Recipe for success? Deep diving into Massachusetts sports betting legalization

Massachusetts hit the headlines early on Monday morning when state legislators announced a compromise agreement paving the way for the legalization of sports betting in the state. The agreement followed weeks of punch and counterpunch between the House of Representatives and the Massachusetts State Senate, with wrangles over factors including taxation, college betting, and advertising all figuring highly in the debate.

Now that the dust has settled on this furious activity, EGR takes a look at approved bill H5164 before its passage to the desk of Governor Charlie Baker to assess what made it in, and what didn’t.

You better you bet

A highly contentious subject in the days running up to the bill’s passage was the issue of college-based sports betting. The bill for its part shackles operators to not accepting bets dependent on individual college athlete performance, high school or youth sporting events. This includes in-game or in-play wagers on injuries, penalties, player discipling or replay review.

Sports wagering shall include, but shall not be limited to, single-game bets, teaser bets, parlays, over-under, moneyline, pools, exchange wagering, in-game wagering, in-play bets, proposition bets, and straight bets.

Massachusetts residents may only bet on out-of-state college teams, with the exception of during tournaments, a move which opens the door for betting on the NCAA’s March Madness tournament.

The best form of governance?

While not directly licensed, sports teams and governing bodies in the Bay State play a significant role in the legislation, with entities allowed to prohibit or restrict betting subject to certain factors. These include if the market involved is contrary to public policy, is unfair to consumers, undermines its own sporting integrity and undermines the integrity of the sport concerned.

In an effort to appease those sports governing bodies and teams, H5164 includes language to allow sports governing bodies to enter into agreements with operators in which they “may share in the amount wagered or revenues derived” from sports wagering on sporting events of the sports governing body. As part of this process, any obligation that said body would first obtain a license or “any other approval” from the Massachusetts gaming commission has been removed, essentially giving operators and governing bodies free reign to conclude deals.

Fee…is the magic number

Understanding license fees in US legislation can often be difficult to comprehend, and Massachusetts is no exception to this precept. Licenses in the state start at $1m for a temporary sportsbook application allowing for the “immediate commencement” of operations, for a period of one year, while applications are being reviewed. Operators are liable to pay $200,000 in application fees, but this could increase subject to the information provided by the applicant.

Qualities listed as assessment criteria include integrity, reputation, financial stability compliance track record, whether the company concerned is currently the subject of litigation involving its business practices, and whether its affiliate partners pass muster.

Should the applicant prove successful, the operator is required to pay a full license fee of $5m, with licenses issued for a five-year period and renewable every five years subject to the payment of an $5m renewal fee.

Licensees can transfer their licences to another party subject to the approval of the Massachusetts Gaming Commission, which is obligated to conduct a suitability check and can reject transferences where it deems the receiving party to be unsuitable.

With great power comes great responsibility

As with more recent sports betting legalizations, responsible gambling figures prominently within the text of H5164, with several requirements in the areas of RG. Highlights include prohibitions on pop-up adverts online and via text to those who have self-excluded, bars on advertising which may be considered deceptive and those under the age of 21. Licensed operators will also be required to implement RG-led programs as well as “comprehensive” employee training on responding to signs of gambling addiction. To further these plans, operators must submit a problem gambling plan for Commission approval inclusive of objectives, timetables and the identity of those maintaining the plans. Signposting to problem gambling-related treatment centers is also required to be included on every operator’s site “prominently” when accessed.

For its part, the Commission will be required to conduct two studies, the first of which scrutinizes the effects of sports betting conducted through the state’s betting kiosks, while the other looks at the social and economic impact of legalization on the state. Both studies are due back on December 31.

A much-muted advertising ban, which drew controversy in the days running up to the bill’s passage has been struck entirely from the final bill. Instead, the bill introduces prohibitions on deceptive advertising as well as any unsolicited pop-up ads sent to self-excluded individuals. In addition, any form of advertising deemed “unacceptable or disruptive” at a sporting event, or ads deemed to be appealing to those under the age of 21 and in violation of state laws are similarly prohibited.

Freedom of Information

The bill places no restrictions on usage of data when determining the results of bets placed, however it includes language allowing for sports governing bodies not headquartered in the US market to enforce a requirement to use official league data. In respect of instances where there is no official league data source, there is no restriction, with operators required to switch to a “commercially reasonable” official data source when one becomes available.

Responsibility for the assessment of this commercial reasonability lies with the Massachusetts Commission with factors including number of sources available, market information from comparable sources and the nature and quality of the data provided.

Data integrity also plays a key role in the sports betting process as part of the bill, with operators required to immediately report any and all instances of suspicious betting directly to the commission as immediately as possible.