The Arkansas Racing Commission has unanimously approved changes to the state’s gambling rules, allowing casinos to offer mobile sports betting and keep 51 percent of the revenue when partnering with online betting platforms; typically, casinos in most states where sports betting is legal keep 5 percent to 15 percent.
The Arkansas Legislative Council (ALC), scheduled to meet on January 28, must approve the rule changes. Racing Commission spokesman Scott Hardin said, “Whether this item makes the January agenda is yet to be determined. If ALC approves, the rule changes allowing mobile sports betting would be effective immediately.”
Eight people, including casino and sports wagering company representatives, spoke at the meeting where the rule changes were approved. Racing Commission attorney Byron Freeland said the commission received about 800 letters and emails from the public, most opposing sports betting.
BetMGM, DraftKings, and FanDuel all sent letters to the ARC expressing concern over the 51 percent split. They asked for that policy to be removed from the state’s proposed rules so vendors can negotiate directly with casinos. The commission denied the request.
FanDuel Director of Governmental Affairs Andrew Winchell wrote, “This requirement makes it financially unfeasible for top national online sports wagering operators to partner with casinos in Arkansas. Even if a casino licensee found a sports pool operator intermediary willing to partner under these conditions, to control expenses, they would need to dramatically limit what they spend on marketing and promotions. As we have seen in other states, a significant amount of marketing and promotional spend has been necessary to activate the market and pull customers from the illegal, offshore market and convert them to the legal regulated market.”
Oaklawn Racing and Casino Resort General Manager Wayne Smith wrote that out-of-state sports wagering vendors generally require receiving 85 percent to 95 percent of net revenue, with 5 percent to 15 percent going to the casinos.
He wrote, “We question whether under such circumstances this is really consistent with the intent of Amendment 100 limiting casino gaming and accepting sports wagers to the four licensed casinos, which are under the more direct regulation of the Arkansas Racing Commission. If the third-party subcontractor-vendor retains 85 percent to 95 percent of the net revenue themselves, who is really conducting the sports wagering?”
Smith added several Arkansas casino officials believe the ultimate goal of many out-of-state sports wagering vendors is to gather a confidential customer database for sports betting and other wagering.
“And in some instances, to promote those customers to visit casino properties in other states where the tax revenue and other economic benefits would be driven by other states, not Arkansas,” Smith said.
A BetMGM official wrote, “In addition to the unprecedented nature of the proposed regulation, imposing such an artificial cap on vendors’ revenue share, in this case not more than 50 percent, is not based on any market considerations and would only serve to impede competition. In short, the cap would make it impossible for sports betting platform providers to enter the Arkansas market and serve the state’s residents.”
Saracen Casino Chief Market Officer Carlton Saffa added that fee structures are built into several gambling laws around the state. He noted Arkansas casinos already have profit-sharing agreements for other games, like slot machines, with 80 percent of profits going to the casino.
Regarding national operators’ pushback, Saffa said the commission’s vote was unanimous. He said, “The folks who are closest to this, who heard the testimony, who received the hundreds of letters, there was not a single one who said, ‘No, these rules don’t make sense.’” Saffa said Saracen Casino plans to launch its own sports betting app in mid-February and would not want to give up 90 percent of revenue to a national operator.
Former state Rep. John Burris, a partner at the Capitol Advisors Group, which represents DraftKings, FanDuel, BetMGM, Fanatics and Bally’s, stated, “We think it’s a great opportunity. I think if I had one point, it would be that it’s not us versus them. Us being sports betting and them being the three in-state casinos. I think that perception has developed, but it’s really not the case. We view it as an opportunity to bring to a marketplace through the casinos’ revenue and a player who is generally being unregulated and utilized now.”
In 2019, the Arkansas legislature approved sportsbooks at the state’s three operating casinos, Saracen Casino Resort in Pine Bluff, Southland Casino Racing in West Memphis and Oaklawn Racing Casino Resort in Hot Springs, plus the recently licensed Legends Resort and Casino in Pope County. The new rule allows mobile betting anywhere within state lines through a casino’s partnership with a gambling license holder.
Since sports betting was approved, gamblers have wagered about $96 million at Arkansas’ three casinos, resulting in more than $83 million in payouts and $1.74 million in state revenue, according to the state Department of Finance and Administration.
