Attention, States Considering Legal Sports Betting: Yes, There Is Urgency To Pass A Law

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Attention to Sports betting urgency

A federal law that has banned single-game sports betting since the early 1990s has a chance of coming off the books as soon as the spring of next year.

If you don’t think that’s a game-changer for the world of gambling, casinos, race tracks and beyond in the US, I don’t know what to tell you.

That’s particularly the case in the Northeast US, where people who like to bet on things have a variety of options in regional casinos and tracks. And if a state is not moving to support its casinos and horse racing industries by providing a framework to regulate sports betting, they’re in danger of getting left behind.

Urgency on sports betting, or no?

Sports betting has a chance to become legal in any state that wants to legalize it, if the US Supreme Court rules in New Jersey’s favor in its Dec. 4 case. Such a scenario would need SCOTUS to strike down the federal sports wagering ban, PASPA, as unconstitutional. There are a wide range of possibilities on the outcome of the NJ sports betting case, but that is certainly one of the more likely ones.

States have already sensed the possible sea change. Sports betting bills have cropped up across the country; Connecticut and Mississippi have already set the stage for acting in a material way.

Why is that? For one thing, first movers will have a competitive advantage and will become a destination for gamblers and sports fans alike.

A Maryland lawmaker has it all wrong

On Tuesday, the Maryland Joint Committee on Gaming Oversight considered the issue of sports betting in a rather general sense, not working on actual legislation. A bill surfaced earlier this year but never saw any activity.

Anyway, the discussion was about whether the legislature should move on sports betting, which would take a constitutional amendment. While casino interests were pushing for a new law, the takeaway was that the top lawmaker on the committee wasn’t bullish on a sports betting law. From the Baltimore Sun:

It’s not clear that Maryland lawmakers share the industry’s sense of urgency. Del. Frank Turner, the gaming committee’s House co-chair, said legislation to allow sports betting will likely find a sponsor, but he’s not sure it will pass next year.

“If we don’t move on it in ’18, we can move on it in ’20,” the Howard County Democrat said.

And the Baltimore Business Journal:

“Whether or not we do it this year or next year, I don’t really think it makes that much difference,” the Howard County Democrat said. “We were told that we got into the casino business late, and maybe we did, but I don’t think it’s affecting us that much because it’s doing very well now.”

That’s a backwards way of thinking about sports betting.

Sports betting, important or not?

Turner is right: Casinos are doing well in Maryland, despite the fact that they were late to the game. But being late to the sports betting game offers different, and in some ways higher, stakes.

First off, the market for regional casinos in the Northeast has become increasingly saturated. Being able to serve a market that was underserved was Maryland’s advantage when commercial casinos started to open. If you live in DC or Virginia, for example, Maryland is likely your closest gaming option.

But sports betting has the possibility of changing the equation. What if casinos and tracks in one state could offer sports betting, and casinos in a nearby state couldn’t?

Think about it from the customer’s perspective. All things being equal, the casino with a sportsbook is likely more attractive than the one without. If a potential customer wants to bet on sports, they’d definitely consider extra traveling time to get to the place where they can bet on games.

Sports betting doesn’t happen in a vacuum

Yes, there are other variables in play, like distance to travel and the hotels and other amenities at the casinos, for example. But sports betting has a chance to change how and why people visit casinos, and where they go with their gaming dollars. Ignoring that reality has potentially dire consequences for states that rely on gaming revenue.

Sports betting, in a vacuum, would undoubtedly be a low-margin undertaking. Consider revenue from just the sports bets themselves, casinos (and the states that regulate and tax them) aren’t going to make vast fortunes.

What sports betting does do, however, is create a reason to get people in the doors of a gaming facility. Being able to wager money on a game would attract patrons that might visit a casino or track less frequently (or not at all) otherwise. That means they might play a table game or a slot machine, book a hotel room or visit a restaurant. And that also hints at the larger economic impact of sports betting.

The impact of sports betting on state governments

Here’s the bottom line of all this analysis: Sports betting could dramatically shift the gaming landscape in the Northeast, and beyond.

New Jersey, if it wins, will obviously offer sports betting in Atlantic City and its tracks. People who might not have traveled to these facilities previously might now head to AC or Monmouth Park so they can bet on an NFL or NBA game. That includes people who might have gone to a relatively close casino in Maryland, Delaware, New York or Pennsylvania.

That means fewer visits to casinos in states without sports betting. In turn, that means less revenue for those casinos, and less state tax revenue, as well.

Maryland as case study

Take Maryland if it takes its time on sports betting. Let’s say, for example, that West Virginia, Pennsylvania, Delaware and New Jersey all have legal sports betting within the next two years, a scenario that is not out of the realm of possibility.

Customers who are on the fence about whether to visit a casino in Maryland or a nearby state would likely choose the option with sports betting, all things being equal. Maryland lawmakers can dismiss this scenario, at their peril.

Casino executives in the region appear to get it; more from the Balitmore Sun:

Joe Weinberg, head of the company that operates Maryland Live Casino & Hotel in Anne Arundel County … warned that Maryland’s competitors for casino tax dollars already are lining up to change their laws in case the Supreme Court rules on a pending case to allow more states to offer sports betting.

“If we wait for 100 percent clarity on federal law, we will be two to three years behind the surrounding states,” he said. Weinberg said it is important that Maryland’s casinos can continue to offer what he called “a full suite of gaming services.”

States around the country are already dealing with budget shortfalls in the current landscape. Any state slow to react to a change in the sports betting environment is likely to feel the impact in their over-arching gaming economy.

That means there’s the potential for creating a hole in a state budget, all because states were slow to act on a gaming option that “they can get around to later.” That’s not a good policy decision in a world where sports betting could become legal in states across the country.