Widespread legalized sports betting cannot succeed in America unless regulators and operators craft a system better than the black market, the keynote speaker at the East Coast Gaming Congress in Atlantic City said Tuesday.
“This definitely will not be a gold rush … unless all interested parties educate themselves on the sensitivities of sports-betting interests,” said Richard Carter, CEO of SBTech, a European-based company that offers sports-betting services to more than 50 partners around the world.
Speaking on the day before the first legal sports bet could be placed in New Jersey, Carter highlighted three factors he considered crucial to maximizing the market in the wake of the U.S. Supreme Court ruling that allows states outside Nevada to regulate wagering on games. Those factors include:
- The availability of mobile betting
- Competitive tax rates
- In-game betting
“If mobile sports betting is not included in the regulations, the online transfer of demand from the black market to the regulated market will not occur,” Carter said. He noted that mobile betting in the United Kingdom accounts for twice the bets made in person.
Widespread access to sports books is another necessity. He predicted sports betting will be allowed in tribal and commercial casinos, off-track betting parlors and racetracks, which already are highly regulated.
“For the market to reach its full potential, greater competition will be needed,” he said. “If restricted to a few venues, this will seriously constrict the size of the market.”
While many lawmakers look at sports betting as a relatively painless way to raise money for the states, Carter cautioned against high tax rates on legal betting.
Studies show the optimal tax rate is 15 percent to 20 percent of gross revenue, he said.
“High tax rates mean offshore black-market operators and local unlicensed bookies can offer more attractive odds,” he said. He listed three advantages of setting an appropriate tax rate:
- Regulated betting offers protection for players and encourages responsible gambling
- Maximization of tax revenue. “The higher the GGR rate, the lower the capture rate,” he said.
- Prevention of criminal activity
Carter called regulated betting on in-game events a “key driver” to the success of regulated sports betting in the United States, such as whether the next goal in an NHL Stanley Cup Final game will come on a power play or whether the Kevin Durant would break the NBA playoff record for three-pointers in Game 3.
“Being able to bet live in the moment in the game could completely change the whole dynamics of betting on sports,” he said.
Carter dismissed arguments by the NBA and some other leagues that they should get a share of the money legally bet on sports.
“There’s almost no valid reason to transfer money to the leagues,” he said. Athletes and leagues will see increased revenue from sponsorships and increased viewership. Besides, operators face no repercussions if they don’t agree to hand over 1 percent or so of their gross revenue to the leagues.
“What are they going to do – encourage the black market?”
Carter said regulators and operators can help maintain the integrity of games by enforcing strong regulations on betting, quickly sharing information about large or suspicious wagers and strengthening gambling laws.
Many countries have regulated sports betting successfully. Working together, he said, U.S operators and regulators can establish a system that will be the envy of the world.
