The Good, The Bad And The Ugly Of The Front-Running Massachusetts Sports Betting Bill

Posted By Derek Helling on April 7, 2020

One Massachusetts sports betting bill has emerged after months of preparation. The bill, H. 4559, is the result of a lot of legislative study and careful crafting.

Because of those efforts, the bill has several great qualities. Unfortunately, some work remains before it becomes an ideal legal framework for Massachusetts sports betting.

Where this Massachusetts sports betting bill gets it right

For months, MA legislators took the approach of learning from other states’ examples. In some ways, it looks as though they gleaned some great information.

The bill avoids putting unnecessary costs of operation on future operators. It does this by not only avoiding any requirements to pay royalties to professional sports leagues but also not placing any official data mandates on operators either.

The bill also does not put any unnecessary burdens on bettors. For example, it does not require bettors to register for accounts with online sportsbooks in person.

Consumer choice and the benefits of competition are another way this bill excels. It authorizes the Massachusetts Gaming Commission to approve up to five online-only and four master licenses with three skins each.

Tax rates aren’t onerous, either. The bill specifies a 10% tax on retail and a 12% rate on online handle. The same goes for license fees.

Licenses would cost $1 million with a renewal fee of half of that cost every five years. Compared to other jurisdictions, that’s a pretty good rate.

There are some provisions of this bill that need some adjusting to be as good as they could be, however. Call them the bad parts of the bill.

The parts of H. 4559 that could use some adjustments

Some of this section is more about what’s not in the bill rather than what is in the text. For example, the bill makes no allowances for the registration of vendors that sportsbook operators use for services like geolocation and payment processing services.

While the MGC could theoretically draft regulations for such licensure after the bill’s enactment, that may create a problem. The bill doesn’t expressly give the MGC the authority to create a new class of license, so some may take issue with that approach.

That oversight might apply to online operators who contract with master-license holders as well. In most other jurisdictions, such operators have to receive licensure to do so on their own and can’t essentially “piggyback” off their master-license holder partners.

The danger in that is master-license holders could potentially partner with companies and individuals who otherwise wouldn’t be up to snuff or pose integrity risks. This is an area that MA lawmakers should consider seriously before finalizing this bill.

There are yet other areas that should be completely eradicated from the bill altogether. Not only are they counterintuitive, but they could create serious problems down the road.

The ugly of H. 4559 as it stands right now

The ugliest part of H. 4559 is its unproductive carving out of certain segments of the betting landscape in the United States. It defeats the purpose of legalizing sports betting and could handicap the state from competing with other jurisdictions.

Two prominent prohibited events are esports and in-game/prop bets involving DI college athletes. Those restrictions are not only short-sighted but problematic.

Esports are growing around the world at an incredible rate, and not only is betting upon these contests going on in Europe successfully, but US jurisdictions aren’t afraid of this “boogeyman” either. Gambling laws in Colorado and Tennessee expressly permit such wagering, while Nevada and New Jersey are already allowing sportsbooks to take bets on esports.

As that segment of the entertainment industry continues to grow, so will the desire to bet on the action. By prohibiting wagers on such events, MA is forfeiting tax revenue and directing bettors to illegal channels.

The same goes for prohibiting bets on college athletes’ performances. The “black market” won’t shy away from taking such wagers, and that leaves college athletes susceptible to match-fixing schemes.

If MA wants to protect college athletes and their teams from such risks, it needs to afford them the same regulatory protections that their professional counterparts enjoy. Hopefully, MA legislators will remove this language from the bill soon.

There’s no guarantee this bill will pass with or without amendments, it represents the results of months of work. It isn’t perfect yet, but with a few alterations and deletions, it could be a stellar piece of legislation.

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Derek Helling

Derek Helling is a freelance journalist who resides in Chicago. He is a 2013 graduate of the University of Iowa and covers the intersections of sports with business and the law.

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