OXON HILL, Maryland – Soon after the U.S. Supreme Court gave New Jersey an overwhelming victory in its efforts to legalize sports betting, the confrontational relationship between the professional sports leagues and the state changed.
Dave Rebuck, director of the New Jersey Division of Gaming Enforcement, said Wednesday that the agency reached out to the “five major litigants” who fought the state’s efforts for six years only to wind up on the losing end of the court’s decision last May.
“We began a dialogue,” Rebuck said during a panel discussion at the American Gaming Association’s Sports Betting Executive Summit at MGM National Harbor. “We needed to find out what they wanted, and we needed to determine what the legislature was going to give them.”
In the end, Rebuck said, the leagues’ efforts to secure integrity fees – a portion of all wagers placed in New Jersey sportsbooks – was rejected.
The discussion regarding the expansion of sports betting has turned to new policies states are considering. Since the Supreme Court ruling to toss the Professional and Amateur Sports Protection Act, seven states – Delaware, New Jersey, Mississippi, West Virginia, Rhode Island, Pennsylvania and New Mexico – have joined Nevada in allowing casinos and racetracks to offer sports betting facilities. Almost two dozen other states are in various stages of legislation to allow sports betting.
Rebuck – whom former New Jersey Governor Chris Christie pointed out, in his keynote address, was the only appointed holdover from his administration kept in place by current Governor Phil Murphy – said states need to be cautious in creating regulations and laws governing sports betting.
“If we have a scandal, if we have a failure, we will all suffer – a lot,” Rebuck said.
Nevada, which has been regulating sports betting since the 1960s, is watching the changing landscape and is willing to offer advice to new sports betting states.
For example, Sandra Douglass Morgan, who was appointed as chairwoman of the Nevada Gaming Control Board by Governor Steve Sisolak in January, said states have the right to ban sports wagering on games involving their in-state collegiate teams. She said Nevada once had similar prohibition on games involving UNLV and the University of Nevada at Reno, but the Legislature ended the ban years ago.
“There has never been an issue involving those schools,” Morgan said.
As for daily fantasy sports, Morgan said Nevada has no plans to back away from a 2015 Gaming Control Board decision that equated the activity with sports gambling. The regulators said daily fantasy sports operators had to apply for a Nevada sports pool license to continue providing the product in the state. None of the companies applied.
Morgan said the Control Board has questions about the recent agreement between casino giant Caesars Entertainment and daily fantasy sports operator DraftKings. DraftKings has since launched sportsbooks in New Jersey.
Mobile sports wagering – including in-game wagering – provokes fears in some states, Rebuck said. Nevada and New Jersey have both had the activity much of the last decade. He said many of the safeguards are “as strong, if not stronger, than brick and mortar controls.”
George Rover, the managing partner of Princeton Global Strategies, said in-game wagering “will be the meat of all sports betting revenues” over time.
“It will become a larger percentage of revenues… and you have to do it on a mobile device,” he said.
When the discussion turned toward potential federal regulation of sports betting, the panelists all rejected the idea. Several bills have been floated, including one that would create an excise tax on sports wagers. The money collected would be used to prosecute the illegal sports betting market.
AGA Senior Vice President of Public Affairs Sara Slane questioned what a federal framework would do “that state regulators can’t.”
Slane said a federal excise tax on sports bets was akin to “going down a slippery slope.”
The casino industry, she said, already complies with rules for money laundering under the Bank Secrecy Act and is under the purview of the Treasury Department’s Financial Crimes Enforcement Network (FinCEN).
On Thursday morning, Rep. Doug Collins, R-Georgia, the ranking member of the House Judiciary Committee, told the summit a federal sports betting regulation bill introduced last winter by now-retired Senator Orin Hatch, R-Utah, “would not be picked up by Congress” this year.
Indian gaming properties have opened sportsbooks in two states – Mississippi and New Mexico – and several other states are considering the idea. Matthew Morgan, director of gaming affairs for Oklahoma’s Chickasaw Nation, said tribes become concerned whenever talk of reopening state compacts arises.
“We have to reevaluate how much of a benefit this will add,” Morgan said. “It’s juice versus squeeze when it comes to sports betting. What (incentives) will the state offer tribes? It’s not an economic driver, it’s an amenity driver.”
Howard Stutz is the executive editor of CDC Gaming. He can be reached at hstutz@cdcgamingreports.com. Follow @howardstutz on Twitter.
