Sports gaming experts: Guarded optimism as the potential for PASPA repeal nears

November 18, 2017 4:08 PM
  • Justin Martin
November 18, 2017 4:08 PM
  • Justin Martin

Guarded optimism was the general tone of some leading American sports gambling experts regarding the activity’s future after the U.S. Supreme Court rules on New Jersey’s to offer the wagering option.

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How optimistic?

MGM Resorts International Vice President of Vice President of Race and Sports Jay Rood told an audience at the Sports Betting USA conference in New York City last week that he was headed to the company’s Borgata resort in Atlantic City to “scout what we’re going to do down there” with regards to a sportsbook.

“We’re in line with thinking that there’s going to be some sort of movement on this,” Rood said during a panel discussion on the “optimal routes” to a legal sports betting market.

“We’re preparing for all the different scenarios,” Rood said. “Everyone is going to have to explore how it’s going to fit into (the) business model of their existing operations.”

Likewise, Dennis Drazin, chairman of New Jersey’s Monmouth Park racetrack said the property spent $1 million in 2013 to build a sportsbook room at the facility when the state first challenged the constitutionality of the 25-year-old Professional and Amateur Sports Protection Act, which limited sports gambling to four states.

Monmouth’s partnership with William Hill US enabled the construction of the sportsbook, that has sat dormant. Drazin said that plans are underway for a second room on Monmouth’s 300-acre property.

SCOTUS Hearing

Now, with the Supreme Court set to hear New Jersey’s challenge to the federally-enacted PASPA on Dec. 4., panelists at the conference expressed confidence a subsequent ruling, will ultimately prove favorable to the gaming industry. They were quick to point out that a win, in this case, isn’t necessarily cause for outright celebration.

“I do believe we’ll win,” Drazin said, “But there’s more than one way to win. What does it look like? Is it (an affirmation of) the 2014 New Jersey partial repeal? Or is it a complete declaration that PASPA is unconstitutional?”

He added that if the Supreme Court upholds PASPA, “New Jersey has introduced another total repeal. I’m certain there can be a challenge.”

The panel discussion, moderated Chaired by Cathy Beeding, Vice President and General Counsel for Island View Casino Resort in Gulfport, Miss., outlined several strategies, and identified a few pitfalls, or gaming establishments to consider should sports wagering be legalized.

Several panelists raised the issue of how to convince players that currently use illegal, offshore accounts to wager on sports to convert to legal, domestic wagering when it’s offered.

Longtime Las Vegas sportsbook operator Vic Salerno, now the president of USFantasy, called PASPA “the best thing to happen to illegal bookmakers 25 years ago. He also warned a repeal “could be the best thing to happen to them since then.”

Salerno said the challenge of competing directly with the illegal markets was that “illegals don’t have regulations, overhead, take the line from wherever without paying for it, and they do it all over the Internet.”

Rood admitted there will be challenge in bringing customers who bet with off-shore operations into the legal fold.

“The biggest competitor is converting the illegal player to play legally,” Rood said. “You’re going to have to scare the end user, because now, there are no repercussions, except maybe his credit card being declined.”

The future

Outsourcing the race and sports book business to outside operators was viewed as suboptimal but inevitable by several panelists.

Ed Malinowski, race and sports book director at the Stratosphere resort in Las Vegas, said outsourcing would help control aspects of the growing sports betting industry.

“There’s stuff we have to outsource,” he said. “We don’t have teams sitting in a room doing in-game wagering. We just don’t have the staff.”

Rood said MGM, which has sports books at all the company’s Las Vegas resorts, has begun utilizing a hybrid approach, pricing out the top markets in-house, determining what to offer and what hold percentage to set. The company contracts with SportsRadar to use their proprietary algorithms to handle everything else.

“We do have our operators who have the ability to take over and adjust, but (sometimes) you’re going to get beat,” Rood said. “The real art to what we do is managing the liability.”

Mobile sports wagering

Salerno, who operated the LeRoy’s sportsbook chain in Nevada that was sold to William Hill US, mentioned some advantages to outsourcing, such as the growing use in Las Vegas of mobile sports betting applications. He said there is freedom and low overhead attached to that platform.

“We ran about 70 satellite locations (in Nevada) and the average ticket cost us about $2.50 to write,” Salerno said. “In the mobile environment, it costs us about two cents. The phone is the terminal, the bettor becomes your employee (who) writes his own bets, and (there are) a lot fewer complaints. How can a person complain if he’s the one who put the bet in?”

Drazin said Monmouth has seen significant growth in mobile horse wagering in recent years. The racetrack has needed to implement geo-tracking on its mobile offerings, since intrastate regulations don’t allow a player to check the status of his New Jersey-based account while in New York.

Monmouth has also implemented geofencing around the park, so that, even on mobile bets, the park retains 100 percent of the revenue generated at the site.

“What’s happened in New Jersey as it relates to sports betting, there’ s a question of how does this roll out?” Drazin said, “If the 2014 repeal is valid, there are no regulations.”

‘Americanize’ sports betting

Rood spoke also of the need to “Americanize” systems that might be European in design. The parameters of inline game wagering, for example, need adaptation due to the potential for broadcast delays in America.

Salerno agreed.

“We’re dependent on algorithms built by people who don’t really know American sports,” Salerno said.

He also emphasized the potential for Internet gaming.

“What are we going to do about the Wire Act? This isn’t going to be a big windfall. It’s going take a hell of a long time to put out.”