Mass. State Sen. Eric Lesser Lays Out Landscape For Legal Sports Betting
Allowing adults 21 or older to bet on professional sports in person and online in Massachusetts would generate meaningful, but not game-changing, revenue for the state, a key senator said Monday as he highlighted a bill that's the product of nearly three years of study and consideration.
"If done correctly, the idea here is to bring sports betting into the daylight, legalize it — and in a real-time way, monitor it so that potential violations or problems can be quickly identified and dealt with," said state Sen. Eric Lesser of Longmeadow. "And it's really going to be about partnership between these operators and the Gaming Commission to ensure that the whole process is done as safely as possible."
Lesser chairs the Committee on Economic Development and Emerging Technologies for the state Senate.
While 25 other states — including neighboring Rhode Island, New Hampshire and New York — have already authorized gamblers to place legal bets on sports, Massachusetts has been considering whether to similarly legalize betting since the U.S. Supreme Court in May 2018 ruled that the nearly-nationwide prohibition on sports wagering was unconstitutional and gave states the ability to legalize the activity.
"Massachusetts has taken a fairly cautious approach, especially compared to some of our regional peers in the states nearby us," Lesser said Monday. "When it comes to this, I think that that's probably been correct because we've now been able to really learn from what a lot of states, especially states in the Northeast, have done over the last couple of years."
The senator's bill (SD 2365), which is one of about a dozen similar pieces of legislation filed by last week's deadline, would put sports betting under the auspices of the Massachusetts Gaming Commission and would create three distinct sports betting license types to allow betting at casinos and the slots parlor, at live horse racing tracks or simulcast centers, and through mobile or online platforms. Bettors would have to be at least 21 years old and be physically present in Massachusetts.
The bill also includes consumer safeguards to protect against problem gambling similar to those provisions put in place for casinos when Massachusetts expanded gaming in 2013, like allowing gamblers to add themselves to an exclusion list and requiring the Gaming Commission to produce regulations around compulsive and problem gambling. Lesser said one of the key consumer protections is a prohibition on betting with a credit card.
"The vast majority of people are looking to just have some fun. It's a form of recreation to bet on their favorite sports team. But we do know, of course, that there are people that might have addiction issues, might have problems," he said. "We don't want to see a situation where somebody with the swipe of their finger on their iPhone, because of an addiction or another problem, is racking up massive, massive credit card bills that they wouldn't be able to repay."
Prop bets — wagers on things other than the outcome of the game, like how many strikeouts a pitcher will record in a given game or which football team will win the opening coin toss — and in-game betting would be allowed under Lesser's bill, but it would require the Gaming Commission to hold a hearing on those types of bets and to put some guardrails on them. No wagers would be accepted on individual athletes who are using wearable technology or if the wager involves players' personal medical information or biometric data.
"This kind of came to light in conversations with players and with players associations. For example, it might be soon possible to have a jersey that could transmit somebody's heart rate or pulse, or blood oxygen level in realtime to somebody who could then place a bet based on that biometric information," Lesser said. "We felt like that was a bridge too far."
The state's casinos and slots parlor — MGM Springfield, Encore Boston Harbor in Everett and Plainridge Park Casino in Plainville — could apply for a Category 1 license which would allow them to offer an in-person sportsbook and take bets through as many as three mobile apps. It would cost at least $1 million to apply, then $2.5 million upon approval of a license and another $1 million every five years as a license renewal fee.
In all cases, the application fees would go to the Gaming Commission to cover the costs of investigations into applicants and ongoing regulation, while the license fees and renewal fees would go to the state's general fund. Lesser's bill would allow the Gaming Commission to increase the application fees.
Category 2 licenses would be for existing horse racing tracks and simulcast centers. The license would allow for an in-person sportsbook and partnership with one mobile app, but the facility would have to maintain a racetrack, put the sportsbook at that track and hold at least 50 live race days each year.
Though there have been several plans in recent years to try to revive Thoroughbred horse racing here — including a recent push involving the New England Horsemen's Benevolent and Protective Association and a potential racing facility in Sturbridge — 2014 was the last year that there were a significant number of live racing days anywhere other than Plainridge Park and the track at the slots parlor was the only entity to seek a racing license for 2021.
The application fee for a Category 2 license would also be at least $1 million and the license fee would be $1.5 million with a $500,000 renewal fee every five years.
Lesser's bill would also permit up to six Category 3 licenses, which would be available through "an open and competitive selection process" to companies that want to offer sports betting through a mobile app or another digital platform that the Gaming Commission approves. Those licenses would be much more costly: at least $2 million to apply, $7.5 million to be licensed and $3 million to renew every five years.
Those online-only operators would also be taxed at a higher rate. Lesser proposes taxing sports betting revenue of Category 3 licensees and daily fantasy sports providers at 25%. Category 1 and 2 licensees, which would have a physical presence that in turn could produce local jobs, would be taxed at a rate of 20%.
Lesser said Monday he does not have a precise estimate for the annual revenue his bill could generate but said he thinks somewhere in the $30 million to $35 million range "is probably right." Baker's fiscal year 2022 budget assumes the state will take in $35 million in sports betting revenue between July 1 and June 30, 2022.
Opponents of legal sports betting have questioned whether that relatively small annual revenue amount is worth the public health and social costs of bringing sports betting out of the shadows. By comparison, the state has collected an average of $20.7 million in tax revenue from the casinos and slots parlor each month of operation since Encore Boston Harbor opened in 2019 and is on pace to collect about $250 million annually.
"It's an important amount of money for us to capture. It's not going to be a panacea to the state's budget issues and it's certainly not going to be something that you can balance the state's budget on. Viewing sports betting as a way to balance the budget or viewing sports betting as a way to generate substantial revenue for the commonwealth is really just not accurate," Lesser said. "It's going to be significant and helpful, but it's not going to be, for example, anywhere near the scale of what [expanded gaming] was or what the Lottery currently is, which is over a billion dollars a year."
The Massachusetts Lottery has been watching the legislature's moves around expanded betting with great interest. For years, Treasurer Deborah Goldberg and Lottery officials have argued that the Lottery needs the ability to sell its products online in order to compete with casinos, daily fantasy sports and, possibly soon, sports betting. The Lottery generated a net profit of $986.9 million last budget year, money that is used to fund state local aid to communities.
"If sports betting is available online, the Lottery must be available online also," Goldberg said in 2019 when the Legislature was in the early stages of considering sports betting. "That's the issue moving forward."
Lesser said Monday that he does not necessarily agree that the two activities should be linked, though he said he is personally supportive of "moving towards some level of online product for the Lottery."
"I think that's just where the world is heading," he said. "Other states like Michigan, I think, have shown it can be done successfully and can be done in a way that protects our brick-and-mortar retailers and small convenience stores, which is also a big priority."