Arkansas Approves Controversial Sports-Betting Revenue Sharing Rule

January 4, 2022
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Arkansas regulators have unanimously approved rules that will open the door for mobile sports betting in the state but kept a provision that could prevent many of the industry’s most familiar names from participating.

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Arkansas regulators have unanimously approved rules that will open the door for mobile sports betting in the state but kept a provision that could prevent many of the industry’s most familiar names from participating.

The Arkansas Racing Commission (ARC) voted last week to approve a set of new sports-betting regulations that permits each of the state’s three casino and racino licensees to partner with up to two mobile sports-betting operators.

A fourth casino, Legends Resort and Casino in Pope County, will also be permitted to offer online sports betting, but not until other gaming operations begin on-site, per the rules.

However, the regulations also include a provision that requires licensees to retain 51 percent of net sports-betting revenues in any market-access agreement with a third-party operator.

“This requirement is unprecedented in the United States,” said Andrew Winchell, director of government affairs for FanDuel. “It is literally just financially unfeasible to operate an online sports wagering pool at that low [margin].”

The state’s casinos pushed for the inclusion of the requirement, citing provisions in the state constitution requiring casinos to maintain control of their gaming operations.

“The theory is if you’re paying someone more than 50 percent, then the casino licensee is not controlling the sports wagering in a way intended by [the state constitution],” said Byron Freeland, counsel for the seven-member racing commission.

“These things go to the integrity of who is really in control in sports betting,” said Walter Ebel, an attorney representing Oaklawn Racing Casino Resort. “If I’m just keeping a very small percentage, common sense dictates that I have less of a vested interest of what’s going on with that activity.”

Lobbyists for major U.S. online sports-betting operators pushed back against the idea that majority revenue share was directly correlated to control under the amendment.

“We’re not asking you to make them do business with us,” said John Burris, a lobbyist representing FanDuel, DraftKings, BetMGM, Fanatics and Bally’s. “We’re asking the government not to put restrictions that prevent this from being an open and competitive marketplace.”

Burris also conceded that even if the commission did relent, the casinos were unlikely to partner with the major brands at the onset of mobile betting in the state.

“I think we all know they’re going to say no, given the way this debate has evolved, but we think over time, we think we can convince them we bring enough to the table to partner with us,” he said.

“Every time the national operators refer to their operations as first class, embedded in that is a bit of a backhanded slap at us,” said Carlton Saffa, chief market officer for Saracen Casino Resort. “The implication is that the Arkansans cannot do what the national brands can do.”

“It’s not like it’s the Wild West if [Saracen] is running sports betting on mobile.”

Saffa also cited the willingness of operators to pay majority revenue share in New York as an example that the claims of financial infeasibility if the rule were to be enacted were exaggerated.

The rules are still subject to final approval by the Arkansas Legislative Council, a joint legislative committee that approves rulemaking in the state. The amended sports-betting rules would become effective immediately upon approval by the council, which is next scheduled to meet on January 28.

Arkansas has offered land-based sports wagering since July 2019.

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