Regulatory Bodies Adapt to Emerging Hurdles in Sport Wagering Industries
Unfiltered Insights on the Changing Landscape of Sports Betting Regulations
In an explosive panel discussion at G2E, the gaming conference of the year, sports betting regulators from notable states like New Jersey, Massachusetts, Tennessee, Michigan, and more shared their experiences and insights on the ever-evolving world of regulating sports betting.
It's clear that the challenges these regulators face have dramatically shifted, with their job descriptions and daily responsibilities vastly different from just a couple of years ago. The key takeaway? Constant adaptation to a dynamic sports betting market is non-negotiable.
Legislative Shakedown
Some states, like Ohio, have swiftly reshaped a state's new sports betting market through legislative action. Ohio's mobile sports betting market, along with its retail counterpart, experienced a tax rate doubling less than a year since launching.
Tennessee made another unusual move over the summer, transitioning from a mandatory hold percentage tax structure to taxing an operator's monthly handle, making it the first state to implement such a system. While this simplifies the workload for regulators, operators aren't exactly thrilled about it, preferring their revenue being taxed in traditional fashion.
Operators and Regulators: A Tense Relationship
Regulatory changes like these often create a tricky situation for regulators and operators, who must navigate new systems while dealing with frustrated operators. When possible, regulators attempt to find common ground with operators to avoid potential conflicts.
For instance, Tennessee's Sports Wagering Council is anticipated to modify a regulation that prohibits athletes from participating in sports wagering commercials aired in Tennessee. This is a nuisance for operators running national advertising campaigns, but the council expects this "strict prohibition" to be altered in the coming months as long as operators provide them information on the ad campaign before it airs.
The Great Pick'em Debate
During the "North American Regulator Talks" panel, laws surrounding pick'em-style fantasy contests were a hot topic. Illinois Gaming Board Administrator Marcus Frutcher defined these games as essentially sports wagering, implying they might face regulatory action in some states. However, companies like Underdog Fantasy and PrizePicks, who offer pick'em-style fantasy games, argue that they follow all legal guidelines, distinguishing them from traditional sports betting.
A recent change in Michigan is expected to officially prohibit pick'em-style fantasy sports offerings in the state soon. The executive director of the Michigan Gaming Control Board, Henry Williams, confirmed that the regulator views these games as they are legislated.
State-Specific Regulations and Challenges
Illinois
Illinois implemented a progressive tax structure on sportsbook gross gaming revenue, with rates ranging from 20% to 40% based on adjusted gross revenues. Additionally, a new per-wager tax of 25 cents per bet for the first 20 million bets annually, and 50 cents for each additional bet has been introduced. This could significantly impact operators like FanDuel and DraftKings, potentially affecting market competitiveness.
Ohio
Ohio currently charges a 20% tax on sports betting revenue but is proposing a 2% sports betting handle tax. This tax would add to the costs operators face, raising questions about how it would affect their operations and investments in the state.
Tennessee
Though specific details about new tax structures in Tennessee aren't widely available, Tennessee officials have implemented a 20% tax on gross gaming revenue for sports betting. However, Tennessee is not currently mentioned in relation to recent tax structure changes or challenges related to pick'em-style fantasy games.
In summary, sports betting regulations are a constantly shifting landscape for regulators and operators alike. Stay tuned for further developments and updates.
Sports platforms, like Underdog Fantasy and PrizePicks, are debating the regulation of pick'em-style fantasy contests, as Illinois Gaming Board Administrator Marcus Frutcher considers them a form of sports wagering that might face regulatory action.
Operators in states, such as Ohio, are scrutinizing proposed changes in tax structures, with Ohio potentially imposing a 2% sports betting handle tax that could impact their operations.
Some state regulatory bodies, such as Tennessee's Sports Wagering Council, are working on altering regulations that restrict athletes from featuring in sports wagering commercials, a move that would ease the burden on operators running national advertising campaigns.
