Another article in an exclusive series examining the AGA’s Strategic Plan
Legalized sports betting could soon be coming to a state near you, but these nascent markets are at risk of being suffocated before they even begin by misinformed public policy decisions.
That’s the message that the American Gaming Association is trying to disseminate to state legislators in light of a pending decision by the U.S. Supreme Court that could open the door for the activity outside of Nevada.
While more than a dozen states have either passed or are considering laws to enable these wagers in the event of a favorable Supreme Court decision, there has also been no shortage of untenable and misinformed ideas popping up that could throttle any momentum as quickly as it emerges.
These include a 36 percent tax rate on sports betting that was passed in October by Pennsylvania, as well as a recent proposal in Indiana that would pay a 20 percent “integrity fee” to the major sports leagues.
“There’s a risk that we have a legal sports betting market in name only,” Geoff Freeman, the group’s president and chief executive officer, told CDC Gaming Reports, adding that consumers wouldn’t participate in such an environment because the market simply doesn’t work.
“With those type of rates, you’re now beginning to affect the odds that the legal market is able to provide,” he said. “And if the legal market can’t provide compelling odds, the customer is going to continue (wagering) in the black market, which has proven to be reasonably effective for their purposes, and that will simply undercut the legal market.”
The temptation to lump sports betting into the same bucket as other forms of gambling, coupled with the appeal of the new revenues that could be captured if the underground market is brought to light, appears to be causing some legislators to become overly giddy and optimistic.
But Freeman warns that this new form of wagering is hardly on par with slot machines or traditional table games when it comes to forecasting tax revenues.
“This is a very, very complex business, and it’s certainly a fear of ours that legislators kill the business before it even gets up and running,” he said.
Indeed, with the AGA’s campaign to bring the issue of sports betting to national attention now a proven success – exemplified by the Supreme Court stunning the world by agreeing to hear the New Jersey case in the first place – the dirty work will now need to be done state-by-state in jurisdictions that are keen to green-light the activity.
“It’s the heaviest lift for us to get into all of these markets to quickly help legislators, leagues and others understand the complexities of the business so smart policies can be put in place,” Freeman said.
“For better or worse, we made our decision years and years ago that gambling should be offered on a state-by-state basis,” he continued. “That’s not going to change with sports betting, but what it does require is a heck of a lot more work and getting out there and educating the powers that be.”
Fortuitously, the campaign lines up with a renewed focus by the group and the industry more broadly to be more proactive and efficient when it comes to rolling out and influencing policy at the state level.
“Sports will be a big test of that,” Freeman concluded. “Our efforts to build out a state-based function couldn’t be coming at a better time.”
