The Oregon Lottery says it plans to launch sports book in time for this year’s NFL season.
Revenues could be large, as New Jersey has demonstrated when $1 billion was wagered in its first ten months of operation. But they could also be small, as Rhode Island discovered when its estimates for revenues were off by 90 percent.
American Gaming Association director of research David Forman is bullish on sports betting. He told the Bend Bulletin, “There is a huge pent-up demand,” that will attract millions of people who have always wanted to make wagers, but didn’t want to get involved with the black market.
Lottery officials are being cautious in their estimates, although they do expect the handle will start out at $330 million the first year and reach $680 million by the third. Farshad Allahdadi the Lottery’s chief gaming officer commented, “We have about 3 million eligible players in Oregon, many of whom bet illegally now.” He added, “Our challenge is to create a compelling product that can draw a portion of those illegal betters and attract a whole new group of customers.”
The lottery will start with online sports book this summer and then begin installing kiosks in restaurants and retail outlets that currently sell lottery tickets sometime next year.
It will be the first state lottery or agency to directly run its own sports book. Other states have chosen to farm out this activity to casinos, racetracks, etc.
The state is currently vetting the vendor it tentatively chose to operate the wagering, SBTech Global Ltd., which is based on the Isle of Man in the UK. The investigation is being conducted by the Oregon State Police.
Although SBTech is well known in Europe, the losing bidder, Scientific Games Ltd. filed a complaint, alleging that SGTech does business in countries were gaming is illegal. It cites the company 10Bet, which has been blacklisted by the Belgian Gaming Commission, and alleges 10Bet is affiliated with SGTech. SGTech’s website does list 10Bet as a client.
According to Scientific Games’ complaint, “Given the array of international jurisdictions in which SBTech and 10Bet either offer or support online sports betting and gaming, it would be reasonable for the Lottery to assure itself that both companies … are not participating in or supporting illegal sports betting or other illegal gaming activities in other jurisdictions.”
SGTech denies this, and Allahdadi said last week, “We found nothing that would disqualify them.”
Nevertheless, as part of the vetting process, Oregon investigators recently visited Bulgaria as one of the places to check up SGTech’s activities in Europe. It operates in 20 regulated gaming markets.
The lottery wouldn’t provide details on why investigators visited Bulgaria, but a spokesman said, “The due diligence isn’t over,” he said. “Detectives are continuing to do their job.”
The complaint doesn’t list any specific countries that it suggests SGTech might be operating in. However, the company’s technology is used by some companies to illegally do business with customers in Iran and Turkey, where most gaming is illegal.
SGTech told the Statesman Journal it vets companies that use its products to ensure that they abide by anti-money laundering and other regulations in the countries they operate in.
If SGTech survives the vetting process it will collect between 9-11 percent of gaming revenues, depending on the details of the final agreed to contract with the state. To earn that money it will provide technology and support for mobile apps, kiosks and TVs in retail operations. It contractually bans its customers from using its technology in countries where it is illegal to gamble.
Sports betting remains controversial. The NCAA, for example warns that sports betting calls the integrity of the games into question.
Steve Ross, a law professor at Penn State, told the Bend Bulletin “Regulating sports gambling takes it out of the shadows.”
The state is only allowing betting on professional sports and not amateur sports. Possibly due to the Sports Action scandal of the 1990s and 2000s which involved the Sports Action parlay game the lottery promoted and which caused the NCAA to prevent Oregon from being a host for any March Madness games. The state ended the program in 2005.
Oregon was one of four states that was not included in the federal ban of sports betting that was adopted in 1993 and was lifted by the U.S. Supreme Court a year ago.
