The Massachusetts Senate has passed a bill to legalize sports betting with restrictions on advertising unique in the U.S. market, setting up a showdown with the state's House to iron out the many significant differences between the bills each chamber has approved.
The Senate voted on Thursday (April 28) to approve an amended version of Senate Bill 2844, which would permit the state’s three commercial casinos to offer retail betting and online betting with one skin, as well as creating six new licenses for operators to offer mobile betting and retail betting in different regions of the state.
Although the Senate spent much of Thursday’s session considering amendments, proposed changes to many of the bill’s headline features, including its licensing and tax structure, as well as bids to remove an outright prohibition on college sports betting and a so-called “whistle-to-whistle” advertising ban, were all rejected.
The bill includes a 35 percent tax on mobile wagering, which would be one of the higher tax rates in the U.S. to date, as well as a 20 percent tax on retail betting, with no deductions for bonuses or promotional credits. By comparison, the bill passed by the House of Representatives last July features a 15 percent tax on mobile betting and a 12 percent rate on retail betting.
Senator Michael Rodrigues, a Democrat and chairman of the Ways and Means Committee which crafted the bill, noted that other U.S. jurisdictions such as New York, Pennsylvania and neighboring states New Hampshire and Rhode Island all boast comparable tax rates or higher, although in the case of the neighboring states, those states feature single-operator models rather than the competitive market proposed in Massachusetts.
“Given these examples, I find it hard to believe that a tax rate that is lower to Pennsylvania’s and New York’s and lower than three out of our five neighboring states would make Massachusetts uncompetitive,” Rodrigues said.
Another key feature of the Senate bill is the most restrictive advertising provisions proposed in the United States to date, including a ban on television advertising for sports betting starting five minutes before any live sporting event telecast and concluding five minutes after the event ends.
Republican Senator Patrick O’Connor pitched an amendment removing the whistle-to-whistle ban, arguing that in addition to First Amendment concerns that could ultimately be the subject of litigation, the ban as written would be difficult to execute in practice.
“Legal sports betting occurs in almost all of our neighboring states, all of which share television markets with [Massachusetts],” O’Connor said. “How do we stop ads from reaching Massachusetts residents?”
“Are we going to regulate [local regional sports network] NESN and tell them OK, you can broadcast DraftKings to your fans in New Hampshire, Connecticut and Rhode Island, but not in Massachusetts?” he continued. “I really just don’t logically understand how we could regulate the whistle-to-whistle ban that’s currently in this bill.”
However, O’Connor’s argument’s fell on deaf ears, as his amendment to remove the ad ban was voted down in a voice vote. In contrast to the Senate, the House bill includes standard language prohibiting misleading advertising, among other concerns, but nothing as significant as the whistle-to-whistle ban.
One of the overarching debates about sports betting in Massachusetts throughout the last few years has been whether college sports would be allowed, a sensitive subject in the Bay State dating back to an infamous college basketball point-shaving scandal at Boston College in the late 1970s.
As approved on Thursday, the Senate bill would prohibit all wagering on collegiate sports entirely, which would also be the strongest prohibition on collegiate wagering in the U.S. and a significant blow to operators, as college football and basketball drives a significant portion of betting handle.
For example, in Colorado, which reports pro football and pro basketball revenues separately from collegiate revenues, betting on the two major college sports made up about 10 percent of betting handle in 2021.
Several amendments were proposed that would include varying forms of college betting being permitted, but all were withdrawn without receiving a vote during the Senate’s discussions before the vote.
The only amendments senators did adopt were largely non-controversial or technical in nature, although one successful change will mean that so-called Category 2 sports-betting licenses will no longer be chosen based, in part, on whether proposed retail sportsbook locations are at a sufficient distance from an established casino.
After passage by the Senate, a six-member conference committee representing members of the House and Senate will now be formed to attempt to negotiate a compromise between the two chambers and put forward a definitive bill for final approval.
The Massachusetts legislature is scheduled to remain in session until July 31, giving lawmakers around three months to complete the process.
Additional reporting by James Kilsby.