Why Every State Should Follow Maine’s Example For Sports Betting

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The following is an op-ed representing the guest author’s opinion.

In the waning hours of its legislative session, the Maine legislature passed a comprehensive sports betting bill that should become the model law for post-PASPA sports gambling expansion.

It is, frankly, the way US sports betting should be.

The bill, LD 553, which is now headed to Gov. Janet Mills’ desk, is stunningly unique and sophisticated for a small state with a part-time legislature in that it actually embraces a free market approach. Essentially, it lets the best sportsbook operator win, unencumbered by outrageous licensing fees, integrity fees, or official data mandates.

Passing the bill, however, was no easy task. In fact, LD 553 remained secret until it hit the Senate floor for the first time last week.

For months, it was Sen. Louis Luchini’s blank “concept bill.” However, it became the placeholder for ideas and compromise as Maine’s Veterans & Legal Affairs Committee debated nearly a dozen different sports betting bills.

Everybody in the pool for legal sports betting

The first challenge in creating a bill that could survive in the legislature was recognizing the assorted groups who had a stake in its outcome – casinos, the harness racing industry, Native American tribes and mobile operators.

Rather than reinvent the wheel, LD 553 rightfully allows all stakeholders an opportunity to obtain a license. Under the bill, there are 11 brick-and-mortar, or “facility sports wagering”, licenses available to the state’s two casinos, its only commercial harness racing track, four off-track betting facilities and four tribes.

The bill also permits all of these facilities plus “a qualified gaming entity” to receive a mobile sports wagering license. A “qualified gaming entity” is a “gaming entity that offers sports wagering through mobile applications or digital platforms in any jurisdiction in the United States pursuant to a state regulatory scheme.”

This means the doors are open for nearly all current mobile operators.

Cutting everybody in is quite radical in Maine, because until now the tribes had been shut out of gaming expansion. Fortunately, common sense prevailed, which is really a victory for consumers.

Now Maine bettors will have numerous options for betting from a mobile device or at locations spread throughout a geographically large state.

Understanding the importance of mobile

The second hurdle to legal sports betting was whether to permit standalone mobile licenses “untethered” to brick-and-mortar facilities. This was the source of intense debate when LD 553 first came to the Senate floor.

Two senators warned that outside corporations who do not pay property taxes in Maine and who do not (at least yet) employee Maine citizens would swoop in and fleece taxpayers somehow.

Yet even these senators were not opposed to mobile wagering. Instead, they advocated for tethering a mobile license to a physical location. At this point, it became clear that Maine would legalize sports betting; it was just a matter of form.

Reaching a compromise solution

Again, Sen. Luchini’s bill exhibited a rather clever compromise to quiet any further criticism – a two-tiered taxation and licensing fee system. The bill called for a facility license fee of $2,000 with a 10% tax while a mobile license would cost $20,000 with a 16% tax.

Although the mobile tax is on the higher end compared to other states, the bone thrown to brick-and-mortar facilities worked and the “untethered” model passed with by a 19-15 vote, with one senator excused. The House quickly adopted the “untethered” amendment Tuesday.

After two more procedural votes late Wednesday night, the bill moved out of the legislature and on to the governor’s desk, where it should become law. A veto is highly unlikely.

Logical sports betting regulations enacted

The genius of Maine’s approach is its simplicity and common-sense approach as seen in some of its core regulations:

Fair taxation scheme and realistic expectations

Unlike some of its New England counterparts – looking at you, Rhode Island sports betting – Maine seems to have grasped that sports betting is not a major windfall for its coffers. This is particularly true in a state with only 1.3 million people.

So fiscal projections appear realistic for a change. The fiscal note to LD 553 projects revenues to the General Fund of $1.3 million in Year 1, up to $5.2 million by Year 3. By comparison, slots netted the state close to $54 million in 2018.

These projections are again based on $2k/$20k licensing fees and a 10%/16% tax rate. Of those taxes, 1% will go to the administrative expenses of the Gambling Control Unit and 1% will go to the Gambling Addiction Prevention and Treatment Fund.

This is a shockingly straightforward breakdown considering Maine divides slot revenue 11 ways.

Everyone, follow Maine

Ultimately, barring an unforeseen veto by the governor, Maine (of all places) will have a modern and open sports betting market ready to launch by the end of 2019 – and potentially in time for the start of football season.

It is both a consumer- and operator-friendly law that provides various types of wagering with a reasonable fee and taxation structure. States still sitting on the sidelines would be wise to model their legislation after Maine’s.