Rhode Island Sports Betting On Front Burner After Supreme Court Decision; DraftKings Wants In?

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RI sports betting 2018

Rhode Island may have already legalized sports betting within its borders, according to a recent report from the Providence Journal.

The smallest state is one of many that explored the issue in the lead-up to Monday’s US Supreme Court decision, when the court ruled that PASPA overreached in prohibiting state-based regulation of sports betting.

On Tuesday evening, a pair of RI Senate committees met to discuss the issue as it relates to their state. The hearing drew testimony from some familiar characters, along with an aspirational newcomer in sports betting.

Daily fantasy sports operator DraftKings appears to be pursuing the one sports betting contract available in Rhode Island.

What’s new in Rhode Island

First, read the report from the PJ, as the newspaper acquired various emails on the subject of sports betting in the state between state officials and gaming and lottery executives.

The most interesting exchange came between the state lottery director and an executive at IGT. Scott Gunn, a senior vice president at IGT, wrote in an email: “As we view the situation in RI, when voters approved ‘casino gaming’ in 2012 and 2016, they approved sports betting,” according to the PJ.

RI Lottery Director Gerald Aubin agreed with that assessment in those emails; more from the PJ:

But “that being said, to make the statement that the citizens of Rhode Island approved sports betting might come as a shock to many and may not be well-received,″ Aubin wrote Gunn. “Perhaps a better response would be that in 2012 and 2016, Rhode Island voters approved Class III gaming, which we believe would include sports betting if in fact states are cleared to offer it.”

The state does not look like it’s ready to turn on the switch for sports gambling immediately, but direct legislation is already in the works. The current proposals would place the industry under the lottery’s oversight. The lottery has already put out a request for proposals to operate sports betting in the state.

RI holds first post-PASPA hearing 

Following the Senate’s adjournment on Tuesday, a pair of committees gathered to talk sports betting.

The legislature scheduled the hearing several days ago, but the timing couldn’t have been better. Rhode Island was the first state legislature to address sports betting with the knowledge that federal law no longer prohibits regulation.

The bill up for consideration was S 2045, which reflects the Aubin/Gunn conversation. The bulk of the text explains how RI voters implicitly approved sports betting via the two casino referendums.

With that cleared up, the bill moves to allow the two Twin River casinos to offer sports betting. The Lincoln property has an existing pari-mutuel area that it could modify, and Tiverton is preparing for its grand opening this year. Everyone already knows space will be an issue at Tiverton, and they’ll cross that bridge when they come to it.

The lottery recently enlisted Spectrum Gaming to help draft a Request for Proposal, an indication things are moving forward. The state agency will solicit up to 18 offers from vendors looking to partner up in RI. It’ll choose just one, preferably one that can meet its proposed October launch.

As for specifics on available betting types, the lottery says that will be partially at the vendor’s discretion:

That’s to be determined by the platform provider. So in other words, we’re not limiting what they can propose to us. We’re actually encouraging innovation. This is a competitive situation with Massachusetts and Connecticut, so we really are encouraging them to think outside the box. Then it will be our job to create what the box is going to be.

Under the lottery’s interpretation, sports betting in any manifestation could only occur inside the casinos and hotels of those two properties.

That’s not everyone’s interpretation, though.

DraftKings moving for RI sports betting?

DraftKings sent Assistant Director of Government Affairs Sarah Koch to Providence in support of the bill. Koch introduced herself, then her company, which is “right now” best known as the world’s largest fantasy sports operator.

“Given yesterday’s Supreme Court decision,” Koch said, “we’re extremely well positioned with our customer base to rapidly expand into sports betting and offer sports betting on our online platform, as well.”

The site’s founders admitted this week the rumors and hints are true. DraftKings is going to offer sports betting, and it seems interested in the Rhode Island gig.

That might be an issue, as the bill doesn’t seem to leave room for online operations. And DraftKings is a website. Both the standalone bill and its inclusion in the state budget address only land-based wagering.

DraftKings, however, believes those same casino referendums also approved online platforms if navigated carefully. “It would still be offered by the casino,” Koch said, “and for that reason, it would still fall under the constitutional approval that the casinos already have.”

Lawmakers suggested they’d need a legal opinion to support the claim, and Koch countered that DraftKings had already obtained one. Here’s how she summed it up:

As long as it’s the casino offering the bets, and accepting the bets at that location, in most case law the precedent shows that what matters is where the bet is accepted, not necessarily where the bet is placed. So as long as the casino is accepting the bet from their location, they could accept them from anywhere within the state of Rhode Island.

If DraftKings actually intends to compete for the RI Lottery contract, it would need to submit a proposal by about Aug. 1 in order to meet the projected award date.

Leagues get a lecture from Finance chair

Lawyers from the PGA Tour, NBA, and Major League Baseball were also in Providence to pitch for their integrity fees, among other things. Most statehouses have received their testimony with skepticism, and Rhode Island senators are similarly dubious.

During his pitch, NBA assistant general counsel Dan Spillane said that integrity fees make sense “just logically and based on fairness.” He drew a parallel to casinos’ licensure of slot machines. Spillane also used the phrase “it’s our games,” which touched a nerve with one senator.

Finance Chariman Sen. William Conley responded with a bit of a parental lecture. From his comments:

I don’t think either logic or fairness leads you to the conclusion that it’s your game and therefore you ought to profit from this. It’s our state. We ought to benefit from this opportunity.

The attitude somehow — I’ll also candidly admit I’m a huge sports fan. And as a sports fan who enjoys the integrity of the game, enjoys the competition of the game, enjoys all the values that it brings in the competition, I don’t see it as your game.

You’re in a business; that’s a good thing. And you should make a profit off your business; that’s a good thing. But gentlemen, those games do not belong to you. They belong to the fans…

No logic and no fairness suggests that you are to get a piece of the action. I’m not saying that this discussion is over, but I’m suggesting that your presentation this afternoon has fallen far short of a compelling argument.

The Rhode Island bill does not include integrity fees.