The U.S. House of Representatives posted a schedule for the first congressional hearing on legalized sports betting in July but quickly postponed it. It would have been the first crack at legalized sports betting by the U.S. Congress since the U.S. Supreme Court struck down the federal ban on sports betting under the Professional and Amateur Sports Protection Act (PASPA) as unconstitutional.
The hearing, before the House Subcommittee on Crime, Terrorism and Homeland Security, titled “Post-PASPA: An Examination of Sports Betting in America,” was postponed only hours after the date was posted, with no new date for the hearing noted.
The hearing, when it does take place, will examine the prospects of a federal bill to regulate sports wagering, a move that the American Gaming Association and other sports- betting proponents have declared unnecessary. “States and tribes have proven to be effective regulators of gaming,” AGA President and CEO Geoff Freeman said at the recent customer conference staged by slot-maker AGS. “There’s nothing left for Washington to do. They tried that once, and we saw how it worked.”
No bill to regulate sports betting has surfaced yet in Congress, although Senator Orrin Hatch announced a plan to draft a bill.
MLB, NCAA Clarify Positions on ‘Integrity Fees’
Rob Manfred, commissioner of Major League Baseball
Top officials of Major League Baseball and the National Collegiate Athletic Association clarified their positions on so-called “integrity fees” in connection with legal sports betting in separate forums last month.
MLB is one of the professional sports leagues which, along with the National Basketball Association, has lobbied for state sports-betting laws to include fees to each league in connection with wagers on their games. Some call them “integrity fees” to cover purported extra costs of maintaining the integrity of the games in the face of expanded sports wagering. Others call it a “royalty” on the “intellectual property” of the games themselves. Opponents call it a simple money grab by already-rich leagues.
MLB Commissioner Rob Manfred explained his position on the Boomer and Gio sports talk radio program in New York, saying his primary goal in seeking a fee is to protect the integrity of baseball.
“Integrity monitoring is a really expensive undertaking,” Manfred said. “It’s very sophisticated. It involves the analysis of massive amounts of data in order to detect patterns in the betting that can be of concern.”
Manfred first said the league only wants a portion of sports wagers to cover those increased monitoring costs and not to make profits, but later showed his hand that he considers it a fair royalty.
“I do not think it’s unreasonable to suggest that people who are free riding on our product should have to compensate us,” he said.
Current casino states that have enacted sports wagering are generally dead-set against paying royalty fees. For instance, New Jersey state Senate President Stephen Sweeney said in May that the state will never approve such fees to the leagues.
“The leagues are asking to be paid to allow games to be played fairly,” Sweeney wrote in a letter to governors of all 50 states last month.
Manfred said in the radio interview that MLB should not “rely on a bunch of state regulators to ensure the integrity of our sport,” although states have effectively regulated all forms of gaming for decades. “Quite frankly, I don’t believe they’ll be as good at it as we will be,” he said.
Meanwhile, a top NCAA official said the collegiate sports organization will not pursue sports betting integrity fees.
Speaking to a group of college athletic business administrators at the National Association of Collegiate Directors of Athletics’ annual convention, NCAA Senior Vice President and Chief Financial Officer Kathleen McNeely said that as long as sports-betting regulation is conducted on a state-by-state basis, individual schools should decide whether or not to pursue such fees from sports-betting operators.
(The NCAA and the NFL are advocating for federal regulation of sports betting.)
Some schools are already advocating for fees. Penn State President Eric Barron, in a letter to the state gaming board asking for a moratorium on wagers involving in-state college fees, suggested that his school may lobby for some type of integrity fee to pay for compliance hires and other sports betting-related expenses. The University of Pittsburgh has also floated the idea of an integrity fee.
McNeely said the NCAA national office “will not be going after any gambling revenue. We know it will cost money to monitor, but (NCAA President) Mark Emmert has been pretty firm in saying he doesn’t think it’s appropriate for the NCAA to try to access that revenue. Schools will need to look at their own values and decide.”
New Jersey Sports Betting Off to Good Start
Lines were out the door over the first few days of legal sports betting at Atlantic City’s Borgata
Monmouth Park Racetrack in Oceanport, New Jersey, and the Borgata casino in Atlantic City both reported a strong first week of sports betting in the state. Later, the new Ocean Resort in Atlantic City and the Meadowlands racetrack opened their own sports books.
State regulators have not released any official numbers, but officials for both facilities told the Associated Press they are very pleased with their initial numbers.
The two initial sports books were the first in the state to offer live sports betting since New Jersey won its battle to strike down a federal ban on sports betting before the U.S. Supreme Court. Sports betting went live in the state June 14.
“We’re really pleased with the early results, especially considering it’s a slow time on the sports betting calendar,” said Joe Asher, CEO of William Hill US, which runs the sports book at Monmouth Park and the one at Ocean.
According to local reports, the track saw large crowds for its first full weekend with sports betting, including attendance of more than 23,000 for Father’s Day, more than 5,000 more than last year. The track also featured a full slate of racing for the weekend.
Dennis Drazin, president and CEO of Darby Development, which operates the track, told the Asbury Park Press the “numbers have been very strong.”
“I think this shows you sports betting is not going to cannibalize our product. In fact, it makes it even stronger when we have more people there doing both,” Drazin said.
The Borgata—which has opened its sports book alongside its already-operating race book—also said business is up.
“The revenue was definitely beyond what it would have been,” casino spokeswoman Liza Costandino told the AP.
Costandino also said sports wagering is attracting new demographics to the facility, including younger players and more female players.
“A full bachelorette party came in and they all made sports bets,” Costandino said.
Rhode Island Legalizes Sports Betting
Rhode Island Governor Gina Raimondo
A sports betting bill, H7200A, was approved last month by the Rhode Island legislature and signed by Governor Gina Raimondo as part of the state budget. The governor had anticipated this by already budgeting $23.5 million in the current budget for a sports betting program. For that amount to be collected in taxes, the industry would need to take in $900 million in bets.
The betting sites could be operating as soon as October 1.
The bill does not include language for an “integrity fee” that would benefit sports leagues such as Major League Baseball, and in fact specifically bans such a fee: “Under no circumstances shall the state or the division pay an integrity fee to any sports league.” In addition, it only authorizes land-based wagering, not mobile.
Under the bill, the Rhode Island Lottery will administer sports betting in cooperation with the state’s two Twin River casinos, tentatively beginning October 1. Lawmakers contend that to extend sports wagering online or on mobile platforms would take a vote of the people.
The host communities, Lincoln and Tiverton, would each collect $100,000 annually for sports betting. The state will collect 51 percent, the vendor (most likely IGT, since it was the only bidder for a sports wagering contract) will collect 32 percent and the casino itself will collect 17 percent.
That 51 percent is the largest share of sports betting revenue of any state so far, and could be a deal-killer.
Eric Ramsey of RK Forum says he is skeptical that the state will collect that much in taxes, noting that Nevada’s world-class, mature sports betting market collects $5 billion in wagers. He wrote, “Rhode Island can expect to take about one-fifth of Nevada’s wagering handle, but it’s hard to imagine numbers that rosy.”
Mississippi Casinos Prepare For Sports Betting
Saturday, July 21 was slated as the first day sports bets were to be placed at one of Mississippi’s 28 casinos. The Mississippi Gaming Commission adopted the regulations for sports betting on June 21, and a 30-day waiting period followed. Beau Rivage is likely to be the first casino to offer a sports book. Casinos owned by corporations that operate sports books in Las Vegas, like MGM, Caesars Entertainment and Golden Nugget, are expected follow soon after.
Beau Rivage Vice President of Marketing Brandon Dardeau said, “Beau Rivage is on track to take wagers the day sports betting regulations go into effect. Construction has already begun on our provisional seven-window sports betting facility, which will be located outside the poker room. We have looked forward to offering sports wagering in Mississippi for many years.”
Beau Rivage, Harrah’s Gulf Coast Casino, Scarlet Pearl Casino and Hard Rock Casino Biloxi all are running help-wanted ads for sports book staff.
At the Golden Nugget Biloxi, General Manager Chett Harrison said, “We’ve been working on plans since probably early spring. We’ll be ready for football and in some form for the opening of sports betting.”
Harrison said Michael Patrick’s sports bar will become the site of sports betting with the Vegas-style atmosphere, where guests can place wagers, dine and watch the games. “It’s going to be great, especially during football season, the Final Four and other big sporting events,” he said.
Hard Rock Biloxi General Manager Todd Raziano said, “We plan to be open by football season, just like everyone else.” He added management is considering various locations inside the casino to “create an experience for sports bettors.”
General Manager Jonathan Jones at Harrah’s Gulf Coast in Biloxi said, “We are looking forward to capitalizing upon this new opportunity, and to debut this new and exciting feature at our resort and casino.” Jones said Harrah’s is designing a space for sports betting and noted the casino’s parent company, Caesars Entertainment, “has a fantastic infrastructure already in place for us to capitalize upon. We expect to give our guests the ability to wager on sports at Harrah’s beginning with the 2018 fall football season.”
At Palace Casino Resort in Biloxi, General Manager Keith Crosby said sports betting will be located at the Contact sports bar. He added finding equipment has been challenging.
“Suddenly there’s a very large interest in a very limited amount of equipment,” he said. Still, he expects sports betting to be available by the start of football season. “I think that’s what everyone’s targeting,” he said, noting sports betting probably won’t be a big money-maker for casinos. “It’s a nice addition to what we offer but you couldn’t get a seat in Contact during football (even) without sports betting.”
