Game On: Sports betting is now legal in Massachusetts, but implementation could take several months.
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The gaming-heavy state became the 31st to legalize sports gambling but the industry is waiting for bigger prizes like California, Texas and Florida.
Sports bettors in Massachusetts will soon be able to ditch their local bookie for a legal sportsbook. Governor Charlie Baker signed the Massachusetts Sports Wagering Act into law on Wednesday, making the Bay State the 31st in the nation to legalize sports gambling.
“Our administration first filed legislation to legalize sports wagering in the Commonwealth several years ago, and I am glad to be able to sign this bill into law today,” Gov. Baker said in a statement. “We appreciate the dedication and compromise that the Legislature demonstrated on this issue, and we look forward to supporting the work of the Massachusetts Gaming Commission on the responsible implementation of the law over the next several months.”
The Massachusetts Sports Wagering Act was not a sure bet this year. It passed the state senate by 36-4 after elected officials pulled an all-nighter during the last legislative session of 2021-2022. For two years, state lawmakers could not agree on a bill and up until the end of July, Gov. Baker openly discussed how it might not make it to his desk. Now that the bill has become law, the state’s Gaming Commission will begin working on the implementation and licensing—a process that is expected to take months.
Lawmakers estimate that legal sports betting will bring in $60 million in annual tax revenue, thanks to a 15% tax on in-person sports wagers and a 20% tax on mobile betting. Once companies are licensed, betting can take place at brick-and-mortar casinos, horse tracks, and via mobile apps. The state’s Gaming Commission will regulate the industry and is allowed to license up to seven companies that do not already have a casino presence in Massachusetts. The state expects to generate up to $80 million in licensing fees, which must be renewed every five years.
State Senator Eric Lesser, one of the bill’s sponsors, said during Massachusetts radio’s Zolak & Bertrand show that Lawmakers are hopeful that legal sports betting might launch before the Super Bowl, the country’s biggest single-game betting event.
“I want the public to understand, as we as commissioners are starting to understand, that this isn’t something that’s going to happen overnight,” Commissioner Brad Hill told State House News. “This is going to take a little longer than people probably anticipate, and I’m okay with that because I want to do it right.”
On Tuesday, Massachusetts House Speaker Ronald Mariano said it would be “disappointing” if the implementation went on too long. “You’ve got two hotels that are ready to open the doors as quickly as you can,” he said. “I know Encore [Boston] has built a room, and I know MGM [Springfield] is depending on this to increase their bottom line. So I hope we can get it up and running.”
Doing it right has taken a long time. Brendan Bussmann, the managing partner of B Global, a consulting firm focused on gaming, sports and hospitality, says Massachusetts finally joins the majority of states—31 plus Washington, D.C.—that have some form of legal sports wagering. “It’s about time; no state has debated it longer than Massachusetts,” says Bussmann, explaining that a version of the bill was debated for multiple legislative sessions before a compromise bill was passed. “It’s a big sports state with the Celtics, Patriots and Bruins. All of these teams have been bet on over time, but instead of the bartender taking your bet [illegally] you can now do it on your phone.”
There are now only 16 states that had not reformed their laws since 2018, when the Supreme Court overturned the Professional and Amateur Sports Protection Act. (PASPA had effectively made sports betting illegal except in Nevada and a few other states.) Maine, Ohio, Nebraska and Kansas have legalized sports betting but have not launched legal markets yet.
Massachusetts has a much more reasonable tax rate, 20% on mobile wagers, compared to New Hampshire and New York, which tax mobile sports wagers at 50%. But Bussmann thinks the state’s legal industry will have difficulty competing with the illicit market, especially around college sporting events. The law does not allow betting on in-state college games except during tournaments, like during March Madness. “The college wagering provision is just stupid,” says Bussmann. “It makes absolutely, positively no sense.”
Another regulatory hurdle is that gaming companies cannot deduct promotions, which are necessary costs to lure customers to a certain app in a competitive environment.
“There’s still going to be a black market,” Bussmann adds, thanks to the “handcuffs” of taxes and regulations that legal operators have to deal with. “An operator who wants to do it right not only has the privilege to pay taxes of 20%, but you’re looking at 30% to 40% extra costs beyond what illegal operators pay in marketing.”
At some point, Bussmann says, more states will have to lower their tax rates and step up enforcement against illegal operators, “which no one seems to be willing to do and hasn’t been for years.”
When asked if Massachusetts’ new law is a policy failure, Bussmann says: “To be determined.”
Colin Mansfield, an analyst from Fitch Ratings, says Massachusetts’ long-delayed move to legalize sports betting is a good thing for the industry, but it’s not one of the big states like California and Texas, which are still a long way from legalizing their own betting markets.
“We view it positively, but that’s on the margin,” says Mansfield. The average American spends $50 a year on sports betting, so if you extrapolate that to Massachusetts’ population of 6.8 million people, the state has a potential market size of about $350 million in gross gaming revenues, Mansfield says. “Not anything that’s going to move the needle for any of the gaming companies,” he says.
But Massachusetts is a “gaming heavy” state with one of the highest per capita spending on lottery, says Mansfield. So, if you’re a betting man or woman, the odds might be in your favor.
Source: https://www.forbes.com/sites/willyakowicz/2022/08/11/heres-why-legalized-sports-betting-in-massachusetts-is-already-a-bust/