Massachusetts Legislature Reaches Deal On Sports-Betting Package

August 1, 2022
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After marathon negotiations that continued into Monday’s early morning hours, a Massachusetts conference committee has reached agreement on a plan to legalize sports betting.

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After marathon negotiations that continued into Monday’s early morning hours, a Massachusetts conference committee has reached agreement on a plan to legalize sports betting.

House Speaker Ron Mariano said Monday (August 1) morning that the Sports Betting Conference Committee tasked with reconciling the significant differences between a House bill approved in July 2021 and a Senate bill approved in April had in fact struck a deal.

The state’s 18-month long formal legislative session was set to end Sunday night, but the legislative chambers continued to extend the session hour-by-hour as negotiations continued on a wide-range of issues, including sports betting, until a deal was announced around 5am.

The House ratified the report by a voice vote Monday morning, and the Senate will have to do the same prior to adjournment before the bill heads to Republican Governor Charlie Baker’s desk to sign.

Baker has been a long-time backer of sports-betting legislation and said last week that he hoped the legislature would send him a bill to sign.

House Bill 5164 will allow each of the state’s three casinos to offer up to two mobile skins in addition to a retail sportsbook, as well as permitting the state’s two horseracing simulcast facilities to offer a retail sportsbook and one mobile skin.

The bill also allows up to seven licenses to be awarded to mobile operators untethered to a land-based operator. All mobile operators will have to obtain “Category 3 licenses” regardless of tethering status.

The bill allows any qualified gaming entity to request a temporary license for immediate commencement of betting operations, with a $1m license fee for the temporary license. The temporary license is functional for one year or until the commission makes a final determination on the pending operator license.

Full licensure will include a $5m fee for a five-year license, with the $1m for the temporary license being credited back to operators. After five years, operators will have to pay a $5m renewal fee.

Applicants also must pay a $200,000 processing fee for investigation costs, as well as any additional cost if the $200,000 proves insufficient to complete the investigations.

The bill will allow betting on collegiate sporting events but will prohibit bets on events including Massachusetts college teams. However, bets can be placed on those colleges during an NCAA tournament, as well as any other team in the tournaments.

Collegiate betting was one of the most publicly divisive issues between the two sides, particularly in the last week of negotiations where leaders from both chambers sought to lock in their positions.

The Senate version would have prohibited betting on all collegiate sports, while the House bill would have allowed wagering on college sports but prohibited prop bets on the performance of individual collegiate athletes.

The concerns, which were also backed by the governor, stem from the scars of a point-shaving scandal involving basketball players at Boston College in the late 1970s and a subsequent scandal in 1996 that involved football players betting on games.

The compromise also includes a 15 percent tax on retail betting and a 20 percent tax for mobile betting on adjusted gross revenues, which includes deductions for federal excise tax paid.

The previous House bill included a 12.5 percent tax on in-person wagering and 15 percent on mobile bets, compared with a 20 percent tax on retail and a 35 percent tax on mobile betting in the Senate version.

The compromise also removed strict advertising restrictions included by the Senate such as a “whistle-to-whistle” ban on sports-betting advertising during televised sporting events, which would have been the first of its kind in the U.S. to date.

The bill does direct the Massachusetts Gaming Commission (MGC) to create regulations to prohibit advertising that is “deceptive, false, misleading, or untrue”, as well as “any form of advertising … that the commission deems unacceptable or disruptive to the viewer experience at a sporting event.”

The plan also includes a prohibition on using credit cards to place wagers in person or make deposits on online wagering accounts.

Although professional sports teams did not receive direct licensing opportunities, or a carveout that was included in last year’s House bill that would have given teams a 1 percent share of betting revenue of any event in a Massachusetts facility, the bill does commission a feasibility study to look at including betting kiosks at retail facilities throughout the state.

A provision that allows American professional sports leagues to request the use of official data to settle in-play wagers is also included in the bill.

If legislators had not reached an agreement, the issue likely would have been punted to 2023 at best, as action this year would have required the legislature to convene a special session, which would be unusual given ongoing elections in the state, or a bill would have to receive unanimous support to pass during an informal session later in the year, which would have been extremely unlikely.

The win marks the most significant victory to date for the sports-betting industry in what has been a fairly lackluster year for new states coming on board via new legislation.

Only two states, Maine and Kansas, have passed legislation permitting sports betting in 2022, and both states are among the ten least populous states to legalize betting to date.

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