conference committee members a letter asking them to support the House provisions regarding including racetracks.
“While we all want to celebrate the new, let’s not at the same time throw out some of the old part of the gaming industry that has actually paid their dues in making sure that they were there to create the jobs and keep them going all these years,” Pacheco said.
In-game television ban makes bill
The Senate bill bans television stations from airing sports betting advertisements during game broadcasts.
Rodrigues provided reasoning for this ban, which he considers a key part of the bill:
“The bill institutes a whistle-to-whistle ban on television advertising similar to what they do in Europe. This bill limits advertising on television and online, where less than 85% of the audience is 21 years old or older, similar to what we do in the cannabis legislation.”
O’Connor questioned whether the legislature has this right to limit free speech. He added that it’s not practical to block in-game sports betting ads from national broadcasts or regional markets that operate in Massachusetts.
“We are all concerned about the potential flood of sports betting ads that will follow the hopeful enactment of this legislation,” O’Connor said. “I think we all understand what that could mean for children and people who suffer from gambling addiction. But the language in the underlying bill simply goes too far.”
He asked for language matching the House bill.
“We should be doing what other jurisdictions do on this front and give the gaming commission the tools to review licensed operator ads,” O’Connor said. “A full whistle-to-whistle ban in my opinion is not constitutional, not practical, not logical.”