Potential Legal Loophole: Permission Granted for Establishment and Subsequent Forced Closure of Operators
In August, the Massachusetts General Court extended its session to legalize sports betting, leaving the state gaming commission grappling with a potential conundrum. The legislature's law allows for up to seven standalone digital sports wagering licenses, but it remains undecided regarding the number of temporary digital licenses that can be issued.
The Massachusetts Gaming Commission (MGC) is concerned about the possibility of awarding numerous temporary licenses, which might force some operators to close down when only seven permanent licenses are available. At Thursday's meeting, the commissioners voiced their concern that the temporary licenses could saturate the market, leaving some operators without permanent slots.
Commissioner Jordan Maynard expressed worry about issuing an excess number of temporary licenses, potentially causing uncertainty for operators and their customers. Cathy Judd-Stein, the chair of the MGC, commented that the agency may have to shut down operators that don't make the final seven. Judd-Stein noted that this situation was unintended by the legislature and has yet to find a viable solution.
The intention behind the law is to have up to 15 digital platforms in total, with two each for the state's three existing casinos, one for each of the state's two existing horse tracks, and seven standalone platforms. Industry heavyweights, such as Barstool Sportsbook, BetMGM, and WynnBET, have market access through existing casinos. Other players seeking retail partners or standalone mobile licenses include DraftKings, FanDuel, and PointsBet, among other entities. More than 40 stakeholders have already informed the MGC of their interest in operating in Massachusetts.
Despite the confusion regarding temporary licenses, the MGC aims to solve the issue and move forward with a launch date. The commission will organize a roundtable meeting on Sept. 22 to deliberate on the temporary licensure question. Participating stakeholders will be given five minutes to comment on potential solutions for addressing consumer protection concerns in the event of sudden shutdowns for temporary licensees who do not win permanent slots.
In the interim, the commissioners expressed a desire to establish a launch timeline but admit they cannot provide specific dates. They feel the public needs some expectations in regard to when sports betting might launch in the state. Stakeholders' comments on a launch timeline were tabled, pending the Sept. 22 roundtable discussion. The commission also plans to address the question of whether to launch both online and retail platforms simultaneously or stagger their entrance into the market.
Although the current challenge involves digital platforms only, a staggered retail launch could be advantageous, as it would simplify the licensing process and help manage market growth more effectively. Both New York and Kansas have adopted a universal launch method, with Ohio sports betting set to follow suit on Jan. 1, 2023. Massachusetts maintains a measured approach to market expansion, carefully controlling the pace at which new operators enter the market. Prudent licensing caps, regulatory oversight, market monitoring, and economic data analysis remain integral to the MGC's efforts in ensuring market competitiveness while preventing potential instability.
- The Massachusetts Gaming Commission (MGC) is apprehensive about the prospect of granting multiple temporary sports betting licenses, as it could lead to the closure of certain operators once only seven permanent licenses are available.
- At the September 22 roundtable meeting, stakeholders will be allowed to comment on potential solutions to address consumer protection concerns in the event of temporary licensees not securing permanent slots, which could result in sudden shutdowns.
- While the focus is currently on digital sports betting platforms, a staggered retail launch could streamline the licensing process and help manage market growth more effectively, as seen in states like New York, Kansas, and Ohio.
