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Massachusetts Passes Sports Betting in Eleventh Hour

Massachusetts Passes Sports Betting in Eleventh Hour article feature image
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Suzanne Kreiter/The Boston Globe via Getty Images. Pictured: Massachusetts State House.

It took the power to stop time, but Massachusetts sports betting is on the way.

After five resolutions extended the 2022 lawmaking session by effectively stopping time in the Bay State, House Speaker Ronald Mariano announced at 5:10 a.m. ET that the House and Senate had agreed on a sports betting bill to send to Gov. Charlie Baker.

Baker has been a staunch advocate of sports betting, which has been legalized in every New England state besides Vermont.

The final version (H. 5164), adopted 36-4 by the Senate, will legalize online and in-person sports betting, without the ability to bet on Massachusetts colleges. It’s slated to allow up to 15 betting apps to start and could allow betting kiosks and hundreds of bars and restaurants.

It’s a huge win for operators, which under a previous Senate bill would have been prohibited from offering bets on any college sports. They will not however be allowed to deduct promotional bets from their taxable income, which should increase their operating costs.

Regulators Working to Fast-track First Bets

Even before Baker’s signature, the Massachusetts Gaming Commission is working to get sports betting up and running as quickly as possible.

Last week the commission released a draft version of initial framework rules to regulate the industry, which Commission Chair Cathy Judd-Stein said it’d put together based on conversations with other legal states. Their work will several industry reports, rules drafting and license vetting.

Several Massachusetts casinos already have already built physical sportsbooks. According to one industry source they’ll offer sports betting much earlier than online providers can.

On average, it takes about eight months from bill passage to first bets, but the commission’s eagerness along with a few deadlines in the bill is a good sign betting may start well before April 1, 2023.

By the end of 2022, the commission must complete two studies. The first reports on the feasibility of sports betting kiosks, which have become an increasingly popular option to let bars and restaurants participate.

It’s great to see that the legislature was forward thinking about the continued growth of our industry, in this bill,” said Brandt Iden, head of U.S. government affairs for Sportradar.  “I think we’ll quickly see even more opportunities for sports fans of the commonwealth to participate in this regulated entertainment activity.”

The second will study opportunities for minority, women and veteran-owned businesses within the industry — which in Maryland has posed a major roadblock to implanting online betting.

Baker has previously said he wants betting by the start of the NFL season, though that’s not likely possible at this point betting could start by the Super Bowl in February.

Up to 15 Apps to Start

Licenses will be designated for casinos and racetracks. Each of Massachusetts’ three Casinos may partner with up to two online operators. Racetracks may partner with just one.

A path for even more operators exists if the state adds more racetracks.

Each license costs $5 million and lasts five years.

BetMGM, WynnBet and Bally’s each have partnerships or affiliations with casinos in the state and will likely receive licenses.  DraftKings, which is headquartered in Boston, would likely apply for one of seven additional “untethered” online licenses.

The online betting giant, which runs New Hampshire’s sole mobile sports betting app has reported that three in ten bets placed in the Granite State come from Bay Staters crossing the boarder.

 

Hard Ball Negotiations Come to an End

The product of over a month of closed-door negotiations, the final bill lands in between many of the “dealbreaker” asks pushed by the House and Senate.

Last week it appeared they might not find middle-ground over college betting, which the Senate wanted an outright ban on. Ultimately both sides compromised by banning wagering on in-state colleges only, a trade-off struck in a handful of other states like New York and New Jersey.

Online operators will pay a 20% tax, while retail operators will pay 15%. These are considered middle-of-the-pack compared to the other 35 legal betting states, though they’re much less than the 35% rate that had been pushed by Senate.

The House’s bill would have allowed operators to deduct revenue associated with promo bets or free play from their taxable income, which has reduced the effective tax rate across nine legal states. It did not make the final bill.

Jeff Ifrah, founder and general counsel for iDEA Growth, a gaming lobbyist group called the compromise “a huge win for Massachusetts consumers and major blow to the illegal bookies.”

iDEA Growth is one of several groups that had sent letters to lawmakers urging them to back-track from some restrictions in the Senate’s bill.

Bay Staters will not be able to use credit cards to fund their accounts, a concession made by the House. Fortunately for operators and maybe for lawmakers as well, widespread restrictions on advertising did not make it into the final bill.

The Senate’s bill had included framework to ban sports betting ads during live sports broadcasts, but there were several legal and practical concerns around doing so.

“Once signed by the governor, this new law will open a new industry for our Commonwealth, creating jobs and economic growth,” said  Sen. Eric Lesser, one of six lawmakers appointed to the conference committee tasked with finding a compromise. “It will also safeguard consumers and athletes with some of the strongest protections in the country while maintaining the integrity of sports.”

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