While 2022 has been a relatively slow year for sports betting legislation in the US, with gaming pushed to the back amid the elections cycle, a series of recent developments show that legalization is still an issue states are still willing to discuss and, in some cases, even place a wager on.
While the number of states that managed to pass legislation to regulate the activity this year is low -Kansas and Maine, with a slim chance that Massachusetts joins them this weekend- others got close to the finish line but to no avail. And in some cases, things are just getting started, with a battle for legalization in California ramping up ahead of the November ballot, and Florida's complicated legal situation with the issue seemingly poised to take some time to resolve.
In conversation with Yogonet, Brandt Iden, Head of Government Affairs US, Sportradar, provides a state-by-state update on sports betting legalization in the country, while also discussing the intricacies of each case and what to expect from them. Additionally, the former Michigan representative talks about prospects for 2023, and why iGaming legislation might be the next big thing on the gaming agenda.
One of the most pressing issues on the sports betting landscape is legalization in Massachusetts, where legislators have until Sunday to come up with a compromise bill. Is an agreement there still possible?
Yes, it is still possible. If this one gets done, it'll come down to the wire. An agreement could be reached as late as Saturday, maybe early Sunday morning. What I'm seeing here is a situation where sports betting is probably going to be politically traded with something else. The House seems to be more interested in getting the sports betting bill done than the Senate does at the moment. The Senate is looking for things like a mental health reform package they're trying to push, and looking at a tax relief plan.
Those issues may get lumped together, with some political maneuvering between the House and the Senate that may result in an agreement. It can be done, but I'm not overly optimistic: I give it a probably less than 50% chance because when things come down to the wire like this, you just never know. It's always like a game of Jenga: you pull one block out and you see if it can stay together before it all tumbles down.
The House and the Senate are divided on a number of issues, but whether to legalize or not collegiate sports betting seems the biggest one. The option of allowing some college sports betting has not been ruled out. Could this be the way to go?
You've got three major issues that the conference committee is debating. There’s the tax issue: the House is at 15% for mobile, and the Senate's at 30. But there's also the advertising ban, and then the total collegiate ban.
The House has been very clear that they are not going to pass anything that involves a total ban of collegiate sports. A compromise could be a ban on in-state colleges, whether you'd be prohibited from wagering on those. We've seen it in other states, and that's probably a compromise that the Senate may be able to live with versus an all-out ban.
I still think that, unfortunately, it prohibits players and pushes them into the black market, with the whole point of this being an effort to bring consumers into a regulated environment. That's not, in my opinion, the best way of doing it. But I do think that if a compromise is reached, that's probably where they end up going.
Another state to which much attention is being paid is California, where we have a battle between operators and tribes to legalize sports betting. We are seeing record amounts of money being poured into political campaigns. Is this developing the way you expected?
They're pouring a lot of money in and they're not done yet. This will be the most expensive ballot initiative ever run in the state of California, and by that I mean the total amount of money spent for and against Propositions 26 and 27. It is playing out how I anticipated, which is that it was going to be very expensive. How it ends up playing out in November remains to be seen. I continue to think that, statistically speaking, whenever you have two opposing ballot initiatives, voters just get inundated with a tremendous amount of information and they are likely to vote no on both.
However, in all the ballot initiatives on sports wagering that have been run since PASPA was overturned, in each state, respectively - they've always won. That's for ballot initiatives that have passed with voter approval. So there's that as well. And at the end of the day, there is going to be a massive amount of money spent. You're going to see both sides play all the way to the wire on this. And then voters are going to go and make a decision, and we're going to see how it shakes out. We're going to probably have to start the process all over again, unfortunately, but we'll see.
We're now also seeing lines being drawn here. For instance, the state's Democratic Party has said it opposes the online sports betting plan. Do you expect more of this to occur - to more stakeholders come up with their own intentions on whether to back or not these proposals?
I think that will continue to play out until November. We've seen a lot of division between these two proposals. We've even seen some of the smaller tribes break with the commercial proposal and say that they think it would be good for them to potentially partner with these commercial operators on the statewide mobile plan. We've seen the Democratic Party come out against the commercial operators and support of the tribes, and we’ve seen one of the largest unions in the state -the AFSCME Union- come out against the retail tribal proposal. As we get closer to November, we're going to see more alliances forming and how that moves the needle.
There's just so much noise in the market. And there are a lot of other things on the ballot, and voters just get inundated with all this information. Eventually, they tune it out regardless of how much money is being spent. They've made up their mind one way or the other. They're going to support or oppose, or they're going to say, “I don't know, this is confusing - I'm going to vote no on both.” And that's, unfortunately, the way these proposals go when you have two competing initiatives and so much money being spent.
We have now learned that the Court of Appeals is highly unlikely to rule on the court case blocking the legalization of sports betting in Florida this year. Many scenarios have been suggested, such as the case reaching the Supreme Court, or approval through a citizens' initiative. Ultimately, what do you think will happen here?
Florida's been very interesting. I'm not sure that it's played out how anybody expected, and the timeline has now been set for the appeal. We will not see a decision in Florida, in my opinion, until mid-2023. And where does it go from there? I'm of the opinion this probably ends up at some stage in the US Supreme Court, maybe later in 2023, maybe in the first part of 2024. And depending on how that all shakes out, this may end up having to go back to the voters in some sort of ballot initiative like you're seeing in California. That could put us well into 2024 before you see any sort of movement in Florida.
This is going to be a long process. I think the courts are going to certainly take their time with this. That could also happen in California in some respects. Depending on how Florida plays out, that could dictate how California plays out a little bit potentially. I see some overlap here. Unfortunately, it's going to be a while before bettors can place a wager in Florida.
We do have a few states that have been able to legalize sports betting, such as Kansas. Much attention was paid to the bill, which calls for parts of the tax revenue to be directed to a fund that would provide incentives for sports teams. Now, Gov. Kelly has dismissed the idea that the fund would be enough to lure the Kansas City Chiefs from Missouri. So the question would be - what should we expect then from this fund?
Kansas has been a good development this year. We anticipate a launch this fall for the NFL season and we're very excited about the state. Missouri didn't quite get there, but this will put pressure on them to hopefully make some headway in 2023.
As it relates specifically to the fund, the amount of money collected probably will not be enough to lure any major franchises. The legislature knew that when they put that forth, where I think the value for professional franchises is having the ability to contract with an operator and put in a sportsbook at the facility. That is a bigger draw. The dollar amount is certainly smaller, although obviously, it's going to build and accumulate over time. Who Kansas tries to attract with those dollars - we'll see.
But I do think that professional sports teams are looking at this and saying -especially in Missouri- “it's going to be a while before we can get up and operational in Missouri.” Even if the legislature were to pass something in 2023, we likely wouldn't be able to wager until 2024. So if I'm a professional sports franchise and I'm looking to renegotiate, I'm certainly taking a hard look at Kansas, where there are many opportunities for me. Sure, there are these dollars available, but also I'm going to have the ability to potentially partner with an operator, and build a book there. This is just more revenue that I can capture and potentially brings more people into the stadium.
Kansas is pushing hard for a pro sports franchise. They've wanted one for a while. I think it'll be interesting to see how it plays out. This is the first time we've ever seen dollars being specifically parceled off for a fund like this. So depending on how successful this is, you may see some other states, as we look next year to South Carolina, Georgia, and Kentucky - you may see them try to implement a model similar to this if it starts to make sense and starts to come together.
Kansas Gov. Laura Kelly
In regards to the timeline set for Kansas and a launch in time for the football season, do you see this as doable? Some doubts have been raised in regards to this.
I certainly think that they will be up for the first part of the NFL season. I don't know if they're going to be ready for that very first game. The Kansas Lottery came out with a statement yesterday - they're going to try. They're working really hard to get it up and running. But this process just takes time. In the event that they are able to launch by that first NFL game, it would be the quickest launch we've seen thus far.
But it always takes time. You've got to go through the regulatory process, the rule promulgation process… Those draft rules have got to be put out for stakeholder comments, and that just takes time, naturally.
Among states that have failed to pass mobile sports betting we have North Carolina. What's surprising perhaps is that this effort had the support of many parties, including the state's three major league franchises. What would you say has failed this time around?
It was disappointing. I was really optimistic about North Carolina - I had been optimistic even in 2021. I believe that a major part of the discussion with legislators comes down to the educational part. It comes down to making sure that stakeholders like myself and others that are heavily involved in the industry with the educational part, with the lawmakers and the lobbying aspect - that we're doing our job. We dropped the ball a little bit in North Carolina. When you have legislators referencing match-fixing schemes from 1960, it means that stakeholders, in general, did not do a good job with the education of the lawmakers.
And also it was an election year, which are typically difficult to get gaming legislation done. That proved to be the case this time. North Carolina just fell victim to that, unfortunately. But I'm optimistic once again. We're going to get back at it hard at the beginning of the year. In fact, we're not even going to wait that long. By the fourth quarter of this year, as we look to the fall and winter, we're going to be spending a lot of time with lawmakers once we get through those elections.
I think that there's a huge opportunity to get this done early on in 2023 in North Carolina because we were very close this year. And depending on how the elections break and so on and so forth, I think we're going to be in a good spot. So it was disappointing, but I'm still really optimistic about North Carolina.
North Carolina Legislature
As you said, this year has been a slow one for sports betting, with gaming pushed back as other issues took center stage. As we leave the elections behind in 2023, do you see this general scenario changing next year? Which states should we pay attention to?
We were hampered in 2022 with the elections. Not only elections, but major elections and redistricting in the US. So you had incumbent legislators running against potential other incumbent legislators. That always makes for a precarious situation with difficult votes, and sometimes gaming can be a difficult vote to take for legislators. It gets pushed back. That was one of the major issues that slowed us down this year for sure.
As we look to 2023, I think it's going to be much more successful. The elections will be behind us. There will be potentially new governors in place. There will be new members of the legislature in place. A lot of the same members that are now will be there, but there will be a changeover. I'm going to mention North Carolina again, but I'm also optimistic about Georgia, which I think was slowed basically because of the elections this year. And I think that in Minnesota the same thing happened.
I think that there's an opportunity to do something in Alabama, believe it or not. And 2023 will be a big year for Texas. In Texas, the legislature only meets every other year and they're meeting in 2023. That's a huge opportunity to build on what we did in 2021; there's potential for some movement there. It may not be next year in Texas, and it may be another building year to get us to the point where we're ready for a vote, but we're making a lot of headway there.
What's important to remember is that these next states are going to be harder to get. We picked all the low-hanging fruit and now we've got to work extra hard at getting these other states over the finish line. But when it's all said and done, we're going to get there.
We have a majority of states, at 35, on board with sports gaming legalization now. Do you see iGaming legislation becoming the next big industry issue in the next few years?
I don't think it will be in three or four years, five years down the road. I think it's now. Even in 2023, you're going to see a push for iGaming. I'm always disappointed that we don't see it in tandem with sports betting, as we did in Michigan. If you're going to push that rock up the hill, you might as well push it up there once. But I think that in Iowa, Illinois and Indiana - you're going to see a push for iGaming in 2023, and it's going to kick off that discussion.
I think we're going to go back to states that have passed sports betting, and they're going to be really interested in taking a look at the successful model that Michigan and Connecticut have with sports and iGaming. I think that Ohio may look at the same thing. Ohio is looking at iLottery. They're going to be bordered by Michigan and Indiana. If Indiana makes a move for iCasino, you may see Ohio do the same thing. It's going to be very active on that front as well, and I think we're poised for a great 2023.