Massachusetts Sports Betting Negotiations Underway with Governor’s Support
Nathaniel S. Butler/NBAE via Getty Images. Pictured: TD Garden in Boston.
A committee of lawmakers from the Massachusetts Senate and House begins negotiations today aimed on reaching an agreement on sports betting.
The conference committee, slated to gather at 2 p.m. ET, will attempt to find middle ground between two very far apart sports betting bills, previously passed by both chambers. The main points of contention: betting on college sports, tax rate, advertising restrictions and number of operators.
Gov. Charlie Baker has touted sports betting during the Boston Celtics’ NBA Finals run. He’s expected to sign off, as long as both chambers pass an identical bill by July 31, the last day of the formal legislative session.
That would bring legalization to the largest New England state, and home of Boston-based DraftKings. Last year, the online sportsbook reported that 28% of Super Bowl bets in neighboring New Hampshire came from Massachusetts residents.
Sens. Eric Lesser (D), Patrick O’Connor (R), and Michael Rodrigues (D) will push the Senate’s agenda, while Reps. Aaron Michlewitz (D), David Muradian (R), and Jerald Parisella (D) will negotiate on behalf of the House’s plan.
Lawmakers did not respond to inquiries for details on the negotiating process.
Key Differences Between Each Chamber’s Bill
|Online Tax Rate||15%||35%|
|Retail Tax Rate||12.5%||20%|
|Sportsbooks at Arenas||Yes||No|
|Revenue Projection||$60-$70 million*||$35 million|
*based on projections from Rep. Jerald Parisella, co-chair of the Joint Committee on Economic Development and Emerging Technologies.
College Betting is First Concern
The biggest hurdle should be college betting.
A handful of states restrict betting on their own colleges, though Oregon — as Gaming Attorney Daniel Wallach points out — is the only state with a blanket ban on college sports.
A source close to the situation told Action Network that Massachusetts’s colleges are pushing for the ban, in wake of their history with match-fixing scandals, one of which was famously portrayed in Martin Scorsese’s iconic gangster movie, Goodfellas.
But House lawmakers and industry advocates refute the notion that banning legal college betting will curb criminal activity. In a letter sent to lawmakers ahead of today’s meeting, gaming consultancy iDEA Growth urged them to regulate rather than restrict.
Additionally, a college betting ban could lead to a 25% to 50% reduction in handle (dollars wagered), according to Eilers and Krejcik LLC, a gaming advisory firm. That would mean a lot less revenue to the state, around 25% less, according to O’Connor.
Ahead of conference committee negotiations, House Speaker Ron Mariano (D) criticized the restriction, saying he did not see its “purpose.” He’s previously called its inclusion a “deal-breaker.”
There may be hope yet. During the Senate’s vote in April, conference committee-appointee O’Connor deviated from the rest of his chamber by making the case for college betting.
“Banning college betting will stop no one from betting on college sports. It will only drive up the black market, where restrictions are absent and the potential for an unsafe environment is much greater,” O’Connor said.
If both sides can find common ground, it’s reasonable to expect the blanket college betting ban morphs into a restriction only on in-state colleges, as it did in New Jersey and New York.
Conceding to a Higher Tax Rate
The higher tax rate proposed by the Senate is likely a product of New York’s high tax on online sportsbooks and the record amount of revenue it’s generated.
But Massachusetts is three times smaller than its bet-crazed neighbor and much less valuable to operators. Online sportsbooks have weathered New York’s 51% tax, in hopes that 1) they’ll hold on to a sizable share of the largest legal market, and 2) lawmakers will eventually lower the rate.
That being said, a 35% tax rate, while viewed unfavorable by operators, would not be untenable to them. It’s higher than in most states, but less than Pennsylvania’s, which is fifth among legal states in all-time handle.
Along with New Jersey, it’s the only of two states not named Nevada where operators have surpassed $1 billion in gaming revenue.
Simple math tells us that a compromise would result in the House and Senate coming up/down equally from their respective proposed rates of 15% and 35%. But if College betting is the “deal-breaker” House leadership says it is, the Senate might get its way with a higher tax.
Advertising Restrictions Unclear
As legal sports betting in the U.S. enters its fourth years since the Supreme Court cleared the way for states to regulate it, lawmakers are beginning to focus more and more on scaling back advertising.
If the Senate’s bill was to become law, Massachusetts would impose the largest restrictions on advertising we’ve seen thus far in the 35 states to legalize:
- A ban on any advertising during live sports broadcasts.
- A ban on any betting ads in pro sports arenas that could disrupt the viewing experience.
- A vague limit on promotional betting incentives, which could mean no free credits or signup bonuses.
- A ban on all forms of advertising unless 85% of viewership is over the age of 21.
Whether those are enforceable is a different question entirely. State sovereignty and lack of federal oversight would seem to make it difficult to regulate national broadcasts.
The House’s plan is in more in line with recommendations for the American Gaming Association, which in May sent a letter to lawmakers urging them to withdraw potential restrictions from Senate legislation.
Under the House bill, the only limits on advertising would prevent sportsbooks from promoting misleading or untrue messages and directly marketing to minors.
It’s unclear how the advertising piece will turn out with the conference committee. Due to the ambiguity behind many of the Senate’s proposed restrictions, lawmakers may be better off letting the Massachusetts Gaming Commission handle that part.
The commission, per Action Network reporting, has been preparing to implement sports betting in anticipation of legalization. Under each bill, they’d have to put rules out by Jan. 1, 2023, which would fast-track a potential online launch.
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