The secret is out: gambling is now a visible part of the American sports landscape (and many of our personal entertainment budgets). That writing has been on the wall for years. But as all 50 states grapple with the economic recovery in the wake of the pandemic, we’ve seen a hastening of the dominos to fall as state-by-state legalize sports betting, and perhaps most importantly, facilitate live in-game (mobile-based) sports betting so as to share in the massive new revenue.
What’s the key ingredient to this larger sports industry pie? Micro-betting—which brings with it the ability to place individual bets between downs, between pitches, and between points—allows for thousands of bets to be placed per sporting event, rather than a handful. This has already proven out in various markets in Europe, where live in-game betting comprises the vast majority of all wagers placed in markets that have been legalized for quite some time.
Here in America, as 21+ states have now passed legislation, the change taking shape is transformative. Baseball is now talking about its pace of play problem as more of an opportunity, so as to allow for more in-game betting between pitches and pitching changes. One pro basketball owner apparently told Charles Barkley that “in 3-to-5 years, we won’t even need the TV money … that’s how big [gambling] is going to be.” And the live sports betting maiden voyage, Turner’s “The Match: Tiger v. Phil”, has spawned entertainment spin-offs and legitimate competitive organizations that threaten the very existence of the PGA Tour’s status quo.
As the recent legislation in Florida, Ohio, and Arizona highlight, legal and implementation hurdles still remain for live sports betting to become fully integrated. The bills from state to state vary greatly, the long-standing Indian Gaming compacts vary greatly, and the implementation of mobile sports betting varies almost across the board. But these examples also highlight the willingness (and speed) state legislatures are showing to partner with teams, leagues, and Sportsbook and DFS operators to facilitate the making of more money for everyone. “Even you, Dorn”.
Legal hurdles on the sprint towards live sports betting legalization across the country
The logic really is quite simple. “It’s all about engagement … If you bet on a game, you’re 98% more likely to watch a game and spend more time watching it then if you didn’t bet,” said David Levy, former Head of Turner and current Chairman of Genius Sports, the leading sports data technology company who recently closed an exclusive six-year deal with the NFL for the rights to the league’s data feeds—to go with deals in place with the NBA and the PGA Tour. “If ratings go up, ad dollars go up. If ad dollars go up, media rights go up. If media rights go up, franchise values go up.”
And everyone is seeing dollar signs. These new revenue opportunities are ushering in alternatives to the traditional sports leagues and the traditional media platforms, with entities such as the Premiere Golf League threatening the PGA Tour and sportsbook behemoths like FanDuel and DraftKings disrupting the major network stranglehold by becoming platforms and content portals themselves.
How fast is this happening though? It certainly has the makings of a sprint, though the legal and implementation hurdles might make it more like a steeplechase.
Since the Supreme Court’s landmark Murphy v. NCAA decision in 2018 opened the floodgates for states to legalize sports betting, it has now been legalized in 21 states (plus DC), with six more having greenlit it in some form. And similar to the nascent cannabis industry, the shifting social / political winds, the prospect of billions in guaranteed revenue, and the creation of thousands of jobs are proving quite tantalizing to state legislatures looking to rebuild their state economies ravaged by COVID-19.
As stated above, the laws from state to state differ in quite substantive ways. From the inclusion of long-standing Indian Gaming pacts in some states, to the implementation of mobile sports betting, to the bodies that are put in place issue licenses and oversee all gaming in each state. No two bills are seemingly the same—but lessons can and are being learned by the state legislatures and the interested parties needed for the machine to operate (the taxpayers, the tribes, the sportsbooks, the professional leagues and Tours, the local professional teams, etc.).
In late May, the Florida Senate approved a new state gambling compact with the Seminole Tribe of Florida that would, if approved by the House and federal regulators, bring online sports betting to Florida. The compact includes a new revenue-sharing agreement with $2.5 billion guaranteed for Florida over the next five years (and an estimated 2,000-plus new jobs), and gives the Seminole Tribe the right to offer betting on professional and collegiate sports.
However, the legality of the compact is being questioned as it relates to the allowance and the mechanisms behind mobile and online sports betting—the primary means by which live in-game betting will take place.
Under the Senate bill, the bets will be allowed from mobile devices as long as the servers handling the bets are located on tribal property—a defining feature that varies from other tribal gaming compacts approved under the Indian Gaming Regulatory Act. To date, only the Ninth Circuit has addressed the issue (see California v. Iipay Nation of Santa Ysabel), echoing the federal agency guidance in its holding that tribes cannot offer online gaming to patrons located off tribal property. But this Ninth Circuit decision would not be binding on the Eleventh Circuit, thus even if approved by the US Department of Interior, this issue may very well provide a basis for legal challenges from cities, counties, and operators who may feel left out of the bill. And it may also cause other state legislatures to consider doing the same if they are outside of the Ninth Circuit.
But that of course is not the only hurdle to these bills. Various anti-gambling groups have already expressed opposition to Florida’s sports betting provision, arguing that the compact violates a Florida constitutional amendment approved by voters in 2018 that requires voters to ratification of any new casino gambling. Whether or not this would encompass sports betting in general and mobile sports betting in particular, is a question that may be in front of the courts quite soon.
Also in May, the state of Ohio’s legislature proposed a revised version of a sports betting bill. The proposed bill would set up three sets of licenses that will be issued by the Ohio Casino Control Commission allowing for mobile betting, brick-and-mortar sportsbooks and betting kiosks at sports bars (twenty new licenses each, on a “first-come, first-served basis”, for brick-and-mortar facilities and for online gaming). While the bill still must be passed by the state House, it passed the state Senate in mid-June by a vote of 30-2.
In what appears to be a paved path to legalization, the state of Arizona recently passed its legislation to much fanfare on April 12, with a bill that enacted a new tribal gaming compact, legalized both sports betting and daily fantasy sports, and is projected to bring in $154 million in annual taxable sports betting revenue once the market matures. The bill contains 20 licenses—ten of those going to tribal operators and the other 10 going to Arizona’s professional sports teams, with the licenses including retail and mobile operations. Those who spoke to the state Senate advocating for the passage of the bill included local professional sports teams (like the Arizona Diamondbacks and the Phoenix Suns), professional organizations (like the PGA Tour), and national sportsbooks / daily fantasy sports operators (like FanDuel, DraftKings, and others).
Showing the speed and cooperation at play amongst all the interested parties, just two days after this bill was passed by the Arizona Senate (and before it was signed into law by the Governor), DraftKings announced a partnership to open a retail sportsbook at the famed TPC Scottsdale golf course in Arizona, as part of an expanded partnership with the PGA Tour that will also give the gambling company access to operate across the state of Arizona. All parties involved are hoping to have the Sportsbook operational in time for the 2022 Waste Management Open (on Super Bowl Sunday).
Each of these examples share numerous things in common, not the least of which is the inevitability of some type of legalization in each state, at some point in the near future. As a result, we’re seeing significant cooperation between states and all interested parties to not only help write the very rules that will help transform the sports industry, but also be the first movers by helping to enable and implement the systems on a local level. And those not involved in the process early are certainly at risk of losing out—which will certainly continue to result in its fair share of litigation from the aggrieved parties looking to challenge the bill’s legality in any way possible.
The speed at which this all comes to fruition will be based on the state legislatures ability to learn from their own false starts and the legal obstacles faced by those before them—as many states may do by following Florida’s lead with respect to servers handling the mobile bets being placed on tribal property, if necessary. And the fate of many of these bills will no doubt be decided in the courts.
Published at. https://www.jdsupra.com/legalnews/game-changer-live-sports-gambling-s-7658128/
