Lawmakers in the Massachusetts state House of Representatives easily approved a bill to legalize sports betting on Thursday, but the measure still has a big hurdle to overcome before Bay Staters can start downloading apps.
The 156-3 vote for House Bill 3993, formerly known as House Bill 3997 and before that House Bill 3974, brings back memories of when state representatives passed an economic development initiative that included sports betting. That bill passed by the exact same margin at nearly the exact same time, but the state Senate removed the wagering initiative from that bill just days later.
The Senate won’t take up the bill as quickly this year, and this time around, that chamber may decide to pass its own bill – a move that would likely lead to the formation of a committee to negotiate a compromise.
In an interview on NESN before the House’s vote, state Sen. Eric Lesser (D-Longmeadow), the sponsor of Senate Bill 269, said his colleagues “may or may not” take something up in the weeks ahead.
“We have a lot of steps left, but I think absolutely we should really hope and aim to get this going by the end of the calendar year,” Lesser said.
One key difference between the two sides is college sports betting. Lesser’s bill excludes all college betting. The legislation that passed in the House allows it, with an exception for player prop bets.
In introducing the bill on the House floor Thursday, state Rep. Jerry Parisella (D-Beverly) said that college games make up about 40 percent of the market. As for concerns about match-fixing, he pointed to a well-known local case as a reason why the state should legalize it.
First of all, it brings it out of the shadows,” said Parisella. We want to make sure that issues like the [point] shaving scandal that happened at Boston College a number of years ago doesn’t happen. It brings it out into the light.”
Parisella and Lesser serve as chairs of the Joint Committee on Economic Development and Emerging Technologies.
Bill Allows Untethered Mobile Sports Betting Apps
The House bill passed Thursday was an amalgamation of several legislators’ proposals, and lawmakers approved several amendments to it on the House floor before the final vote.
One significant change House members approved on the floor allows for online operators to get a license without needing a partnership with a state-licensed casino or racetrack. That could open the door for startup and emerging ventures, although the $5 million license fee could be a barrier to entry for some of those operators.
Casinos are allowed to partner with up to three mobile partners, and eligible racing facilities can partner with a mobile provider. Both types of gaming venues also can host a retail sportsbook.
However, lawmakers pressed the pause button on automatically including professional sports arenas for licenses. Instead, the House bill now calls for a feasibility study on the issue. The Massachusetts Gaming Commission (MGC) would present its findings by the end of next year.
The MGC will also study the possibility of placing betting kiosks in bars and restaurants, with that report also due on Dec. 31, 2022. Lastly, lawmakers did approve an amendment calling for a study to determine how to get increase minority, women, and veteran participation in sports betting. State Rep. Orlando Ramos (D-Springfield) offered the amendment, saying he wanted to promote equity and diversity in the industry – both in the workforce and among licensees.
That report would be ready by next July 1.
$60 Million Question in Massachusetts
Under the House bill, brick-and-mortar sportsbooks would be taxed at 12.5 percent of adjusted gross receipts (AGR), while mobile operators would be taxed at 15 percent. AGR would allow the licensees to deduct wagers made with promotional gaming credits minus the total of winnings paid on such bets.
Proponents claim sports betting could generate up to $60 million in tax revenue, provided college sports are included.
Typically, legislative tax revenue estimates tend to be a little rosy, and that might be the case here.
Assuming a 90 percent online market share, getting to $60 million in taxes would require a total AGR of $408 million. If the sportsbooks average a hold of 7.5 percent, that would mean the annual handle is about $5.4 billion, or a monthly average of $453.3 million.
For perspective, Pennsylvania reported a 2020-21 fiscal year handle of almost $5.6 billion. Pennsylvania has a population of 13 million, according to the most recent Census report, compared to the 7 million people in Massachusetts. Pennsylvania’s gross domestic product was $821.1 billion for the first quarter of 2021, compared to $611.9 billion for Massachusetts.
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