Ambiguity and money headline Missouri draft wagering rules

The Missouri draft regulations are, for the most part, standard fare. Of note, they outline licensing fees ranging from $10,000 for official league data providers to $500,000 (£401,000/€479,000) for stand-alone mobile platforms. They also define key terms, but leave much open to interpretation.

An updated draft was sent to Governor Mike Kehoe for approval on 27 January. The Missouri Gaming Commission (MGC) is pointing to a June wagering launch date. The regulator has not publicly released the draft regulations sent to Kehoe.

After the draft regulations are signed by the governor, a 30-day public-comment period will open. Following that, the regulator may make changes based on the comments. The application process will open once the regulations are approved.

Two stand-alone licences available

The law and regulations allow for two stand-alone mobile licences, which will cost more than tethered licences. It is likely that these will be used by wagering companies that do not have brick-and-mortar locations or market-access partnerships in Missouri.

The draft regulations do not address how many skins each casino company in Missouri could have. The law appears to allot one skin to each company. Six casino companies own Missouri’s 13 riverboat casinos. Caesars and Penn Entertainment each own three. Affinity Interactive, Boyd Gaming and Century Casinos each own two and Bally’s owns one.

It’s been widely understood that due to the wording of the initiative, land-based casino companies would get the rights to one digital licence per company instead of one per location. Prior to the November election, the MGC told iGB that the “Commission’s position is that the language of the proposed amendment allows for a mobile licence for each excursion gambling boat in Missouri.”

No dates shared

The draft regulations also do not indicate when the application window will open or provide a firm date for launch. It also appears that “direct mobile licences” may be handled on a different timeline. The regulations say that when such licences are available it will post a notice and application.

Among the ways that bids for direct mobile licences will be judged are “their ability to generate, maximise and sustain revenues for the state” and the “capacity to increase” the number of customers on a platform. Such language is often seen when a lottery commission is regulating sports betting. In states with gaming commissions or boards, only New York comes to mind as having similar language in its bid process.

The proposed regulations also say the competitive bid process “shall occur every five years”. It does not appear that companies with the licences will be able renew without going through the bid process again.

Licensing fees

The proposed regulations lay out the following fees:

• Retail licence: $250,00 application fee, $250,000 renewal fee (good for five years);
• Mobile licence: $500,000 application fee; $500,000 renewal fee (good for five years);
• Sports wagering supplier: $50,000 application fee; $10,000 renewal fee (good for two years);
• Official league data provider: $10,000 application fee.

The MGC goes on to outline a unique official league data annual fee structure. Similar to Illinois’ regulations, the MGC proposes a sliding fee scale for official league data providers. For data sales of up to $500,000, a provider would pay a $10,000 annual fee. At the top end, for data sales of more than $2 million, a provider would pay a $150,000 annual fee.

One stakeholder referred to this as a de facto “tax” on official league data. Licensing fees, other than those for retail or mobile applicants, are non-refundable, according to the draft.

Another unusual provision in the draft is the requirement that operators purchase and install “all hardware, software and related accessories necessary to allow for remote monitoring of sports wagering by the commission”. The Missouri regulator is not the first to include this language. At least one other state has similar language. But operators may push back in the public-comment period.

Section covering ‘brawls’ online removed

Operators may have already pushed back on a section of the proposed regulations that would have required them to break up a fight or stop “obscene activity” by online bettors.

The Missouri text sent to operators states that licensees must “prevent or suppress” and “immediately report” any “violent” or “unlawful” acts that happen while while a customer is using a digital betting platform. Among the kinds of acts should be stopped or reported are a “brawl, fight” or any “indecent, profane or obscene activity”.

The MGC Monday (17 February) told iGB that this section of the proposed regs was removed before being sent to Kehoe’s office for approval.

The described behaviour could be easily spotted and managed at a brick-and-mortar sportsbook. Operators will likely have no issue with this requirement. But identifying and dealing with such behaviour on a digital platform would be tricky. In general, operators do not have chat functions on their platforms, so patrons do not communicate with one another. Operators are also not generally having live conversations with consumers, nor do they have a window into what a person is doing while betting.

A little more clarity, please

Some of the language in the proposed regulations is ambiguous. Below are some spots that could be tightened up:

Section CSR 45-20.040, Suitability for Licensure: Section 3(D) allows the MGC to revoke a licence if an applicant or “key person” of the applicant “is an affiliate of a person who has had a sports wagering or gaming-related licence revoked, suspended or denied in any other jurisdiction”. But the word “affiliate” is not defined in the proposed regulations.

Section CSR 45-20.040, Suitability for Licensure: Section 4(A) would allow the MGC to “refuse to issue or renew” an occupational licence to anyone who “has been convicted of a crime or has been found guilty of, pled guilty or nolo contendere to or entered an Alford plea to a crime, or received a suspended imposition of a sentence, for violations of any federal, state, county or city law, including ordinance violations.”

It is fairly standard for a gaming law or regulations to allow a regulator not to license an entity or person who has been convicted of a gaming crime or a felony. But the Missouri language leaves the door open to interpretation. For example, if a “key person” on a licence got a moving violation, was convicted of trespassing or was convicted during a protest, could the regulator decline to issue or renew a licence?

Open to interpretation

Section CSR 45-20.040, Suitability for Licensure: Section 4(L) uses the words “moral character”, “notorious” and “unsavoury reputation” as reasons to deny a licence. These words are also not defined. Looking back to Barstool Sportsbook, it is possible that some would define Barstool founder Dave Portnoy as having had an “unsavoury reputation”. While some regulators grilled Portnoy and partner Penn Entertainment on Portnoy’s past behaviour, none denied the entity a licence.

Also in that section, the MGC writes that an applicant “associated with, in either social of business affairs” anyone with a “notorious or unsavoury reputation” could be denied. This again leaves much open to interpretation.

Section CSR 45-20.040, Suitability for Licensure: Section 4(M) allows for denial of an application to anyone who “provides the commission with false or misleading information, documents or data, or who makes false or misleading comments to the commission.” Similar language appears in other sections. The stakeholder iGB spoke with suggests adding the word “knowingly” ahead of “false” for clarity.