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Sports betting fever is sweeping the nation. The year 2019 has seen legislative efforts in no less than 30 states, but an assortment of sticking points is preventing a lot of those states from sealing the deal.
- The ever-present bugaboo of expanded gambling.
- What role, if any, the professional sports leagues should play, and whether they should have a seat at the revenue table.
- Finding an agreeable tax rate that satisfies the state and the operators.
- Whether to go online or restrict wagering to land-based sportsbooks.
If and when a state should consider online sports betting is easily one of the most contentious issues.
Online betting: Now, later or never?
Lawmakers have come down on both sides of this issue, and there’s even a secondary thread regarding mobile or in-person registration.
Cuomo on sports betting: "I am not a fan, pardon the pun, of the new mobile sports betting." Adds revenues being seen by NJ govt from sports betting taxes would be a "rounding error" for NYS budget. ”I don’t even think the economic benefit is there,'' he says.
— Tom Precious (@TomPreciousALB) March 18, 2019
If you're a lawmaker and not utilizing mobile you're committing legislative malpractice.
— Shawn Fluharty (@WVUFLU) March 18, 2019
Unlike lawmakers, industry types know that online is a necessity. Not only will it maximize revenue and modernize gaming, but it’s an integral part of stamping out the black market.
But even among analysts and pundits, there are points of disagreement. And there’s a growing debate over how and precisely when a state should add online sports betting.
Truth be told, online sports betting is state dependent.
- Some states should consider online right out of the chute.
- Other states should start with a retail-only approach and add online at a later point in time.
- Other states should probably avoid online altogether, at least for the time being.
Here’s why.
You’ve waited for online sports betting this long
There’s no reason to fear online sports betting, but at the same time, there’s no reason to rush into it. Because especially in states that don’t have a long history of gambling regulation and aren’t prepared to tackle something as complex as retail sports betting on top of an online component.
And some longtime industry folks have been screaming just that ever since legal sports betting outside of Nevada became a reality.
“I would advocate for a retail market first, and then taking steps toward remote gambling,” Art Manteris, the vice president of race and sports operations for Station Casinos, told attendees at the US Sports Betting Policy Summit in November.
Manteris went on to make a case for a step-by-step rollout.
According to Manteris, the enforcement of policies and procedures, state regulatory requirements, and federal law enforcement requirements are easier to deal with in a face-to-face retail setting. He added that “as the market develops, then reach out and make the market broader as the need arises.”
Another regulator speaks out
Manteris isn’t alone.
In an October column in Global Gaming Business Magazine, a former casino executive and former regulator Richard Schuetz called for a slowdown until everyone is brought up to speed on sports betting:
“Lately, I have been involved in my second experience in life where it seems I am in a sea of people that have no earthly idea as to what the sports wagering business is about, and it is the whole post-Murphy v. NCAA world …
… we might want to slow down a bit from the rush to introduce a product that a great many in the US do not understand, or have wrong. It is important for a variety of reasons to get this right, and this is a very complicated product to deliver. In my life, I have seen much of what can go right and what can go wrong in a book, and this modern era of sports betting has set sail in the US with a crew that is somewhat unprepared to navigate many of these waters.”
There’s wisdom in these comments.
The US created underground and offshore books
Yes, the repeal of PASPA is an opportunity to stamp them out, but that doesn’t mean it has to happen overnight in one fell swoop. The only way to put a dent in, and hopefully eradicate the illegal markets is to get it right.
That means avoiding embarrassing and sometimes ugly missteps and errors.
Mistakes have been made since the PASPA repeal
New Jersey gambling regulators, whom I consider some of the most experienced and capable in the country, have gone through some early growing pains.
In my opinion, a number of the early miscues listed below could have been avoided.
- Miscommunication between staff and customers led to a swirl of (false) rumors that the FanDuel Sportsbook at Meadowlands ran out of money.
- There was the now legendary palp error that saw a bettor receive fantastical odds on a Sunday Night Football game.
- Multiple casinos were fined for offering prohibited bets.
- There were the on-again-off-again Oscar markets.
- A strange ending to DraftKings Sports Betting National Championship that had some crying foul.
To be fair to the DGE, it was handed accelerated sports betting timelines by the state. Given their druthers, I’m sure David Rebuck and the rest of the DGE staff would have preferred a slower rollout with more time for both testing and training.
The missteps in New Jersey pale in comparison to West Virginia, a vendor contract dispute has sidelined retail and online sports betting at Wheeling Island and Mardi Gras Casino and the BetLucky.com online app.
A lot of people are wondering what happened. The real question is, how could this happen?
The answer is likely the same as most mistakes that are made: rushing.
What’s wrong with a Rhode Island approach to sports betting?
Sports betting is new to virtually every state, and as IGT executive Charles Cohen stated at the January 2019 NCLGS Conference in Louisiana, “It is the most complicated form of gambling that it is possible to offer.”
So, why not take a conservative approach to sports betting? As Manteris said, start with retail, get the bugs worked out, and then expand.
That’s what Rhode Island has done.
In Rhode Island, they legalized sports betting in June and after a few delays finally launched in November. So far so good in Little Rhody. And now the state is closing in on expanding into online sports betting.
That type of approach is something other states should consider.
Waiting a year (or six months) to authorize online sports betting might leave some early revenue on the table, but if the alternative is embarrassing and potentially consequential missteps, I’ll take a small, temporary revenue hit all day every day.
