Two weeks ago I looked at what sports betting will look like in the legalized states of DE, MS, NJ, PA, RI, and WV. Now let’s shift focus to what states might come next. There’s also an elephant in the room in the form of Congress. We’ll address that as well. None of the states we’ll discuss will have wagering available for this football season. At best, there may be some March Madness in these states. More realistically, you’re looking at a rollout next summer.
The Sure Things
New York won’t let another year go by without completing an expansive sports wagering law. They came very close to completing this work in June, but the legislative year ended on them. This year they’ll be watching progress in neighboring New Jersey. In doing so, they’ll also be watching potential revenue leaving their state. New York appears ready to pay an integrity fee to the leagues—most likely due to gain favor so they can continue hosting major sporting events in New York City. It’ll be important to watch how they choose to craft the fee.
Facing pressure from both sides of the state’s geographic borders, Connecticut is also a sure thing. The complication here is that the state’s two casinos are on tribal land. How Connecticut handles sports wagering in a tribal casino will be interesting and possibly precedent setting. The tribes believe they should have exclusive rights to sports wagering. They also want to reduce the state’s 25% share. Connecticut Governor Dannel Malloy is entering his final year in office. He is in favor of getting a deal done, although the legislature has shown less urgency.
Iowa came close to moving a bill through legislature this year. It even got as far as to set licensing fees and tax rates. However, its session adjourned nine days before PASPA was overturned and, as a result, the urgency wasn’t there to get it done in 2018. The Iowa General Assembly reconvenes on January 14, 2019. Expect a law in Iowa by spring. William Hill has already planted its flag in Iowa by operating the Race Book at Horseshoe Council Bluffs.
Snowballs Rolling Downhill
Some states have bills that should gain momentum in the next six to nine months. There is bipartisan support for sports wagering in Ohio, but so far only a one-line bill. Plenty of meetings and hearings will be needed to fill that bill out; however, the bipartisan support is key.
Illinois is looking to pass a sweeping gaming expansion within the next year. You can expect sports wagering to find its way into the bill. Sometimes these gaming-expansion bills can go off the rails due to special interests, which is the only reason this isn’t a sure thing.
Kentucky also has wide-ranging bipartisan support for a sports betting bill. The key in Kentucky will be the support of the state’s horse racing industry. The progress of a sports betting law in Kentucky will depend on how it treats the horse racing tracks. Kentucky might be the first state to place sports betting regulation in the hands of the Horse Racing Commission. Other states have used the state gaming board or lottery commission, but never the racing industry.
Meanwhile, there are some states — Louisiana and Maryland — that require voter referendums to approve constitutional amendments to allow sports wagering. Voter referendums can become pawns if they might influence certain demographics to turn out to vote. The fight over which ballot they appear on is often half the battle. Then there are states with a heavy presence of tribal casinos who will need to renegotiate compacts. Beyond the aforementioned Connecticut, expect complicated negotiations in California, Florida, and Oklahoma.
The Elephant in the Room
Two US Senators garnered attention last week when they came out in favor of federal oversight of sports wagering. Senator Orrin Hatch of Utah and Senator Chuck Schumer of New York both signaled their support of a potential bill that would regulate sports wagering. Hatch is one of the original authors of the failed PASPA law. He has also repeatedly led opposition to gaming expansion in the US. He is also entering his final few months in Congress. Senator Schumer’s support of federal framework is a bit more surprising and unfortunate. Schumer appears to be aligning himself with the interests of the sports leagues. He’s in favor of a federally mandated integrity/royalty fee. He wants to give leagues the final say as to what type of bets can be offered. Lastly, he wants to force sports books to use official data from the leagues.
We’ve explored the hypocrisy of the integrity fee before. The threat of point-shaving or a gambling-related scandal actually decreases with more legalized markets. In terms of data, there is rarely a discrepancy between data sources regarding the resolution of a sports wager. In many cases, the official source for grading is disclosed upfront by the sports book. Forcing a costly and unnecessary royalty for this data onto the industry is not fair for the consumer. Fortunately, given the mid-term elections and general turmoil of Congress at this point, it’s unlikely this bill by Senator Hatch will get to a vote in 2018 or 2019. The year after that is a major election year. Many experts believe the next viable window for Congress to act on something as mundane as sports wagering is 2021.
You can track the developments in any state by clicking on its pin in this map.
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I know these decisions will be made at the state level, but what effect, if any, will the outcome of the midterms have on these decisions? Generally speaking, casinos are owned by rich Republicans. I would expect those who own casinos in Nevada to oppose sports betting expansion (because it takes away an incentive to visit Vegas or Reno) and those who own casinos in other states to favor it (because it gives them a way to make their properties more attractive to visitors). Where’s the money going on this issue? Whose pockets are being lined? Of course, we’ll never know.
Another thing I would expect is for states that don’t have casinos, or don’t have very many, to see sports betting as a lip-licking potential cash cow and thus, tend to be in favor of it. This is reminiscent of the introduction of casino gambling into places like Tunica and Biloxi. The pitch was always that it would create jobs for the local and tax revenue for the state. Of course, that completely ignores the social blight of having a casino in your neighborhood (increased crime, among other negatives) and the vampire-like drain on the pockets of the locals. But I think the prospect of yummy tax revenue might trump all, regardless of the social costs.