Sports betting bill goes to the Massachusetts House for review

March 11, 2020 | G. Michael Dobbs
news@thereminder.com

BOSTON – Is sports betting getting closer to being a reality in Massachusetts? Yes and no.

A bill was released last week by the Joint Committee on Economic Development and Emerging Technologies that “would allow adults 21 or older to place bets in person at the state’s casinos, slots parlor or live horse tracks, and through web or mobile apps if they are physically in Massachusetts when they make the wager. Regulators at the Massachusetts Gaming Commission would be given the discretion to write the actual rules for sports wagering,” according to Colin A. Young of the State House News Service.

The Senate members of the committee did not vote on the bill and state Sen. Eric Lesser, the Senate chair of the committee, explained to Reminder Publishing because it is a bill that involves taxation it must be crafted and approved by the House.

The release of the bill to the House was an effort “to keep the process moving,” Lesser said.

“The Senate doesn’t have a bill [about sports betting]. There is still interest in it. Many senators are weighing in on it, “ he added.

The committee conducted two full days of hearings with both oral and written testimony,” the senator said. He added there are a lot of different elements to think about.” Among those elements are the roles casinos and Keno operators will play in sports gaming.

In the 2018 white paper report issued anticipating the Supreme Court decision making sports betting legal, the Massachusetts Gaming Commission detailed the challenges of crafting legislation legalizing sports gaming in the Commonwealth. “As the Legislature considers whether or not to legalize sports betting, its evaluation will be guided by certain policy objectives. The introduction of a new aspect of the emerging gaming industry in Massachusetts presents an opportunity to bring a significant amount of gaming activity and revenues out of the shadows and into the legal market. With that transition would come the opportunity to cultivate the associated economic benefits – including tax revenues – while providing consumers of sports betting with protections not afforded them by illegal bookmakers.

While certainly not an exhaustive list, we would posit that among those policy objectives under consideration by the Legislature could be:

• A desire to transition sports betting activity from the black market to legal, regulated markets

• A desire to capture tax revenues from legal sports betting activities

• A desire to expand economic opportunities to potential local providers of sports betting and related industries

• A desire to identify and mitigate any potential negative externalities associated with the introduction of sports betting, including efforts to promote responsible gaming

The Legislature’s appetite for legalization and the particular perspective it takes on addressing the policy objectives under consideration will have significant impact on the nature and conduct of a potential sports betting landscape in Massachusetts. Here are some of the high level considerations to frame some of the most important issues and serve as a starting point for further analysis.

One issue facing the Legislature is just how profitable sports gaming would be for the Commonwealth. The 2018 white paper reported, “One of the inherent difficulties with estimating the potential legal sports betting market size is the uncertainty that comes with any estimate of the illegal market size. Further complicating the matter has been the fact that most of the figures advanced in public reports are based on a national estimate of total betting handle and not revenue. Understanding the difference between the handle and revenue is critical for realistic expectations of sports betting revenue. The ‘handle’ in sports betting refers to the total amount wagered, which is not the amount that would typically be taxed. Sports book operators typically clear roughly 5 percent of handle as gross gaming revenue. ‘Gross gaming revenue,’ (GGR) is the amount wagered minus the winnings returned to players (before paying taxes and operating costs). For example, a handle of $50 million would result in only $2.5 million in GGR. So while there may be an extremely large handle for illegal sports betting, the taxable GGR is a much smaller percentage of that figure.”

The paper goes on to use Nevada as an example, “For example, in Nevada, the gross gaming revenue is taxed at 6.75 percent, thus using the scenario posed; the tax would only return $168,750.00 on $2.5 million in revenue.”

Former MGM Springfield President Michael Mathis had told Reminder Publishing that he had spoken for the need of sports gaming to House Speaker Robert DeLeo and said it could raise revenues at the casino by 10 percent.

Sports betting may not necessarily be the cash cow many think it could be. The Associated Press noted that last year the state sportsbook operation lost $2.35 million in covering Super Bowl wins. Rhode Island’s sport betting was established through legislation, a move that prompted lawsuits that the initiative should have been approved voters.

Lesser said the details concerning a Massachusetts operation must be worked out in the House first.

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