The American Gaming Association is warning the Massachusetts legislature that leaving colleges out of sports betting could stunt the industry’s growth.
However, supporters of the Senate version of the bill may like the fact that, although there would be fewer wagers compared to the House bill, the state would realize more in taxes.
Nine months after the House passed a sports betting bill, H3993, the Senate finally passed legislation in April.
Because the House has voted not to concur on the Senate changes, the differences between the bills must be reconciled by a conference committee before a bill can be sent for Governor Charlie Baker’s signature. Each chamber appoints three members to serve on the committee.
Massachusetts is one of 15 states that does not allow sports betting.
In the AGA letter, President and CEO Bill Miller wrote: “Prohibiting wagers on collegiate sports would not only hinder the growth and development of a legal sports betting industry in Massachusetts, it also puts consumers at risk by encouraging their continued reliance on the illegal market, and fails to protect the integrity of games and wagers.”
Miller added, “Allowing legal, regulated wagering on collegiate events strengthens the integrity of games and protects bettors, competitions and the athletes competing in them by enabling robust, transparent, and collaborative monitoring by regulators and law enforcement.”
Legal markets, he said, give law enforcement and regulators access to betting patterns that enables them to identify red flags that will help them discover illegal tampering. Such data is not available for the black market.
One senator who agrees is Senator Patrick O’Connor who declared, “Bettors in Massachusetts are currently betting illegally on college sports, largely in the black market or offshore websites which have no obligation to detect or report concerns regarding the integrity of the games.”
The AGA cites research that estimates that college athletics makes up about one fifth of all legal wagering in the U.S.
An analysis by PlayMA looked in detail at both versions. It found that although the Senate bill would reduce the among of wagers, it would more than double the state’s cut.
In the House bill, online sports betting is taxed at 15 percent, and retail betting is taxed at 12.5 percent. In the Senate bill those figures are 35 percent and 20 percent respectively. The analysis shows that although the Senate version would mean fewer sports bets, that would be more than offset by the increase in tax rate.
Another difference that increases revenue under the Senate version is it does not allow operators to subtract money spent on promotional gaming and federal taxes from taxable revenue. In the House version they are allowed to subtract those expenses. Under the Senate version the state would collect taxes on $318.75 million in taxable revenue compared to $212.5 million under the House version.
History shows that 90 percent to 95 percent of sports betting wagers are made online. Applying the 15 percent tax rate for the House version, PlayMA calculated $31.875 million in state taxes. With the 35 percent tax for online sports betting in the Senate version, the state would collect $111.56 million, or 250 percent more.
