Massachusetts gaming regulators continue to put a lot of thought into the future of gaming. The latest example? A new white paper about the prospects of sports betting in the commonwealth and beyond.
The Massachusetts Gaming Commission released its white paper on Thursday during a public meeting. You can see the document here.
The state is one of many eyeing the future of sports betting in the wake of a US Supreme Court decision expected this spring in the New Jersey sports betting case.
The sports betting white paper
The white paper is a wide-ranging document. Some of what it touches on:
- Handicaps the SCOTUS case about the federal single-game wagering ban (PASPA).
- Discusses other federal laws that could apply to sports wagering in the US, like the Wire Act.
- Looks at legislative momentum in other states.
- Identifies prospective licensees and operators in the state.
Generally, the document serves as a guide if the legislature tackles the issue, and if the MGC ever handles sports wagering in the future.
There is currently no active bill to legalize sports gambling in Massachusetts. However, there is a bill that would set up a special commission to study the issue further.
The MGC previously published a white paper on daily fantasy sports.
Here are some key takeaways
The white paper offered some thoughts on the prospective market for Massachusetts:
Benefits of legalization
The MGC cautioned that sports betting would not result in a windfall of direct revenue for the state. But it believes sports betting does provide opportunities. Legalization could:
- Transition sports betting activity from the black market to legal, regulated markets.
- Capture tax revenues from legal sports betting activities.
- Expand economic opportunities to potential local providers of sports betting and related industries.
Handle vs. revenue
On the second of those points, the MGC appears acutely aware of misrepresentations of possible revenue from sports betting. In both the white paper and Thursday’s hearing, the issue of conflation of handle — total amount wagered — and hold — or revenue generated from handle — came up several times.
It’s been a point of confusion for lawmakers and regulators in many states.
Understanding the difference between the handle and revenue is critical for realistic expectations of sports betting revenue. The “handle” in sports betting refers to the total amount wagered, which is not the amount that would typically be taxed. Sports book operators typically clear roughly 5% of handle as gross gaming revenue. “Gross gaming revenue,” (GGR) is the amount wagered minus the winnings returned to players (before paying taxes and operating costs). For example, a handle of $50 million would result in only $2.5 million in GGR.
Online, in-game sports betting
In order to fully realize the benefits of legalization — and to combat the black market — the MGC recommends that certain types of wagering be a part of any legislation:
Mobile availability: Much as with online, if current black market bettors are accustomed to the ubiquity of a mobile app for their illegal product, any legal version will need to offer similar convenience or risk being ignored.
Similar offerings: Legal sportsbooks will need to offer a similar slate of contests to bet on and types of bets to make, including in-game betting. Any constraints on the most popular types of bets or types of games will discourage adoption of the legal product.
Who’s on board?
The existing/planned commercial casinos in the state — Plainridge Park, Wynn Boston Harbor and MGM Springfield — are in agreement that they’d like to see sports betting:
Recently, during the pendency of The Special Commission to conduct a comprehensive study relative to the regulation of online gaming, fantasy sports gaming and daily fantasy sports, that group heard testimony from representatives from the three casino licensees with respect to a number of cutting-edge issues, including sports betting. All three licensees favored the introduction of a sports betting product at their facilities. While there was no in-depth discussion of the details of how sports betting would be presented by the licensees, it is clear that the opportunity to add a sportsbook to their locations would not be overlooked.
