Sports betting in san diego

Sports Betting On The Main Stage At National Lawmakers Forum In San Diego

As American Gaming Association President Bill Miller gave the keynote luncheon speech to an industry event crowd in San Diego on Friday, he focused on “four key priorities” for 2020.

Priority no. 1, he said, was, “We must get sports betting right.”

A day later, attorney John Maloney, founder of a gaming law firm with offices in Sacramento and Las Vegas, offered the National Council of Legislators from Gaming States a broader perspective on the U.S. place in sports wagering.

“Our European counterparts — I have to say they do it very well,” Maloney said of locations such as the United Kingdom with decades of experience in the industry. “I spoke in Munich [at the International Masters of Gaming Law Conference in September,] and I said to the Europeans, ‘Don’t worry about the U.S. market, because we’re still not even crawling. We’re still in its infancy.’ But great things will happen.”

Not even two full years after the U.S. Supreme Court vacated the Professional Amateur and Sports Protection Act of 1992, thereby allowing any state to legalize Las Vegas-style gambling, 20 states and the District of Columbia have now done just that.

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Miller pointed out that Tennessee, Arkansas, New Hampshire, and Washington, D.C. have passed such legislation in spite of not even having casinos, which are the far more established means of legal gambling in the U.S.

How big can the U.S. sports betting market be?

More numbers from Miller pointed to what may be achieved if that “crawl” mentioned by Maloney becomes a walk.

He noted that while Americans have legally wagered more than $16 billion since the demise of the federal ban on sports betting, a recent report by Morgan Stanley predicts that only five years from now, Americans will place more than $216 billion in legal sports wagers.

Of course, with great handle comes great responsibility, so Miller elaborated on the AGA’s new industry code for advertising and for marketing of sports betting.

The AGA is also part of the Responsible Gambling Collaborative, which last weekend issued a report which has as its goal “a first-ever attempt within the U.S.” to create a consensus statement on problem gambling endorsed by academics, researchers, advocacy groups, and casino gaming industry organizations.

More than 60 partnerships have formed in this new era of widespread legal sports betting, and Miller said, “While our new gaming partners certainly realize the commercial opportunities this brings, we’re going to make sure they all appreciate what a real commitment to responsible gaming looks like.

“All of us involved in sports betting — operators, leagues, technology providers, broadcasters, legislators, regulators — have a role to play in getting this right.”

On the gaming industry in general, Miller said $75 billion in revenue was produced last year at commercial and tribal casinos, with 22 of the 24 commercial gaming states recently experiencing revenue increases and with 12 states setting records.

Commenting on the AGA’s estimated $261 billion in total gaming industry impact, supporting nearly 2 million American workers, Miller noted, “That’s more jobs than the entire U.S. airline industry.”

More expert insights

Sue Schneider, who has been involved in various forms of gambling for 25 years, quipped: “I can truly say that I thought I would never see [expanded and legal] sports betting in my lifetime. Now, I’m old, so I have a shorter time frame than some of you.”

Speaking more seriously, she said that the massive influx of European operators into the U.S. sports betting market is complicated.

“With their betting platforms, they do need to be Americanized,” Schneider said. “Other jurisdictions are much more sophisticated, and that can be a problem for the mass market players that we are looking to bring into the fold.”

Maloney commented on U.S. sports betting’s future: “Money is mobile. Mobile is money. That’s where sports betting is going.”

He also counseled the dozens of legislators and aides in attendance: “States looking closely are going to have to stand back and say, ‘Do we really want sports betting?’ And don’t just hand it off to some taxing agency and forget about it and bury your head in the sand. It’s a huge responsibility.”

Dan Reaser, a longtime gaming attorney based in Reno, Nev., pointed out that estimates of the size of the U.S. market have to take into account the giant populations in California and Florida.

“They have yet to chime in, and those two states won’t be in line in 2020,” Reaser said. “There is too much politically in the hopper in both jurisdictions.”

Reaser also advised legislators to first set goals regarding legalization, determining whether the focus is to enhance the revenues of existing casinos; create new economic development; or prioritize direct tax revenues from sports betting.

A big, popular, “meaningless” number

Kate Lowenhar-Fisher, a Las Vegas-based gaming law attorney, played off Reaser’s reminder to lawmakers of the true rate of return for sports betting operators.

“Everybody always hears about this ‘$150 billion industry, blah blah blah,’” Lowenhar-Fisher said of the conventional estimate on the amount of money wagered illegally in the U.S. “That number is utterly meaningless, really, because projecting handle, turnover, and the amount of bets placed doesn’t talk to you about profitability, or margin.

“And the margins are really, really, really small,” she added. “The best-run books in Nevada have a 4.4% to 5.9% hold. So make sure you’re not killing the industry before it gets off the ground by virtue of your taxing structures.”

Maloney laid out Nevada’s all-time record sports betting handle in November of $614 mm, producing a profit of $31 million.

“Out of $31 million, even a tax rate of 10% — which is high — that’s $3 million, which, times 12 [months], is $36 million,” Maloney said.

On that point, Schneider said, “I think those operators who instituted sports betting last year or so are finding that it is bringing in a different clientele. And they also are pretty realistic that, given the profit margins, it’s not going to be a huge moneymaker for them.

“But those [new] people are coming to the restaurants, staying at the hotels, consuming their entertainment. I think they see it as another amenity that is bringing in a younger clientele, so that’s a win for most of the operators.”

Lowenhar-Fisher commented on the “evolution” of sports leagues on betting, going from a six-year losing court battle with New Jersey regarding PASPA to “gambling is good, and we want to charge a percentage.”

She also revived a subtle point about increasing levels of partnerships by sports leagues and their franchises: At what point are those “marriages” direct enough to trigger background checks, say, for NFL owners as gaming operators?

“That would be hilarious,” she said.

Mobile betting vs. brick-and-mortar traditions

Steve Norton, whose half-century in the casino business included becoming Resorts’ first employee before it opened Atlantic City’s first casino in 1978, lamented that combining mobile betting figures with those from the Meadowlands Racetrack and Monmouth Park left those Atlantic City casinos only taking in 6.2% of sports betting revenue from their brick-and-mortar sites.

But the panel disagreed, with one quoting a Benjamin Franklin anecdote about preferring to leave a grass field alone at first — because by seeing the wearing down of particular sections of the field, that informs where the gravel paths should go. So in this case, New Jersey consumers placing some 85% of their bets online is the path where they clearly prefer to go.

Schneider said that she hoped that some basic national standards could be established, so that states new to the sports betting industry would have effective guidance.

Lowenhar-Fisher replied: “The idea of uniform standards — there is some appeal to me conceptually. But I’m very worried about some ‘Frankenlaw’ that a bunch of people will get their hands on. I’m a little more inclined to say, ‘We actually know what works, so let’s just adopt that.’”

The federal Wire Act of 1961 continues to complicate the lives of gaming industry officials more than a half-century later, as the Trump administration has reinterpreted the law to prevent more than just sports bets from being transmitted across state lines. Depending on the outcome of a federal lawsuit in New Hampshire, online poker and online lottery could be greatly hampered.

“Let’s spend our time getting rid of the stupid Wire Act,” Lowenhar-Fisher suggested. “Then we can allow our states to do what they want to do. How do we reconcile a 1961 law with ‘the cloud’? I have no idea.”

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