2019 Sports Betting Preview: Will Congress Enact Federal Standards For Legalized Sports Gambling?

As predicted, a landmark Supreme Court decision on sports betting has created a frenetic period over the latter half of 2018 the likes of which the gaming industry has never seen.

A bevy of states have pushed through legislation in attempts to capitalize on a first-mover advantage over their neighbors. Established companies in mature markets such as the U.K. and Australia have made inroads into the U.S. in hopes of securing a slice of a pie estimated as much as $10 billion in the coming years. At the same time, prominent commissioners at the major professional sports leagues in North America have moved quickly to establish relationships with the top sports books nationwide as a longstanding debate on intellectual property rights for official sports betting data festers.

Since the Court's decision, operators in Delaware, New Jersey, Mississippi, West Virginia, New Mexico, Rhode Island and Pennsylvania launched sports book operations. As the calendar turns to 2019, the pace of rapid expansion shows no signs of moderating. At least seven others could legalize sports gambling next year, headlined by a critical battle in New York. With a host of pro leagues and major broadcast networks headquartered in Manhattan, the developments in the Empire State will be closely monitored throughout the year.

In many respects, pending legislation in the New York Assembly is viewed as a model bill for other states to emulate. While legislation in New York requires gaming operators to pay a royalty to professional sports leagues for the use of their intellectual property, the mandates come with a caveat. Before a league collects the royalty via reimbursement, it must submit a claim and meet with a state-established regulatory commission. There, the leagues will be required to establish proof that the desired royalty will be spent on various integrity monitoring initiatives, as well as training programs. More immediately, New York assemblyman Gary Pretlow is confident that governor Andrew Cuomo will include sports betting in the 2019 state budget.

On the federal level, legislation pertaining to sports betting could come about more slowly. Before his impending retirement early next year, Utah senator Orrin Hatch released a discussion draft on Capitol Hill that could create uniform federal standards for the legalized sports betting market. The proposal includes the creation of a national sports betting clearinghouse that could become a vast repository for anonymized data. But with pressing issues such as healthcare and immigration on the forefront, as well as a leadership change in the House of Representatives, a federal bill on sports betting could take more than a year to complete.

Here are several other issues that could garner significant attention in 2019:

Player compensation from state-mandated royalties and commercial deals between the leagues and casinos

When the NHL announced a sports betting partnership with MGM Resorts International in October, commissioner Gary Bettman noted that the money the league receives from deals with casinos will be allocated to the league's hockey-related revenue pool. As such, the league will share the fixed revenue from gaming partnerships with the NHL Players Association on a 50/50 basis, Bettman said.

While the NHL's collective bargaining agreement is not set to expire until 2020, the Players Association has an opt out clause to terminate the agreement next September. By then, a clearer picture could emerge in the ongoing debate on whether the leagues and players unions should receive a royalty from gaming operators for the use of official league data. When asked last month whether the issue should be collectively bargained, Steve Fehr, a special counsel for the NHLPA said the players union has not taken a position. Although an argument could be made that hockey-related revenues may surge from the league's interest in sports gambling (i.e. through increased ticket sales and higher advertising rates), Fehr hinted that the players may deserve even more.

"It's kind of hard to accept the notion that an industry should expand exponentially and generate all sorts of revenue basically on the backs of the players -- and the players should not receive anything out of that," Fehr said at the ICE Sports Betting USA Conference in New York. 

On the same panel, representatives from the NFLPA and NBAPA indicated that all four players unions from the major professional sports leagues in the U.S. are aligned in their lobbying strategy when it comes to sports betting.

Could you place a sports bet on a credit card at a betting window next year? 

While bettors in New Jersey can presently use online payment providers such as PayPal and Neteller to fund online accounts with legalized sports books, the customers cannot place a bet on a debit or credit card at a betting window inside a brick-and-mortar location. This may change, however, over the next few months.

Regulations from the New Jersey Department of Gaming Enforcement allow for card acceptance in a face-to-face environment at a retail sports book, said Joe Pappano, a senior vice president at WorldPay, Inc. In addition, Visa appears bullish on sponsoring card acceptance inside retail locations, Pappano said.

"We are working with the various jurisdictions to make sure that the current regulatory environment allow for card acceptance," Pappano said.

The intersection between sports betting and state-run lotteries

West Virginia launched sports betting in August several months after the state legislature passed a bill authorizing the state lottery commission to regulate the activity. A pending bill in the Council of the District of Columbia could bring sports gambling to the nation's capital through the DC Lottery. Separately, a Kansas state representative said earlier this month that a new sports gambling bill could be introduced in weeks. A previous bill authored by Rep. Jan Kessinger would have enabled the Kansas State Lottery to serve as the lone operator for legalized sports betting statewide.

Allowing a state-run lottery to regulate or operate a a legal sports betting market raises significant conflict of interest issues, said Gambling.com CEO Charles Gillespie. Instead, gambling products including those involving state lotteries should be regulated by independent gaming authorities.

"Having the lottery regulate sports betting is like having Netflix regulate Hulu," Gillespie said.

https://www.forbes.com/sites/mattrybaltowski/2018/12/18/2019-sports-betting-preview-will-congress-enact-federal-standards-for-legalized-sports-gambling/