March Madness, MGC Report Address Future of Sports Betting – Perhaps at Casinos like Wynn Boston Harbor

March 16, 2018
By

Starting this week, and going through the rest of the month, the country will largely be enraptured in NCAA college basketball “March Madness,” and no other time during the year is betting on sports more active.

Yet, according to the American Gaming Association (AGA), almost 97 percent of the estimated $10 billion wagered on March Madness is bet illegally, and it’s yet another reason the trade association representing casinos is calling for the legalization of sports betting.

“Our current sports betting laws are so out of touch with reality that we’re turning tens of millions of Americans into criminals for the simple act of enjoying college basketball,” said Geoff Freeman, president and CEO of the American Gaming Association. “The failed federal ban on sports betting has created an illegal, unregulated sports betting market that offers zero consumer protections and generates zero revenue for state and tribal governments.”

At the moment, the Supreme Court is debating whether to overturn the 1990s-era Professional and Amateur Sports Protection Act (PAPSA), which prohibits sports betting in all locales except Nevada – which was grandfathered into the law. The court has heard briefs in December 2017 and questioned attorneys on the case – who represent the challenging state, New Jersey – extensively about the issue. Many believe that the court will make some kind of alterations to the PAPSA law, perhaps overturning it completely. A decision on the case is expected in the coming months.

“As the Supreme Court considers the constitutionality of PASPA, AGA is focused on working with all stakeholders to put the illegal market out of business and enable a safe, legal way for American consumers to participate in next year’s office pool without fear of prosecution,” continued Freeman.

Meanwhile, the Massachusetts Gaming Commission (MGC) has been monitoring the situation at the Supreme Court and issued a White Paper report on the matter this month, indicating that if the law were overturned by the Supreme Court, Massachusetts could see some major advantages to instituting its own laws allowing sports betting.

“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,” read the MGC report. “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.”

The White Paper indicated some of the objectives should 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.

Already, as the report pointed out, several states have passed laws in preparation for the overturning of PAPSA, including Connecticut and New York. Several other states this year have bills proposed in their legislatures, including Rhode Island. That leaves Massachusetts as one of the only states in the region not yet considering such legislation.

“Settling on a Massachusetts approach is important where both neighboring Rhode Island and Connecticut have either proposed or passed legislation that would legalize sports betting in their respective states if PASPA falls,” read the report.

The stakes for sports betting are very high, and many believe they would seek to stabilize the gaming industry – which some believe has an uncertain future. Combining existing gaming with sports betting would offer a very solid product and greatly increased state revenues, the report stated.

Revenues in Nevada, where sports betting is legal, are off the charts. In September, October and November of last year, the “handle” from sports betting per month in the state was more than $500 million per month.

The MGC report said there is no real way to tell how much Massachusetts is losing on the current black market, but the AGA did commission a report from the Oxford Economics Institute last year that found, with a 10-percent tax rate, the state could gain anywhere from $11.9 million to $45.2 million in gross gaming revenues per year.

Much of that depends on where sports betting would be allowed (casinos, lottery retailers, online) and how it would be allowed (physically, by phone, with an Internet-based app).

The MGC White Paper indicated that it would suggest making availability as easy as possible due to the illegal sports betting networks that already exist and are easy to use – and online.

The reports said the state should allow online availability, mobile app availability, similar betting styles (including the growingly popular in-game bets), and heavily promote the fact that legal gaming is protected for consumers.

“Internet based sports betting is already here as exemplified by the multiple off shore sportsbook websites that are easily available to anyone with an internet connection,” read the paper. “A legal alternative to these sites must be as convenient and as accessible to challenge the pervasive black market. Much as with online, if current black market bettors are accustomed to the ubiquity of a mobile app for their illegal product, any legal version will need to offer similar convenience or risk being ignored. Legal sportsbooks will need to offer a similar slate of contests to bet on and types of bets to make, including in-game betting. Any constraints on the most popular types of bets or types of games will discourage adoption of the legal product.”

Wynn Boston Harbor has not said much on the issue, only that it already operates a very successful sports book at its casinos in Las Vegas. They have said they support the effort and whatever decision the MGC and State Legislature would make.

Many believe that, like other gaming operators who are on the record, Wynn would believe sports betting not to be a panacea for their bottom line, but rather a way to bring more people into the casino to play traditional gaming and to dine out or shop.

The AGA said nearly two-thirds of the states in America make filling out an NCAA bracket for a pool illegal, which it said is absurd. It also said that a recent analysis indicated that nearly 24 million people reported spending nearly $3 billion in the past year on college basketball pools alone.

The MGC White Paper seemed as receptive to the idea as the AGA, saying there are some great considerations if the Supreme Court were to overturn PAPSA.

“Should Massachusetts have the opportunity to legalize sports betting, there are a number of questions at hand that will have broad impact, not only on who will benefit from sports betting as an operator, but also whether the overall gaming landscape in Massachusetts will be fundamentally transformed by the introduction of online gaming,” read the report. “The success of transitioning sports bettors from illegal to legal markets may depend substantially on how sports betting is made available as well as the quality of the sports betting products that are offered. Finally, a thoughtful taxation and regulatory approach can maximize the benefits to consumers through increased protections, maximize economic benefits to providers and downstream industries, and create a market that ultimately benefits all Commonwealth citizens by maximizing the potential tax revenues associated with sports betting.”

 

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