Montana became the ninth U.S. state to legalize sports betting when Gov. Steve Bullock signed HB 725 into law this week. It joined Nevada, Delaware, New Jersey, Mississippi, West Virginia, Rhode Island, Pennsylvania and New Mexico in offering a regulated sports wagering industry. The law permits the 1,400 licensed gambling operators in Montana to run sportsbooks at lottery kiosks or via apps that can only be accessed on their premises. Most of them are bars and pubs and they are looking forward to receiving a significant increase in footfall as a result of the news.
Two non-exclusive bills wound up on Bullock’s desk and some lawmakers hoped he would sign both. However, he opted to veto the Senate bill – S 303 – and sign HB 725 into law. S 303 would have created a competitive market by allowing various private companies to run sportsbooks in the state, as is the case in most jurisdictions. However, Bullock pushed for the House bill, which is a lot narrower and simply permits beleaguered lottery provider Intralot to monopolize the sports betting industry across the state.
Yet there is still hope that a competitive market will spring up in Big Sky Country. “As many legislators and stakeholders have observed, unfortunately, a new market like this cannot support sports wagering under both systems at once,” said Bullock in his veto letter. “For the market to succeed, Montana needs to enter the sports wagering market conservatively adopting only one of the two models now. If, in two years, the market can tolerate more entrants, then I fully expect the legislature will revisit whether a second model is prudent for our state.
“I have spent a great deal of time considering the pros and cons of both systems. Ultimately, however, the Lottery model makes more sense for Montana. Under the Lottery model in HB 725, the state will have the ability to control, monitor, and protect sports wagering products and players through security and integrity protocols, policies around responsible gaming, and policies to ensure that sports wagering is competitive, transparent, and reliable. Like the private model, the lottery model protects the taxpayer from risk. But the lottery model builds on existing infrastructure and is projected to return significantly more revenue to taxpayers.”
A High-Hold Model
Athens-based Intralot recorded declines across all core reporting metrics in a tough 2018 as it suffered contract losses in the states of Ohio and South Carolina. However, it has a strong opportunity to boost its revenue via sports wagering. In Washington, D.C., a very similar situation arose. The District’s Council opted for state lottery provider Intralot to hold a monopoly sports betting as opposed to allowing the likes of FanDuel, DraftKings et al to compete.
The sports betting legislation enacted by the Council passed into law on Thursday after a 60-day Congressional review eclipsed. There are no casinos in the District, so it will offer sports betting at stadiums and online, with a tax of 10% on the former and 20% on the latter. Intralot has proposed a high-hold model in order to maximize revenues for the state, and that means unattractive odds for bettors. The problem with this is that it makes legal wagering uncompetitive, meaning sports fans are likely to stick with illegal, offshore sites that offer more compelling lines or visit other legal jurisdictions that are more competitive.
Indiana Becomes 10th State to Join the Party
A similar model is likely to unfold in Montana, although no details have been proposed as of yet. It was interesting to see the state become the first to legalize sports betting in 2019, as others looked to be leading the race. Indiana followed up by becoming the 10th state to legalize sports betting on Wednesday, when Gov. Eric Holcomb signed HB 1105 into law. It includes a 9.5% revenue tax and a $100,000 licensing fee for operators that want to launch sportsbooks.
“Gaming is a highly regulated industry that once had little competition, but now does from surrounding states and new technology,” said Holcomb after signing the bill. “By modernizing our laws, this legislation will spur positive economic growth for our state and for an industry that employs over 11,000 Hoosiers. Additionally, it will bring in new revenue and create hundreds of new jobs – both permanent and in construction. I will direct the Indiana Gaming Commission to monitor for potential effects of this bill so that we can make necessary changes in future legislative sessions.”
Reaping the Benefits of Legal Sports Betting
The American Gaming Association was pleased to see that Indiana did not impose the sort of eye-watering taxes and fees demanding by Pennsylvania, nor did it include any so-called integrity fee to sports leagues. “Indiana is one step closer to reaping the benefits of legal, regulated sports betting with a framework founded on a sensible tax rate and free from unnecessary league fees or carve outs,” said senior vice president of public affairs Sarah Slane. “The bill enables conveniences like mobile wagering and a safe alternative to the pervasive illegal market for the millions of Hoosiers who are already betting on sports.”
Bills are sitting on governors’ desks in three more states – Tennessee, Iowa, and Colorado – meaning the total number of states offering legal sports wagering should hit 13 in the near future. Louisiana and North Carolina are also rapidly advancing sports betting legislation and bills have cleared the Senate in both states. That could leave 15 states offering sports betting this year, and that will keep the domino effect going across the country as nobody wants to miss out.
Of those to legalize sports betting since the U.S. Supreme Court struck down PASPA, the federal ban that prevented legal sportsbooks everywhere apart from Nevada, New Jersey has fared the best. Its handle was north of $370 million in March and its industry is going from strength to strength, while Pennsylvania is also showing great promise, despite the high fees. They are the two largest states to legalize it thus far, and all eyes will be on economic powerhouses like California and New York in the years ahead to see if they join the party.