Massachusetts Sports Betting: Are Stakeholders On The Same Page?

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The headlines out of Massachusetts suggest stakeholders are now on the same page when it comes to sports betting legislation. That’s welcome news for the Bay State and its myriad of sports betting proposals.

The belief that the state’s three casino operatorsMGM, Wynn, and Penn National–are on the same page as Boston-based DraftKings stems from a two-day hearing in front of the Massachusetts Economic Development and Emerging Technologies Committee, and a corresponding letter signed by all three Massachusetts’ casino operators.

Evidence of stakeholder agreement

The three casino operators lay out the model they would like to see Massachusetts implement in their joint letter:

“Land-based sports betting should be reserved for the Commonwealth’s duly licensed casino operators and mobile sports wagering should be reserved for licensed casino operators and a limited number of daily fantasy sports operators with proven sports wagering experience.”

The letter appears to suggest the three casinos would accept legislation that allows DFS companies with a proven track record in the nascent US sports betting industry to apply for independent mobile sports betting licenses.

That’s a policy position DraftKings can get behind. Rather than tying all sports betting licenses to land-based casinos, DraftKings has proposed a model that allows non-casinos to apply for mobile sports betting licenses.

A spokesman for the company, James Chisholmmade the case for an open market at the hearing.

“Sports betting is happening right now in Massachusetts,” said Chisholm. “What we want to see happen in Massachusetts is that it’s legalized, it’s regulated, there’s a competitive, open market that fully embraces mobile.”

But things aren’t always as they appear. A narrower reading of the letter coupled with other evidence paints a different picture.

What are Massachusetts casinos really proposing?

Based on the quoted passage above, the letter seems clear cut.

However, a little later it reads:

“The advent of mobile wagering and daily fantasy sports has coincided with the entrance of new and innovative companies and products into the marketplace. In order to spur continued growth and development in the industry, each casino operator should be permitted to partner with a limited number of mobile sublicenses. Sublicenses allow broader stakeholder participation while tying such participation to the strong probity and suitability imposed on casino licensees… Allowing for this limited sublicensee system allows accomplishes these policy goals without diluting the value of the casino licenses.”

Based on the second passage, it can be argued that the letter is advocating for DFS companies as sublicensees.

Taken together, the letter calls for a limited number of DFS companies to offer mobile wagering. Only later does it identify the manner in which those mobile-only licenses would be issued, saying, “each casino operator should be permitted to partner with a limited number of mobile licensees.”

That would effectively tie these mobile-only licenses to a main license held by the casino.

The topic of licenses and fees

Furthermore, the letter’s continued mentions of casino licenses and the “approval process for a safe wagering environment,” and, “probity and suitability imposed on casino licensees,” suggests that the casinos are drawing a clear distinction between the main licensee (casinos) and sublicensees.

There’s also the mention of the licensing fee casinos have paid. Not to mention the proposal that sports betting licenses should come at no additional cost.

Casino operators have paid substantial licensing fees to operate in Massachusetts, ranging from “$25 million to $85 million dollars,” the letter says. It goes on to say that sports betting licensing fees should not be bifurcated. Rather, sports licenses should be in tandem with the casino’s initial and renewal fee.

And despite thorough tax rate breakdowns, there’s no mention of a licensing fee for a mobile-only operator in the letter.

Even more evidence for a narrow reading

The narrower reading gains more steam in the context of Penn National’s rebuttal of Chisholm’s remarks at the hearing.

“Certainly, we disagree,” Chris Rogers, a senior vice president at Penn National Gaming, countered at the hearing. “There’s a strong rationale, I think, to have the licenses run through the casinos. It acts as another safeguard, from a compliance perspective.”

Penn National Gaming was very clear at the hearing; mobile operators should be tethered to land-based casinos through a partnership. It makes little sense for Penn National to have signed a letter that foregoes that requirement.

Steve Ruddock

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Steve Ruddock is an avid poker player and a veteran member of the gaming media. His primary focus is on the regulated US online casino and poker markets. He writes for numerous online and print publications, including OnlinePokerReport.com, USPoker.com, and USA Today.

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