Massachusetts Gaming Commission Dreams of Sports Betting

As the U.S. Supreme Court mulls whether or not to lift the ban on sports betting that Congress imposed in 1992, the Massachusetts Gaming Commission has issued a White Paper of the challenges and opportunities for the state if it decides to jump in. There are considerable profits to be made, the paper concludes.

Earlier this month the Massachusetts Gaming Commission issued a “White Paper” on the options that are available to the Bay State if the U.S. Supreme Court rules the 1992 Professional and Amateur Sports Protection Act (PAPSA) unconstitutional.

PAPSA applies to all but four states, including Nevada. It was challenged by New Jersey, which wants to introduce sports betting to its Atlantic City casinos.

Currently the Justices of the High Court are deciding how to rule in the case. Many legal observers believe the court wouldn’t have agreed to hear the case if they hadn’t wanted to rule at least some parts of the law unconstitutional.

Sports betting is a very widespread phenomenon. According to the American Gaming Association, 97 percent of the $10 billion that will be wagered on March Madness will be bet illegally.

According to AGA President and CEO Geoff Freeman, “Our current sports betting laws are so out of touch with reality that we’re turning tens of millions of Americans into criminals for the simple act of enjoying college basketball.” He added, “The failed federal ban on sports betting has created an illegal, unregulated sports betting market that offers zero consumer protections and generates zero revenue for state and tribal governments.”

In its White Paper the gaming commission observes, “The introduction of a new aspect of the emerging gaming industry in Massachusetts presents an opportunity to bring a significant amount of gaming activity and revenues out of the shadows and into the legal market.” It adds, “With that transition would come the opportunity to cultivate the associated economic benefits—including tax revenues—while providing consumers of sports betting with protections not afforded them by illegal bookmakers.”

The commission argues for a transition to sports betting from the black market to a regulated market and capture tax revenues, while expanding economic opportunities to vendors that would provide sports betting—and to related industries.

The paper notes that several states, anticipating a favorable Supreme Court decision, has passed laws that will go into effect once such a ruling is issued. Other state legislatures have bills pending.

“Settling on a Massachusetts approach is important where both neighboring Rhode Island and Connecticut have either proposed or passed legislation that would legalize sports betting in their respective states if PASPA falls,” says the White Paper.

The paper says it is impossible to estimate exactly how much the state is losing to the black market but cites an AGA report that estimated that with a 10 percent tax rate the state could collect as much as $42 million in revenues annually.

The White Paper suggests making it as easy as possible to place bets, whether at casinos, using the lottery, using telephones, online or even from retail operations, while emphasizing that a protected, legal structure protects consumers.

“A legal alternative to these [black market] sites must be as convenient and as accessible to challenge the pervasive black market,” the White Paper continues. “Much as with online, if current black-market bettors are accustomed to the ubiquity of a mobile app for their illegal product, any legal version will need to offer similar convenience or risk being ignored.”

The White Paper concludes “Finally, a thoughtful taxation and regulatory approach can maximize the benefits to consumers through increased protections, maximize economic benefits to providers and downstream industries, and create a market that ultimately benefits all Commonwealth citizens by maximizing the potential tax revenues associated with sports betting.”