The largest sports betting conference of the year took place on November 27 and 28 in New York. The event brought together operators, investors, suppliers, regulators and other players in the betting industry. With 2018 being the year of the legalization of sports betting in the US, the event was full of talks and discussions on the subject mainly focused on the implications for the future and the transformations that the industry will have in the face of more and more states passing their own regulations.
David Rebuck, director of the New Jersey Division of Gaming Enforcement, says that the US betting industry is currently looking like this with four main stakeholders trying to ensure their own interests:
As we can see in the previous graphic there are two main issues that face the four actors: taxes and integrity fees, let’s analyze each one.
Taxes and regulations
The federal government seeks to collect a tax of 0.25% from sports betting, while the states are looking for a slice of between 10% and 40%. States do not want to wait for federal regulations since they do not need a federal law, they can establish their own regulations, even in regards to online betting. Given this scenario, the question arises as to what the role of the federal government could be. According to experts, the federal government could establish laws for responsible bets, protect against underage betting and establish mandatory regulations for sharing information. Some leagues agree that the federal government is the one that should establish the regulations and the legal framework, while some operators think that the regulations should be handled by each state independently.
This is one of the issues that generate the most debate since the leagues are pressuring the operators to charge them integrity fees in order to solve the match-fixing. The operators do not want to pay these fees, since they would have to transfer the cost to the final consumer, making the odds more expensive.
Benny Devine from Covers.com thinks that this is almost a type of extortion on the part of the leagues and points out that: “They should just do their job, they get paid enough all ready to do it with integrity“, some do not agree with Devine’s statements, like Kevin Morgan of the National Lacrosse League: “Lacrosse players do not make as much money as other leagues like NBA.” Integrity is very important “. The leagues say they are open to negotiating the amounts, in fact, they went down from 1% to 0.75% of the turnover, since they consider that it is important to maintain a harmonious relationship between the different stakeholders and that this is part of the price to be paid for the lack of federal regulation. The tension around this issue is very high and despite the apparent willingness of the leagues to negotiate, the operators do not finish convincing themselves of this since the leagues do not present concrete plans and mechanisms of how the integrity of the games will be monitored.
Given these scenarios, it seems that the negotiations between the different stakeholders will continue for a long time so we do not know when this round will end. What all ICE assistants are sure of is the exponential growth that the industry will have in the next 3 to 4 years, currently the US betting market handles $196 billion, leaving $10.6 billion of gross, by 2023 it is estimated that 30 states will have a strong local betting industry, shooting the gross generated by the industry to about $15 or $20 billion.
Finally, one of the topics that also generated a lot of interest during the event is mobile betting, since it is clear that this form of gambling will be an important part of the industry in the coming years. There is some uncertainty about how mobile bets are going to be regulated, as this type of betting allows people to place bets from anywhere, but the Wire Act prohibits this: All communications and bets need to originate inside the state and stay and end inside the same state. The operators will then have to place their betting servers in each state where they want to receive bets to comply with the wire act. In addition to this, states are considering incorporating facial and retinal recognition to prevent cross-state and underage gambling.
After two days of intense debate with the most important members of the world of betting, we can conclude that the industry is undergoing a profound transformation that will have an enormous impact in all strata, from the political to the social and that this industry could become one of the most important ones in the US, actively contributing to the economy and to job creation in the country.