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State of the Union: US Sports Betting Update – West Virginia Arrives

West Virginia is poised to become the fourth state to start accepting legal sports wagers after the Supreme Court struck down the federal ban in May.

West Virginia is poised to become the fourth state to start accepting legal sports wagers after the Supreme Court struck down the federal ban in May. Delaware, New Jersey and Mississippi have already joined Nevada in offering regulated sportsbooks since the judges overturned the Professional and Amateur Sports Protection Act of 1992. The framework exists for Pennsylvania and Rhode Island to join the party, but operators in those states have held back from launching while they try to convince legislators to reduce the eye-watering licensing fees and taxes they are demanding. West Virginia is now primed to beat them to the market and attract bettors from neighbours like Ohio, Virginia and Kentucky.

This week the state handed out its first sports betting licence to Hollywood Casino in Charles Town, which is owned by gaming giant Penn National. They paid a $100,000 fee to operate a sportsbook for the next five years, which sounds like small change compared to the one-time $10 million fee that Pennsylvania intends to charge. Hollywood Casino can now begin installing the necessary software and start training their staff, and they expect to be open for business on 1st September, in time for the new NFL season. British bookmaker William Hill, a fixture on UK high streets since the 1800s, will draw upon their vast experience to run sports betting for Penn National at the casino.

West Virginia’s Casino Sportsbooks

Hollywood Casino is the largest casino in West Virginia and it boasts a prime location. It lies in the state’s eastern panhandle, around an hour and a half from both Washington DC and Baltimore. Mountaineer Casino in Chester, Mardi Gras Casino in Nitro, Wheeling Island Casino and the Casino Club at the Greenbrier Resort in White Sulphur Springs are all expected to be up and running by the end of September, bringing the state’s total to five.

West Virginia passed a law permitting sports betting back in March, two months before the Supreme Court decision. The West Virginia Lottery Commission estimates the state will earn at least $5.5 million from sports betting in the 2019 financial year. Within five years, that figure is expected to rise to $28.7 million, which can be invested in public services. That is likely to inspire the likes of Ohio, Virginia and Kentucky to allow sports betting, rather than watch their residents head across the border to West Virginia to spend their hard-earned.

Ensuring Compliance

The West Virginia state law allows land-based and online/mobile sports betting, and each of the five casino licensees can run up to three individually branded online platforms, as is the case in New Jersey. FanDuel, which is owned by Paddy Power Betfair, has already tied up a deal with the Greenbrier to operate on its licence, but that is the only deal currently in place. Operators must ensure they do not offer their services to anyone outside of the state, so geolocation services are necessary, and provider GeoComply has secured a West Virginia sports betting licence to provide that solution.

GeoComply chief executive David Briggs praised the state’s “proactive” approach to rolling out legal sports wagering. “We are grateful for the support they have shown us in the licensing process,” he said. “We are now ready to supply compliance-grade geolocation solutions to the local operators and partners in West Virginia to get online sports wagering up and running in the state.” Managing general counsel Danielle Boyd said the state lottery was very pleased to have GeoComply on board. “With the recent repeal of PASPA, we have set a very aggressive timeline for introducing sports wagering in the state, and are happy to have GeoComply show its readiness to support our launch in time for the new NFL season,” she said.

Boyd added that the state had hoped to see all five casinos launch at the same time, but that this was not possible. “As we move forward, it appears that we’re going to have sort of a phased launch and it’s going to be a tiered approach,” she said. “We’re just really excited to see that Charles Town will be ready to launch by September 1.” She said the state commission faces a huge challenge in setting up mobile and online betting services. “The technology for mobile and online is new to us in West Virginia,” she said. “We’re starting from square one, whereas New Jersey already had online casinos in place, online poker and other casino-style games. “We’ve been reaching out to our counterparts in Mississippi, our counterparts in Nevada and Delaware and any other jurisdictions that come on board,” she said. “We’re building a coalition to share information, share licensing information and also share any reporting of suspicious betting or other anomalies that might indicate there’s suspicious activity taking place.”

Sports Betting Adoption Elsewhere

Sports betting fans might have expected a large number of states to roll out regulated sportsbooks within months of the Supreme Court decision. However, it requires an extremely complex legal and logistical framework and many are refusing to rush the launch process. Legislators in New York continue to wrestle with licensing complexities, while no operators in Pennsylvania have applied for a licence as they lobby against the $10 million fee and an eye-watering 36% tax rate. “Most people thought it would be, you know, probably like 20 states coming out with legislation and it would be passed immediately in several states,” said Jennifer Roberts, law professor at the University of Nevada, Las Vegas. “But I think that some jurisdictions are taking it a little slower,” she added. Roberts estimates that in five to 10 years around 20 to 30 states could have legalized sports betting.

In the meantime, the race is on between the states where sports wagering is legal to see who emerges as the most successful. Forbes this week ran an intriguing examination of New Jersey’s prospects of overtaking Nevada as the top sports betting market in the United States. They pointed out that New Jersey is the 11th most populous state and the third wealthiest, so its chances of overtaking Nevada are strong. New York and California would be likely to blow it out of the water if and when they launch regulated sports betting, but in the more immediate future New Jersey could emerge as the king.

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