The post-pandemic response from gaming legislation By Scott Longley, CDC Gaming Reports November 2, 2020 at 9:06 pm The shutdown of land-based gaming in the U.S. has pushed the argument about online — particularly mobile betting — even more to the forefront. But the reluctance to roll the dice on online might change, given the industry is now staring down the barrel of not having a Plan B. In his contribution to the debate surrounding the sports-betting referendum in Maryland, Gov. Larry Hogan endorsed the measure by citing the hole in the state’s finances left by the shuttering of casinos in the spring. “Right now, as states are really lacking revenue, it’s another potential source of revenue, and it’s much more likely, I think, to happen,” he told NBC Sports. Hogan won’t be alone in making such basic calculations. According to Sara Slane, principal at Slane Advisory, similar discussions are likely to be taking place in other gaming states where tax revenues have taken a hit due to the pandemic. “Revenue shortfalls will continue to be a challenge for state governments as we head into legislative sessions early next year,” she says. “Sports betting offers an appealing option for generating revenue without raising taxes on constituents, while at the same time shrinking the illegal, unregulated, sports betting market that lacks responsible gaming protections.” According to Kevin Vonasek, principal at Vonasek Gaming, the moral arguments against expanded gaming might be overwhelmed by “dire” economic situations. “The need and support for enacting these new revenue streams seem to eventually outweigh those voices in opposition,” he says. “This is nothing new and has often been a factor in brick-and-mortar gaming expansion here in the U.S. We’re now just witnessing the online version of it.” The Legislature on Sunday, Aug. 2, 2020 during the third day of the 32nd Special Session in Carson City. (David Calvert/Nevada Independent) Moreover, the pandemic is forcing changes in the way consumers engage with gaming, suggests John Pappas, founder and chief executive with Corridor Consulting in Washington, D.C. “States that rely on tax revenue from land-based casinos have been severely impacted, and it is going to force the industry and lawmakers to look at new ways for connecting with consumers and generating revenue,” he says. “Online betting made sense before, but now, it has become something that is ‘needed’ and not just something that is ‘nice to have.’” A changing attitude The changes wrought by the pandemic in some ways are immediate — the change in consumer behavior and the resulting dip in gaming revenues being the obvious markers. But the longer-term shifts in attitude toward expanded sports betting and online gaming will likely take more time to become apparent. This goes for all stakeholders, including at the legislative level, according to Jake Williams, VP of legal and regulatory affairs at Sportradar. “The focus from February may be the same in many states. However, other states may be looking to accelerate timelines and reassess policy measures,” he suggests. The obvious policy topic at the forefront is mobile wagering, with many land-based operators evaluating the opportunities presented by expanded gaming and betting. The steady rollout of sports betting has continued regardless of the progress of the pandemic. Tennessee was the latest to join the list of states when it launched on November 1, with Michigan unlikely to be far behind. Hopes for more states opening up to sports betting or expanding the current legal offering to include online and mobile rest for this year and next on New York, Massachusetts and Ohio. Meanwhile, in the November vote, referenda are also taking place in Maryland, Louisiana and South Dakota. All these moves were in motion before the pandemic and according to some commentators, it is hard to see how the events of this year have changed the arguments in each case. “There has been a deliberative process in these states for years and legislators have been careful and diligent in considering the positions of all relevant parties,” says gaming lawyer Jeff Ifrah from Ifrah Law. “I do believe 2021 will bring legal mobile betting to all of these states, but I do not believe COVID-19 will have contributed to such a result.” But Vonasek disagrees when it comes to New York. “New York was hit very, very hard by the pandemic and as a result, I think you will now see mobile sports betting arrive sooner than we originally anticipated,” he argues. There are no guarantees, though, as Pappas points out. “I think each (of those three states) has an opening, but there are a thousand ways to kill a bill and just a few ways to pass it.” Build-out “It’s difficult to predict what legislators may do over the next few months,” says Slane. But she does believe that over time, recognition of the revenue benefits of both legal sports betting and online gaming will percolate through to legislators. “I think that it is a matter of when, not if, these states legalize. It is bound to happen. It just may not be on our timeline,” she adds. But even if it remains somewhat unpredictable, the staggered nature of progress in each state might suit stakeholders in order to adapt to the rapidly evolving legal wagering landscape. “It’s about preparedness, having the ability to assess each state’s framework and execute on your market planning and strategy” says Williams. Pappas adds that the land-based sector has overcome many other challenges in the past and the current pandemic will be no different. The obvious route will be to pivot to online where, he suggests, “the ground has been softened”. “It is the logical next step of gaming evolution,” concludes Pappas. “The industry needs to be prepared to scale. The good news is that many of the online operators are technology companies at the heart, and gaming is just a result of their innovation. I am confident they will be prepared.”