Reactions from the National Conference of State Legislatures (NCSL) Sports Betting Panel
Yesterday’s National Conference of State Legislatures (NCSL) sports betting panel was, for many in attendance, the first in-depth look at a policy issue that many state legislators are going to be exploring in the coming years. The conversation offered many different viewpoints over the central issues that will dictate sound state-level policy for sports betting such as tax rates, protecting sports integrity and the role that pro and college sports leagues should play in that process, and the way that states can encourage customers to start turning to regulated sports betting outlets instead of the offshore market. For most states, sports betting policy is uncharted waters, but that doesn’t mean states need to reinvent the wheel to create a regulatory system that protects consumers, protects the integrity of sports and provides states with the all-important economic incentives of tax revenue and job growth. In fact, state lawmakers need look no further for guidance than the European countries that have been fine-tuning sports betting regulation for several decades.
The NCSL panelists all seemed to agree that mobile sports betting is both the present and the future, and any state policy that wants to encourage sports bettors to stop using the unregulated and untaxed offshore accounts has to allow regulated sports betting products to be at least as convenient as their offshore counterparts. In Europe, online sports betting has been steadily increasing for many years while location-based gaming is slowly declining. The U.S. should follow this example – limiting betting to casinos is like a state trying to ban Amazon in order to encourage people to visit shopping malls; it simply won’t work.
Another major topic among the panelists was the need to protect the integrity of sports and sports betting from corruption. As Bryan Seeley, Senior Vice President of Compliance and Investigations for Major League Baseball pointed out, any single state lacks the resources to fully protect against sports betting corruption due to the fact that games take place all over the country. Seeley highlighted the compliance powers that professional sports leagues bring to the table, including subject matter expertise and the ability to investigate and enforce codes of conduct amongst professional athletes across state and national borders. While leagues are investing heavily in integrity protection measures, panelist Quinton Singleton of Scientific Games offered another solution in the form of third party sports integrity associations. He used ESSA, a European sports integrity watchdog that works with multiple sportsbook operators and notifies its members and sports leagues of any concerning activity, as an example of how partnerships are key to containing betting corruption. No matter the ultimate solution, lawmakers should be wary of state regulators or operators who downplay the risks of corruption and believe they can handle it on their own. What a state doesn’t know about sports betting corruption can absolutely hurt them.
As one might expect with a diverse group of panelists, they didn’t fully see eye to eye on every issue. This is particularly true of the league fee that MLB and other pro leagues have sought through legislation but has been vehemently opposed by most established casino operators. According to Mr. Seeley, this fee, amounting to roughly 25 cents for every one hundred dollars bet on a league’s contests, would cover increased compliance costs for leagues and also incentivize leagues to work closer with states that include the fee. Meanwhile, casinos argue that a fee for sports leagues makes the business of sports betting economically infeasible due to the already razor-thin margins. Much has been written of the positive impact that sports betting has on driving interest and increased viewership for sports, but the inverse is surely true as well; if leagues keep their distance and work against sports betting, the leagues may not benefit from the increased exposure and distribution that sports betting brings. The idea of compensation for the leagues that sanction the sports that people bet on is not new and in fact has proven successful in countries like France and Australia, however none of these countries have structured this compensation in the way the US leagues have suggested. State lawmakers will have to decide whether to follow this model or risk creating a chasm between regulators, sportsbooks and the leagues that provide their subject matter.
All in all, the NCSL conversation should be a useful starting point for policy makers and a glimpse of the debates to come in state capitals all across the country in 2019. Lawmakers will hopefully continue to look for answers to policy questions in European markets, where sports betting is safe and well-regulated but still thriving and consistently innovating.
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