With the news that proposed Maryland sports betting regulations were approved by the state’s lottery and gaming commission last month, the state took one step closer to catching up to surrounding states that have already successfully launched sports betting operations.
But, while this is an exciting development for the Old Line State the regulations are unique and will almost certainly make it impossible for some smaller operators to exist in the state if they are left as is.
The rules impose an official league data mandate, but unlike the other states that have used mandates on in-play wagers, MD sports betting regulations do not appear to make a distinction over when operators need to use official data. That means that the settling of all bets could be required to use official league data.
What do Maryland sports betting regulations say?
The regulations address “Verifiable Outcomes” on page 199. The provision states that while an operator is free to use any data source approved by the Commission:
A governing entity may submit a request to the Commission to require a sports wagering licensee to use official league data to settle a wager placed.
Following the approval of the request, operators are required to make the shift to use official league data within 60 days.
But it has to be commercially reasonable?
Again, that vaunted phrase “commercially reasonable,” is used in the Maryland regulations. Like every state that has used the phrase before, they have their own take on just what that means.
The Commission lists four factors that an operator must show in order to demonstrate that data is not available on commercially reasonable terms:
- “The availability of a governing entity’s official league data for such bets on commercially reasonable terms from an alternative authorized source;”
- The costs paid inside and outside of Maryland by operators for other data from authorized sources;
- The reliability of data, which is measured by the quality and complexity of how the information was collected; and
- “Any other information the Commission requires.”
This list lacks measurability, which leaves small operators with little hope to challenge the mandate.
Can the little guy compete in Maryland sports betting then?
One does not have to look very far to see the consolidation of various aspects of the US sports betting market. A few months past the third anniversary of the Murphy decision, the sports betting market has seen four or five companies with valuations in the tens of billions dominate the marketplace.
The competition is so fierce that even companies valued at around a billion dollars are struggling to capture a meaningful share of the market.
One of the stated intents of the Maryland sports betting law’s supporters was to create a level playing field that would allow small businesses a chance to compete. A mandate for use of official league data to settle all bets does not accomplish this.
In fact, it hands a substantial advantage to the big names who already dominate the market across the country. Cheaper licenses for smaller entities do not accomplish much if it is too expensive for those companies to operate.
This is on top of the well-documented history of official league data mandates creating a solution for a problem that does not exist.
Where is the problem that official league data solves?
The suggestion that there is an epidemic of sports wagers being settled with faulty data is simply a myth, and less believable than Sasquatch or the Loch Ness Monster.
There is little evidence that a multitude of scammers have built sufficient businesses to partner with and sell industrial sports data packages to sportsbooks that are operating in the regulated US market, all the while staying in business sending unreliable or disputable data.
Sportsbooks need reliable data. For years, Nevada bookmakers selected providers that provide them with reliable data at necessary speeds to allow them to operate successfully, all without a government mandate.
This is a multi-billion dollar industry. The market will sort out the best providers without state legislatures awarding monopolies. We have already seen that companies have reportedly exploited official league data mandates to extract higher rents from sportsbooks.
While sportsbooks backed by billionaire investors or those that can simply release a new block of shares onto the market might not be driven out of business, smaller entities are likely to be stifled by mandates that they purchase official league data, especially to settle wagers where the necessary information could be determined by merely opening a newspaper.
Faulty narratives abound
It has been documented almost since the inception of the official league data mandate that the requirement of bookmakers to purchase official data is nothing more than a legislative gift to sports leagues and their data distributor partners.
The official data mandate is constitutionally suspect in the United States, where many types of data exist within the public domain once they are published.
The other key fact that is often lost is that a market where data originates from a single source creates a single point of failure. A robust market with lots of independent data providers who individually collect data protects game integrity. Consolidating the market so that it is all fed through a single funnel creates a single target for corrupters.
Seriously, stop it with these mandates
These mandates likely persist in part a result of sports leagues hiring skilled lobbyists who successfully convince legislators of the need for them. But,it is also at least partly the fault of state legislators who have failed to investigate whether there is any need for these stated “protections” in the first place or in many cases failed investigate what is best for a sports betting market generally.
Official league data mandates, in general, are ridiculous and built around a narrative that simply has not proven to be true. Do ghost games happen? Yes. Is there a risk of a major American sports league being victimized by a ghost game? Absolutely not.
Official league data requirements to settle bets on the end result of a game are totally nonsensical, and will not only not promote integrity, but will also harm hopes for small businesses to compete in a regulated market.