A committee of six lawmakers from the Massachusetts Senate and House are currently in negotiations to find a compromise on the state’s sports betting propositions. To aid that effort, a gaming group has presented a potential sports betting path to MA lawmakers.
The committee is tasked with bridging the gap between the House’s bill, H.3993, which passed in July 2021, and its amended Senate version, S.2862, approved last April.
Ahead of the first meeting on June 9, industry and operator advocacy group iDEA Growth (iDevelopment and Economic Association) wrote a letter to committee members. In it, the group laid out its vision of what sports betting in the Commonwealth should look like.
iDEA Growth’s main purpose is to advocate for responsible internet gaming policies that spur economic growth and protect consumers. Its members, 33 and growing, represent all aspects of the industry and also boast a wealth of experience in states where sports betting is legal.
This puts iDEA Growth in a unique position to offer policy advice to the conference committee.
Gaming group presents potential sports betting path
In its letter, iDEA Growth began by encouraging committee members to consider best practices adopted by the 35 jurisdictions that allow sports betting. The committee should also make use of the collective experiences and insights of the online gaming businesses in those territories, the group urged.
iDEA Growth pointed out that Massachusetts residents are already placing bets on sports through illegal and unregulated channels. And many of these illegal sites and operators have a strong grip on these consumers. Many bettors are also driving to neighboring states like New York and New Hampshire where they can legally place wagers.
Accordingly, the association’s main objective is to establish successful sports betting regulations in Massachusetts that will ultimately lure customers away from illegal markets and neighboring territories and guarantee them protection.
The group outlined five areas committee members should consider while crafting legislation on sports betting.
- Tax rate
- Betting on college sports
- Advertising restrictions
- Supplier licensing
Commonwealth could cash in with competition
Successful regulatory programs are those that embrace an open and competitive market environment, the group wrote in the letter. Burgeoning industries thrive on healthy competition, which allows them to maximize customer engagement and tax revenue.
The fact that both the House and Senate bills authorize existing operators to offer retail and mobile sports betting sits well with iDEA. The group also likes that both bills permit mobile sportsbook operators to get their licenses directly from the Massachusetts Gaming Commission.
However, the association prefers the method outlined in H.3977 which gives casinos the authority to:
- Operate their own online sportsbook as well as two other sub-licenses
- Extend sportsbook licenses to simulcasting facilities
- Not cap the number of “direct” mobile licenses
An increase in the potential mobile operators will be beneficial to both Massachusetts consumers and businesses as well as to the Commonwealth, which will cash in on upfront licensing fees and long-term tax revenues.
iDEA Growth Recommendation: Recognize in-state stakeholders while also promoting competition and an open, consumer-driven market through enabling legislation. We urge the committee to adopt the market access provisions outlined in H.3977.
Tax rates can make or break an industry
Tax rates and their implementation are often the determining factors for the success or failure of a territory’s gaming industry, the group said. They also represent a significant operating cost for legal operators.
This issue plays out heavily online, as online operators face far more competition than land-based ones. While competition for land-based operators spans across borders from neighboring states, mobile sports betting operators must contend with that as well as illegal websites operating outside of the country.
To get customers away from illegal operators, legal ones have to provide odds that are competitive. That can be difficult if they are expected to pay taxes along with player acquisition and compliance costs. Taxes need to be low for legal businesses to compete, the group wrote.
Also, legal operators must be motivated to offer compelling bonuses and promotions to stymie illegal markets.
Recommendation: Adopt the retail and mobile practice rates proposed in H.3977. Lawmakers should strive to eliminate double taxation of their federal sports wagering excise tax obligations. The legislation should incentivize licensed operators to offer promotional credits. Those promotions, or free bets, however, should not be treated the same as money wagered in terms of taxation.
Allow betting on collegiate sports to halt exodus
iDEA is strongly in favor of the right to bet on collegiate sports. It believes the current ban will not hinder bettors in Massachusetts from placing bets in neighboring jurisdictions. Worst yet, the ban could push consumers to illegal sportsbooks that operate without transparency or regulatory oversight. This could render college sports players and teams vulnerable to fraud, corruption and game-fixing.
A good approach to offsetting these negative effects is to regulate college sports betting. They should also use existing technologies to monitor and ensure the integrity of the game.
Given the popularity of betting on college athletics, banning it would result in a 25% to 50% reduction in handle, according to independent research conducted by Eilers and Krejcik. Naturally, this would have an adverse impact on the entire sports wagering market.
Recommendations: Legalize and regulate bets on college sports to avoid the aforementioned negative effects. This is the only way the state can protect college athletics and consumers in the Commonwealth.
Permit reasonable advertising to combat illegal markets
Responsible advertising to consumers is an effective way to entice sports bettors away from illegal markets, the group said. Even as more territories legalize the practice, the unregulated sports wagering market continues to thrive. Illegal operators don’t have to pay taxes and are obliged to provide only minimal consumer protection.
Advertising allows legal sportsbooks to tout their protections and also deliver responsible gaming messages to those that need it most. The group also said its members, which includes DraftKings and FanDuel, wield the technology to promote responsible gaming. These companies provide features that allow players to track and manage their spending. These include tools that provide limits on the amount of money and time one can spend on gaming.
A self-exclusion option not just from individual gaming sites but for all gaming sites within a jurisdiction is also available to players at legal sportsbooks, the group said. iDEA Growth has published Responsible Gaming Pillars that emphasize the best methods to protect consumers and highlight industry-wide responsible online gaming.
Recommendation: Do not impose statutory advertising restrictions or overly prescriptive responsible gaming measures. The Legislature should direct the gaming commission to establish rules and an operator code of conduct that advocates for a common-sense approach to responsible advertising.
Appropriate supplier licensing is crucial
Live odds and data feeds have become integral to the operation of sportsbooks. Licenses should therefore be issued to data suppliers and other entities that are involved in bet markets and bet outcomes.
These businesses should be accountable to the state for their products and services. They should also be commensurate in accordance with their proximity to the actual wagering activity.
Recommendations: Include language that defines a sports betting supplier license. Set up a supplier licensing framework to give the commission unambiguous direction and clear guidelines as to which sports betting entities need regulatory approval before providing services.