With a conference committee reaching an eleventh-hour agreement, Massachusetts is the latest state to legalize sports betting. A very restrictive Senate bill raised legitimate fears of legislative overreach. Still, the final product was a very sensible bill, balancing the needs of the consumer, the industry, and the state.
That balance isn’t always found, as many pieces of legislation can attest to. From any of the three points of view (consumer, industry, state), the Massachusetts law is far from perfect, but a perfect piece of legislation that gives all three sides everything they want is an unattainable goal.
Every state has its nuances, and someone somewhere will always be unhappy.
What is needed is a bill that checks off as many boxes as possible, but most importantly, it must be able to garner enough votes to pass. If a highly flawed bill is the only bill that can pass, then in effect, that is the perfect bill for that state. At least for the time being.
With that in mind, there are several ways lawmakers can structure the best sports betting bill possible.
Have An Open-Door Policy, And A Good Doorman
A decision every legislature should make is not to arbitrarily limit the market. In some states, the ceiling is low, as legislation capable of passing requires limiting licenses to in-state stakeholders, which could number as few as one.
Problems arise when a state arbitrarily decides to limit the number of licenses. New York is a perfect example of a state that expanded beyond in-state stakeholders but still set a hard cap of nine licenses for no reason whatsoever. There is no explanation for nine being the number other than it’s a number.
That being said, states shouldn’t consider all comers. There must be some baseline requirements for licensure.
Leave Regulation To The Regulators
Another issue that has arisen in many locales is launch deadlines. Instead of falling back on regulatory expertise, lawmakers looking to open the sports betting revenue spigot as soon as possible included deadlines for licensing and launches.
We’ve seen how that has worked out, and it’s something states should avoid at all costs.
Another way lawmakers can avoid stepping on regulators’ toes is to allow some wiggle room regarding new products. There is no reason to restrict esports or some yet-to-be-unveiled market or product. That is a decision for regulators.
Bottom line: Lawmakers should legislate, and regulators should regulate.
Finding Balance Between Licensing Fees And Tax Rates
Another way lawmakers can save themselves from future headaches is to set the licensing fee based on the projected revenue. A state will get the most accurate (not the most bullish) projections from potential stakeholders by linking the licensing fee to revenue projections.
What percentage of the projections the fee largely depends on what the state needs to accomplish, which should also influence the tax rate.
If a state isn’t using sports betting as a source of immediate revenue, it would be best to select a low licensing fee and a moderate tax rate to maximize revenue over time.
If the state needs money now, a high licensing fee and a low tax rate are the way to go, with a one-time upfront payoff and some ongoing revenue.
Don’t Skimp On Responsible And Problem Gambling
One area that must be improved upon is responsible gambling policies and problem gambling funding. Robust RG policies and PG funding for research and treatment is something lawmakers and the industry likes to talk about but turning that talk into action hasn’t fully materialized.
The good news is states have gotten much better at including these policy points thanks to the advocacy of groups like the National Council on Problem Gambling and advocates like Brianne Doura-Schawohl. Further, gambling companies have beefed up their responsible gaming and compliance departments.
One crucial component of this is to commission studies, both before and after the addition of sports betting, similar to what Massachusetts did with casino gambling and what New Jersey did when it legalized online casino and poker in 2013.
Address The Things You Prohibited
One of the best things lawmakers can do is provide a clear, easy path for reentry to correct any flaws in the legislation. One way to ensure that sports betting isn’t a fire-and-forget law is to commission studies on the controversial policies that didn’t make the final cut. These studies will force lawmakers to revisit the policies they passed and not simply move on to the next topic.
Implement A Consumer Protection Framework
Players are often the forgotten part of the sports betting triumvirate. As policies are debated, the state and stakeholder point of view is front and center. The customer’s perspective is given lip service, but they aren’t offered a seat at the table.
As such, it’s imperative for sports betting laws to provide specific consumer protections, like non-predatory withdrawal policies, easy-to-find helplines, clear rules on the cancellation of bets, and limiting or prohibiting bettors.
