Casino operators have plenty of control, but only within the parameters set by their state legislatures. And Michael Pollock has some advice for those government officials – legislators and regulators – who will be debating sports gambling at their state capitols in upcoming sessions.
Pollock moderated a session titled “Aligning the industry’s future with policy goals of gaming legislation and regulation” at the Global Interactive Gaming Summit and Expo (more commonly known as GiGse) near Miami on Friday.
“My critical point, which I keep making and will continue to make, is it’s better to do it right than to be first,” notes Pollock, managing director of Spectrum Gaming, a New Jersey-based consultancy firm that specializes in economics, regulation, and public policy of gaming worldwide.
Many states have their sports betting plan in place, and Pollock cautions that the message of being right instead of being first is lost on some states.
“They don’t realize what they don’t know,” he said. “There are no mulligans in gaming.”
The biggest land mine could be determining who gets sports betting licenses and under what conditions. It’s a topic about which Pollock will act as moderator for a panel of experts in July, when Spectrum Gaming coordinates a summer session of the National Council of Legislators from Gaming States in Cleveland.
“Let’s say you err on the side of more licenses, rather than fewer,” Pollock said. “You can’t change that. And if you’re on the side of fewer, that’s also hard to change, because people are making investments and business decisions based on rules.”
Other factors legislators will need to consider include:
Tax rates: A key takeaway from Friday’s session is the notion that with a thriving illegal market already in place, sports books face established competition for the gambler’s dollar.
“One thing that lawmakers have to realize is higher taxes would not only call into question the ability for providers to make a profit, but they also would make it harder to compete against illegal operations that don’t have to pay that fee,” Pollock said. “There’s going to be some inverse relationship between tax rates and the ability to take a bite out of illegal sports betting.”
The value of regulation: A regulated market will have some leverage, though, over an illegal market because, by definition, regulators insist that bets be honored and that there be integrity in the gaming process.
“So you know you’re going to get paid,” Pollock said. He added that casino sports betting also will have the advantage of rewarding players with a variety of points and comps that can be redeemed outside the sports book.
Lotteries: The discussion on Friday came to the conclusion, Pollock said, that inevitably lotteries are going to demand a role in sports betting. “That raises a whole range of new questions,” Pollock said. “One will be whether lottery retailers, such as gas stations, should be able to accept bets on sports, which raises a lot of issues, including age verification.”
A related challenge for casinos, Pollock said, is that lottery retailers in multiple states are very powerful politically. “In many states, political opposition has slowed online lotteries,” he noted.
Working with tribes: States with active Native American gambling have another layer to wade through, Pollock said, because so many compacts were negotiated on the foundation of geographic exclusivity – which would no longer exist if online gaming joins sports betting. “How does that work in an environment where it’s not based on geography?” Pollock asked.
Overall, Pollock notes that because of varying goals as well as non-standard situations, there likely will be wide differences in what states end up doing. “Everywhere you look, new questions arise,” he said. “There’s going to be somewhere in the vicinity of 10 to 20 models of business operations, after you include sports and online betting.”
