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State of the union

| By Stephen Carter | Reading Time: 9 minutes
This week's State of the Union, in partnership with Segev LLP, leads with developments in Virginia, NY, South Dakota, Connecticut, Arizona.

This week’s State of the Union, in partnership with Segev LLP, leads with developments in Virginia, NY, South Dakota, Connecticut, Arizona

Progress in Virginia
The Virginia Senate Committee on General Laws this week cleared two new framework bills for legalised sports betting in the US state. SB 1238, introduced by Senator Chapman Peterson would only legalise land-based sports betting at racetrack and off-track betting facilities. Online and mobile wagering would not be permitted. The bill would levy a 10% tax on an operator’s adjusted gross revenue. Meanwhile, SB 1356 would rename the Virginia Lottery Board as the Virginia Lottery and Sports Wagering Commission, with the latter operating a digital platform to accept wagers across all sports, including college events, with the exception of teams based in Virginia. However, the bill does not include provisions for private sports betting operators to apply for a licence in the state. Both bills have  headed to the Virginia Senate Finance Committee for further debate. Last week, the Virginia Senate Committee passed SB1126, which would legalise casino gaming in the state. For more see our news story http://www.igamingbusiness.com.dev.synot.io/news/two-new-sports-betting-bills-progress-virginia

NY sets out sports betting regs
The New York State Gaming Commission on Mpnday approved regulations to allow the state’s four commercial casinos to obtain sports betting licences.

South Dakota amendment
A group of South Dakota senators and representatives have set out plans to amend the state’s constitution in order to allow its residents to place legal wagers on sports events from inside the city limits of Deadwood. SJR2 commits to putting the amendment to South Dakota voters at the state’s next general election. 

Connecticut eight file bill
Eight Connecticut senators have filed a sports betting legalisation bill. SB 665 puts the onus on the state legislature to develop a regulatory framework for the vertical, rather than setting out a proposed model for the sector. The legislation been referred to the Joint Committee on Public Safety and Security for further consideration. 

Arizona weighs tribal bill
Arizona lawmakers will run the rule over a new sports betting bill that would legalise land-based tribal sports wagering within the state. Senator Sonny Borrelli and Representatives Mark Finchem and Leo Biasiucci’s SB 1158 sets out that each federally recognised tribe in Arizona with headquarters in the state would be able to offer sports betting. This would not be limited to casinos, with tribes able to provide sports betting via kiosks or self-service terminals at one or more premises that hold a bar licence, beer and wine bar or private club licence. Facilities would not need to be located on tribal lands to offer sports betting services. 

Lawmakers in the Sunflower State will consider Senate Bill 23, known as the Kansas Wagering Act, which aims to legalise sports betting via the state lottery. The lottery be responsible for regulatory oversight, with licensees able to offer retail, online and mobile wagering, though similar to Massachusetts Senator Rush’s draft legislation, will also have to pay a royalty fee to the professional sports leagues. This will be paid quarterly, and amount to 0.25% of amounts wagered, though this will be capped at 5% of operators’ gross wagering revenue. The tax rate, set at 6.75%, is particularly low. Unusually, the bill was sponsored by the Committee on Federal and State Affairs, and not an individual. In December the committee held a two-day hearing on sports betting.

Washington, DC
Regulated sports betting in Washington DC has moved a step closer after Mayor Muriel Bowser effectively signalled a two-month countdown to the Sports Wagering Lottery Amendment Act coming into law. Bowser approved the act on January 23, just over a month after the DC Council voted overwhelmingly in favour of the legislation. Following Bowser’s approval, the act will now undergo a 60-day Congressional review before coming into force. A public hearing will take place on Monday, January 28, primarily to explore whether the DC Lottery can use existing partner Intralot to support sports betting in the state instead of launching a new procurement process. Should it be forced to launch a tender process, the launch of sports betting in the US capital may be delayed until 2020 or beyond.

Massachusetts – FIFTH time’s a charm?
After a trio of sports betting bills were introduced by Massachusetts lawmakers on January 16, Governor Charlie Baker and Senator Michael Rush got in on the action with their own proposed legislation. Governor Baker’s proposal, An Act To Establish Sports Wagering in the Commonwealth, aims to legalise both online and land-based wagering. Unlike other states, however, it will allow online bookmakers to secure licences without partnering land-based venues. Regulation of the sector would be entrusted to the Massachusetts Gaming Commission, which already oversees the state’s casino industry. Retail betting licences would include a tax rate of 10% on gross sports betting revenue, while online-only licences would see operators pay a rate of 12.5%. Baker would also introduce a new 12.5% tax on fantasy sports contests, which are currently taxed in the state. Applicants will also be required to pay a $100,000 application fee for their five-year permits.
Rush’s bill, meanwhile, would also allow online and mobile wagering, but online companies would have to operate through a partnership with a land-based casino. It also sets out a $100,000 licence fee for applicants. However, it deviates further from Baker’s proposal by offering the US professional sports leagues a royalty fee, amounting to 0.25% of amounts wagered each quarter. Sports betting operators would also be limited to using official league data.

Maryland lawmakers are looking to use a 1972 referendum as the basis for launching sports betting via the state lottery. A 2007 law dictates that all gambling expansion plans must be put to a public ballot, but the state is exploring the option of bypassing this step. The lottery was approved through a 1972 referendum, and the state is examining whether this effectively gives it the power to launch new verticals without another vote. However, if this path is not considered viable, Maryland may have to wait until 2020 before the matter can be put to the public.

Rhode Island – mobile move
Rhode Island Senate President Dominick Ruggerio has filed bill 2019-S 0037 aimed at legalising mobile sports betting in the state. The Twin River casinos in Lincoln and Tiverton would be permitted to work with developers to create an app utilising geolocation technology. Consumers would first to register in person at one of the casinos. The state would takes 51% in tax from all mobile sports betting revenue, keeping new laws in line with regulations for land-based wagering. Ruggerio said it was estimated 97% of sports betting takes place illegally. “This is an opportunity to give Rhode Islanders and visitors a legal avenue to participate in an activity they enjoy, while providing a very tangible benefit to our state.” The state legalised land-based sports betting in June last year and launched its regulated market in November.  Ruggerio’s bill has been referred to the Senate Special Legislation and Veterans Affairs Committee for further scrutiny.

Michigan: Snyder puts the brakes on
In December, outgoing Governor Rick Snyder vetoed Rep. Brandt Iden’s House Bill 4926, the Lawful Internet Gaming Act, following its approval by the Michigan Senate and House. Under five-year licenses, the state’s tribal and commercial casinos would have paid 8% of GGR generated from games such as poker, blackjack, slots and other card and table games. This had been approved alongside HB5881, which would have amended the 1996 Michigan Gaming Control and Revenue Act and levied an 8% GGR tax on sports wagering.

West Virginia
West Virginia approved legal sports betting in March 2018 with live, on-site betting getting under way at Hollywood Casino on 30 August. The bill authorizing sports betting allows for online and mobile wagering, and Delaware North-owned Mardi Gras and Wheeling Island casinos launched the first online and mobile app on 27 December 2018, the Miomni Gaming-powered BetLucky.com.

Two legislators in Missouri have pre-filed sports betting bills for the 2019 legislative session. SB 44, introduced by Sen Denny Hoskins, presents an interesting twist by foregoing the typical integrity fee in favor of a quarterly 0.5% fee appropriated for upgrades to the state’s sports stadiums. The bill would also authorize sports betting via Internet and mobile devices.  The other measure, HB 119, introduced by Rep Cody Smith, would authorize interactive betting, but only for people who are physically located at licensed facilities.

Kentucky: Staying on track
Members of the Interim Joint Committee on Licensing, Occupations, and Administrative Regulations held a hearing on 12 October to discuss the authorization of sports betting in the state. The proposition has been well received in the legislature, and the outlook moving forward remains positive.Topics covered during the October hearing ranged from tax rates to integrity feels to mobile betting. A bipartisan group of legislators is expected to pre-file a sports betting bill prior to the start of next year’s legislative session. In September, the National Football League, Major League Baseball, the National Basketball Association, and the PGA Tour all registered to lobby during the 2019 General Assembly and are expected to push for a 1% integrity fee, which Committee Chairman Adam Koenig adamantly opposes. Provided the integrity fee doesn’t become a stumbling block, Kentucky could authorise sports betting as early as January.

KS, MI and OR also hopeful for 2019
Legislators in both Kansas considered multiple sports betting bills in 2018, and their sponsors are hopeful for approval in 2019. Oregon’s state’s lottery is hoping to expand its mobile gambling offering to include sports betting by the third quarter of 2019, but the lottery will first need the legislature to approve a taxation scheme. No bills have surfaced yet.

Indiana: Signs of Life
Following a hearing on 19 October, the Interim Study Committee on Public Policy voted to recommend legislation authorising sports betting to Indiana. While the vote would indicate that the state is taking steps toward legalisation, Committee Chairman cautioned that there are “many perils down the pathway before it becomes law.”

Illinois – Slow and steady
The outlook for regulated sports betting in Illinois remains good, but lawmakers are in no rush to push through legislation. Rep. Lou Lang cautioned at a hearing held on 17 October that the state should go slowly and make sure they get it right, and he referenced Pennsylvania’s unusually high 36% sports betting tax as an example of errantly moving forward without fully understanding the economics of the industry. Lang also said they need to give careful consideration toward including an integrity fee. He rejected the idea of paying leagues for the “privilege of showing your games,” but is open to a fee that actually contributes toward preserving integrity in sports. Finally, Lange urged caution in deciding who should be allowed to offer sports betting, pointing out that a state that houses almost 30,000 video gambling machines must be mindful of providing too much access to walk-up betting.

Ohio: Midterm election not good for sports betting
The election of Mike DeWine as Ohio’s next governor does not bode well for advocates of regulating sports betting. DeWine has consistently opposed efforts to legalise sports betting, while his opponent, Richard Cordray had indicated that he would consider legalisation. In August, Ohio Senate President Larry Obhof said Senate Bill 316, which would provide for legalised sports betting in the state, would be studied in a committee after the midterm elections in November. Obhof further predicted that the bill would not likely hit the Senate floor until 2019. Meanwhile, questions have been raised about whether the legislature even has the right to legalise sports betting in Ohio. The state’s constitution prohibits gambling, except under specific circumstances. Other forms of gambling, such as casinos, were only legalised through a constitutional amendment in 2009, and Senator Obhof suggested that sports betting would need to be amended into the constitution by a vote in a similar manner.

Florida: At the mercy of voters
The passage of Amendment 3 on the November ballot makes the legalisation of sports betting a much more difficult task. The amendment puts gambling expansion in the hands of voters, via citizen initiatives, rather than legislators. Because the initiative process requires 60 percent of the votes for passage, the prospects for authorised sports betting in the state are greatly diminished.

Colorado: Still an issue for voters to decide
Despite Attorney General Cynthia Coffman’s determination that sports betting is not subject to state constitutional restrictions, at least one of the legislators who supports legalisation is of the mind that the issue should still be decided by voters. In October, Rep. Cole Wist told the Denver Post that, while he is in favor of regulated sports betting, “I think it’s important to go back to the voters and make sure it’s something that they want.”  Rep. Wist and Rep. Alec Garnett are hopeful of getting sports betting to a statewide vote in 2019, which would mean legal sports betting would not become a reality until at least 2020. Meanwhile, gubernatorial candidate Walker Stapleton, a Republican who favors sports betting regulation, lost in the November election.

CA, LA, SC are years away
Proponents of sports betting in California have their sights set on the 2020 ballot. The state has approved signature collection for the most recent measure, which was introduced in June 2018. To land on the 2020 ballet, the proposal needs to garner 585,407 signatures from registered voters by February 2019.

In Louisiana, Sen. Danny Martiny made multiple efforts to get his sports betting bill on the agenda during special sessions, but Gov. John Bel Edwards would have nothing of it. Martiny said he’ll make another push in 2019 but is not optimistic.

Despite the introduction of a regulatory bill in South Carolina, the state is likely years away from authorising sports betting, which would require a constitutional amendment to become a reality.

Segev LLP employs an eight-strong igaming team with corporate, commercial, IP commercialisation, M&A, private equity finance, public markets finance, privacy and data, and regulatory and compliance experience. Its senior attorneys have a combined total of more than 40 years in the industry.

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