Review Of Massachusetts Sports-Betting Applications Set For December

November 30, 2022
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The Massachusetts Gaming Commission will process MGM Resorts International’s sports-betting license application even though it was filed two days after a deadline, allowing commissioners to consider the application during a public review next week.

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The Massachusetts Gaming Commission (MGC) will process MGM Resorts International’s sports-betting license application even though it was filed two days after a deadline, allowing commissioners to consider the application during a public review next week.

Thomas Mills, an MGC spokesman, confirmed to VIXIO GamblingCompliance in an email that there will be a public review of the Category 1 license applications next Tuesday through Thursday (December 6-8), with a public hearing scheduled for Monday (December 5).

On Tuesday, the five-member commission voted unanimously to accept the late Category 1 sports-betting application from MGM, which operates a casino in Springfield.

The approval means the company is still on track to open its brick-and-mortar sportsbook when retail wagering is expected to launch in late January along with Wynn Resorts’ Encore Boston Harbor and Plainridge Park Casino, operated by PENN Entertainment.

Mobile wagering in Massachusetts is expected to launch in early March.

MGM Springfield submitted its $200,000 application fee to the commission on the November 21 deadline but did not submit its application for a Category 1 operator's license until November 23.

Augustine Kim, executive vice president and general counsel with MGM Springfield, told the commission the late filing was a “miscommunication” and as soon as the casino realized there was a problem it was quickly corrected.

MGM, Encore Boston Harbor and Plainridge Park Casino each submitted applications. Under state gaming law, each casino is allowed to operate retail sports betting and partner with two operators to run their mobile business.

According to the commission, MGM Springfield will only partner with its BetMGM affiliate for its online mobile wagering service. Encore Boston Harbor will partner with WynnBET and Caesars Sportsbook, while Plainridge Park will partner with Barstool Sportsbook and BetFanatics.

Each of the mobile sports-betting partners is required to be licensed as Category 3 operators and have submitted relevant applications to regulators. Category 2 licenses are reserved for current racetracks and simulcast facilities and are accepted on a rolling basis.

All three categories of license will come with an additional $1m fee to receive a temporary license and a $5m fee to receive a permanent five-year license.

MGC executive director Karen Wells reminded commissioners there is a “provision in our regulations that allows the application to still go forward.”

Wells said the commission can decide to extend the time for a filing but under the regulations, any extension requires a vote by commissioners. She also assured commissioners that MGM’s delay in filing its application did not have an impact on any other parties applying for licensure.

The commission may, in its discretion, extend the time for filing a complete application to enable an applicant to cure a deficiency in its application, provided that the application forms were submitted, and the applicable fee was paid before the established deadlines, or to provide reasonable additional time for filing in cases where extraordinary circumstances prevented a timely filing,” the regulation regarding “extension of time for filing” reads.

Prior to the commission unanimously voting to move the application forward, chair Cathy Judd-Stein said commissions anticipated this so that is why the provision was included in the regulations.

“We’re not obligated, but we can move to receive the application,” Judd-Stein said.

The MGC received 15 total sports-betting license applications by the November 21 deadline. Loretta Lillios, director of the MGC’s Investigations and Enforcement Bureau (IEB), said staff is performing “deficiency reviews” of the license applications to determine where any additional materials are required.

The commission, which meets again on Thursday (December 1), plans to vote then on four proposed sports-betting regulations to complete the promulgation process and consider a request by Lillios to designate the Massachusetts State Police as the primary agency in assisting the commission with sports wagering corruption cases.

Lillios noted that the state police already has a specialized division dedicated to gaming that reports to the IEB, the head of the state police and the Division of Gaming Enforcement within the attorney general’s office.

Among the four proposals up for a final vote is a regulation that governs the licensing of sports-betting vendors, including temporary licensing, term and renewal, and disciplinary action, plus a regulation that governs the process for filing and collecting taxes on sports betting and real money fantasy sports contests.

Massachusetts plans to tax mobile wagering at 20 percent, with retail sportsbooks and fantasy sports at 15 percent. The state’s sports-betting law does not allow for promotional costs and free bets to be deducted from taxable revenues.

In comments submitted on November 18 to the MGC by MGM Springfield, Kim urged regulators to allow for the deductions offered to bettors as an incentive to place a wager on a game. He said removing the ban “removes a disincentive to operators to promote and market their legal products.”

“A free bet extended to bettors comes from the operator’s own treasury funds,” Kim wrote. “If the wager is in turn lost by the bettor — thus recovered by the operator, it is not recognized as revenue based upon how the term is defined under generally accepted accounting principles or by the Securities and Exchange Commission.”

Kim added that “no monies actually changed hands,” but if a bettor wins a wager using promotional credits, “the operator is on the hook to pay the bettor with actual money.”

“Therefore, free bets must be excluded from taxable revenue in order to ensure fairness and that an operator is being taxed only for the money it actually collects from patrons,” he wrote.

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