The good, the bad, and the ugly of April sports betting regulation

If you slept at all during the month of April, you’ll likely have missed a lot in the world of sports betting. Part dream and part nightmare, April 2021 will be remembered as one of the more satisfying and equally as frustrating months for the industry since the Professional and Amateur Sports Protection Act was struck down in 2018.

The good – Wyoming

Let’s start with the good: Wyoming. The smallest state by population in the United States is actually a very bright spot for sports betting legalization. Wyoming did not try to reinvent the wheel. Instead, it pulled the best sports wagering policies from other states and incorporated them into its own law which was signed on April 5. The state also recognized the regulatory expertise of other states. If you hold licenses and are “operating in good standing” in other regulated US sports betting jurisdictions you can be awarded a temporary operator or full vendor permit in Wyoming.

The Wyoming regulator is not ceding its authority, it’s a common-sense acknowledgement that much can be learned from states that have gone before them. It saves the state financial resources and importantly, it saves time. Wyoming will be able to expedite its launch and begin receiving the license fees and tax revenues even sooner than if it started the regulatory review process from scratch. Other states should not only be in awe of Wyoming’s natural beauty, but also its beautiful sports betting law.

Wyoming isn’t trying to reinvent the wheel with sports betting regulation

Arizona

On April 15, Arizona’s Governor signed a sports betting law that also deserves praise. Like Wyoming, Arizona regulators will have the flexibility to quickly approve operators and suppliers if they are already licensed in states with a similar regulatory framework. I’d bet on Arizona launching retail and mobile sports betting by the start of the NFL season in September. This is saying a lot considering I almost always take the “over” when it comes to launch dates.

The Arizona sports betting law comes as part of a newly negotiated compact with the state’s tribes. Under the new compact, up to 10 gaming tribes will be able to offer mobile sports wagering throughout the state (all can offer retail). While there are 16 Class III gaming tribes in the state, the presumption is that some of the smaller, more rural tribes will join forces with an online sportsbook operator as its collective partner. Time will tell how successful this system will be for Arizona’s Native American community, but you cannot deny that it is a forward looking and innovative approach. I applaud any state that finds a way for tribes to embrace internet betting.

Maryland

The sports betting dream continued in Maryland this month. On April 12, state lawmakers approved a bill that could bring up to 60 (yes 60!) mobile sportsbook operators into the state. As I highlighted in my column last month Maryland has untethered its mobile sportsbooks from any land-based gaming entities such as casinos or horse tracks. Instead, the bill creates strong incentives for mobile operators to establish “meaningful partnerships” with minority and female-owned businesses. It even considers a one-year head start for online betting companies that is dependent on those partnerships.

This is where the dream really slows down. In an effort to create a more diverse and inclusive market, lawmakers have established a behemoth process to get there. The head of the state’s regulatory agency said last week that “the whole process could take 12 to 24 months” before the market is fully up and running. He acknowledged that retail could be available in as few as four months, but his prediction for mobile betting means that those 60 online books and their potential minority partners are going to have to wait.

The bad – Illinois

Now we’re entering the nightmare portion of the busiest betting month of the year so far. The month started with some startling news as Illinois announced that it was suspending remote registration for sports betting. Sadly, this arcane way of participating in ‘mobile’ sports betting is actually how the law was crafted.

The pandemic forced a temporary change to the policy and since July of 2020 Illinoisians could sign up remotely. The ability of consumers to conveniently sign-up for their favorite sports betting apps helped fuel rapid growth of the Illinois betting market which reported more than half a billion in handle, topped $35m in operator revenue and $5m in state tax revenue for the month of February (the most recent data made available). This reversal of policy, which happened despite Covid cases actually surging in Illinois in recent weeks, could considerably slow the growth of the market and put new operators’ launch plans on hold.

Changing back to remote registration permanently will not be easy. Some have suggested that the original law sunsets the in-person requirement 18 months after the launch of the market. Unfortunately, that is not true. A thorough review shows that in-person registration will remain in place until the state awards one of the three mobile-only sports wagering licenses it created. Complicating matters further, these licenses are priced at $20m dollars!

At this point in time it is hard to imagine which online sportsbook operator is going to pay that price tag to be live in Illinois. So, unless an operator opens up their check book or the state legislature makes a change, the in-person nightmare is going to continue for the foreseeable future.

The ugly – New York

What are you doing to my dreams New York? Please, someone wake me up! On one hand New York lawmakers could have adopted a reasonable and vetted approach to online sports betting, that while not perfect, would have quickly established a competitive market and brought meaningful revenue to the state this year. Instead, they chose the other hand.

This hand waves off other successful regimes and instead has created one of the most confusing sports betting laws ever written. As one industry analyst put it: “The bill reads like notes from a misheard phone conversation rather than a serious attempt to define how the online sports betting industry is structured.”

Terms like ‘platform provider’ and ‘skin’ and ‘mobile operator’ are used, but their meaning and purpose are not yet fully understood.

Thankfully, the New York State Gaming Commission (NYSGC), which has a smart and hard-working staff, is already racing to establish some clarity which will hopefully stop the industry speculation and hyperventilation. Due to a flood of incoming inquiries the NYSGC released a document that addresses many of the outstanding questions. However, these answers could create new problems, not least of which is potential litigation from stakeholders or anti-gambling activists.

The only clear winner in New York sports betting so far is the embattled Governor Andrew Cuomo. All along Governor Cuomo wanted a limited “lottery style” market that squeezes every cent out of every dollar wagered. It looks like his dream may come true.