A Senate vote is the last step in front of Vermont sports betting before the governor can sign a bill to legalize it.
The VT sports betting bill (H.127) is eligible for a Senate floor vote after the Senate Committee on Finance approved it with amendments Tuesday. It would authorize between two to six online sports betting apps, giving the Department of Liquor and Lottery carte blanche to negotiate tax rates, betting criteria, and advertising guidelines.
Senate vote expected to go ‘smoothly’
“I see it moving smoothly,” bill sponsor Rep. Matthew Birong told LSR in a text message immediately following the committee vote.
Vermont is the sole northeastern state yet to legalize sports betting, and, following Massachusetts‘ recent launch, is completely surrounded by legal betting markets.
Vermont sports betting rules subject to change
In lieu of a set tax rate, the bill allows the DLL to procure revenue-sharing agreements with sports betting operators. The total number of operators will be determined by what they are willing to pay and the plans they provide for advertising and responsible gaming, though lawmakers have indicated they expect two or three apps.
“The tax rate that the operators lobby or want to have is lower than what we expect we can get through a competitive bidding process,” DLL Commissioner Wendy Knight said during one of several Senate Finance meetings last week. “A 20% tax rate is the number sports betting operators have indicated as the maximum they would expect.”
Each operator would pay $550,000 for a license. Under the House-passed version, that fee would decrease based on the number of operators admitted. But on Tuesday, the Senate committee amended it, keeping the initial fee static and allowing the DLL to renegotiate it, at most every three years.
Lobbyist calls fall on deaf ears
In a hearing last week, Jon Mandel of the Sports Betting Alliance, which represents BetMGM, DraftKings, FanDuel and Fanatics, urged lawmakers to set the rates and fees in stone, arguing fluctuating costs could hurt competition.
“It’s going to factor into how much an operator is ultimately willing to bid,” Mandel said. “We could see reduced interest among operators to apply, so then less likely of a robust competitive market and more users going to states with multiple options.”
Birong said lobbyists have mostly asked him for a fixed number of apps, which would presumably strengthen their negotiating leverage with the DLL.
Fantasy sports could be impacted by VT sports betting
The bill also directs the DLL to examine how Vermont regulates daily fantasy sports, which the state legalized in 2017.
Lawmakers considered raising the minimum DFS age from 18 to 21 in the bill to match sports betting, but ultimately declined, asking the DLL to take a look at the legally adjacent industry instead.
In a committee hearing last week, testifying on behalf of top DFS operators PrizePicks, Underdog Fantasy and Sleeper, lobbyist Ron Heart offered to assist the DLL when it revisits the state’s definition of “fantasy sports.”
Taxes on winnings
Unlike most state sports betting bills, Vermont would impose a tax on winnings.
Under the bill, a bettor’s winnings would be subject to Vermont’s income tax, in the manner that a lottery winner’s are. Those winnings are subject to at least a 6% withholding.
That provision applies to out-of-state residents, who would owe 7.25% of winnings they make in Vermont to the state, according to the Vermont Lottery‘s website.
Vermont’s 2023 legislative session runs through May 12.