Sports

Sports Betting Proposal Could Bring South Carolina Out Of The 1800s

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South Carolina was one of a handful of states to consider sports betting prior to the U.S. Supreme Court overturning PASPA in May, and even though legislation has failed thus far to even get a hearing, there will be additional efforts next year to amend the state constitution.

A pair of measures were pre-filed in the South Carolina Senate on December 12, paving the way for continued discussions on the topic. The odds are very long for success in 2019, but one can look at the bills as laying the groundwork for casino-less South Carolina, which has the lottery as its only form of legal gambling.

The lack of any commercial or tribal gambling facilities adds to the uphill battle for the state, as there is no existing legal or regulatory structure for casino-style gambling.

Should the state legalize the activity and allow state-of-the-art online/mobile products, South Carolina could see about a sports betting market worth $3.2 billion in annual handle, generating about $215 million in taxable gaming revenue, according to a 2017 Oxford Economics study. The research also projected a total GDP impact of about $240 million annually, including about 2,600 new jobs.

What the measures seek to do

South Carolina has banned gambling, with little exception, since 1802.

S 57, introduced by State Sen. Gerald Malloy, a Democrat, would amend the South Carolina constitution to allow for sports betting and “casino activities.” Unlike a recently approved proposed constitutional amendment in Arkansas, the South Carolina proposal wouldn’t lay out where casinos could be built.

The enabling legislation would set the stage for comprehensive gambling statutes thanks to removing the constitutional prohibition on gambling. Voters would either approve or reject the amendments. The joint resolution stipulates that the issue would be on the ballot in the “next general election for representatives.”

The other measure on the table, S 71, also backed by Malloy, would create a South Carolina Gambling Study Committee to look at “regulating gambling.” The bill would require that the study committee report its findings to the General Assembly on or before January 31, 2020.

The group, comprised of state officials, would look at “the various forms of gambling, including casinos, slots, table games, horse and dog racing, sports betting, and internet gaming” for South Carolina.

Partisan divide

The divide on gambling in the Palmetto State falls along partisan lines, which doesn’t bode well for its chances. Democrats are interested in casinos, while Republicans are not.

The opposition from Republicans goes all the way up to the governor’s office. A spokesperson for Gov. Henry McMaster told The Post and Courier in May that gambling “flies in the face of everything South Carolina stands for.” McMaster won re-election last month with 54% of the vote.

It’s unlikely McMaster would approve even a state study of gambling.

The partisan politics in South Carolina can be contentious, but that’s especially true when it comes to state-sanctioned gambling. Two examples to consider when pondering South Carolina’s efforts: 1) the state didn’t allow charitable groups to hold raffles until 2015, and 2) it wasn’t legal for seniors to play bridge until 2014.

More than $200 million in taxable gaming revenue from sports betting alone might seem like a figure that’s attractive to conservative policy makers. “Just because we can get money out of it doesn’t mean we need to do it,” Senate Majority Leader Shane Massey, a Republican, said in May.

Democrats, on the other hand, see it as a lucrative opportunity for the state.

In the wake of May’s Supreme Court ruling, a former Democrat in the South Carolina House tried to temper expectations for residents excited about the opportunity for the state:

Those looking for some optimism could point to the fact that the pro-gambling legislation on the table this year was declared dead before PASPA’s demise (the legislature had adjourned for 2018 prior to the ruling).

The Graham factor

South Carolina is home to one of the most high-profile federal lawmakers, U.S. Senator Lindsey Graham, a Republican. According to a report from Gambling Compliance (paywall), Graham plans to ask the incoming U.S. Attorney General to make online casino gaming illegal.

Graham is referring specifically to the Wire Act, which was re-interpreted in 2011, allowing states to pursue online betting. It’s highly unlikely that Congress will put the genie back into the bottle, as Graham’s comments represent little more than fealty to a top Republican donor.

Still, Graham’s high-profile opposition to online gaming, which is a component of the emergent sports betting industry, will not help the political divide in his home state.

But … ‘We’re already gambling’

Sports betting policy discussions in other states feature a spotlight on the fact that black market wagering is already happening. That applies to South Carolina as well. The Democrats are pointing out that offshore sites do business with South Carolinians, while South Carolina Republicans are avoiding the topic.

State Rep. Wendell Gilliard, a Democrat, is among the state’s supporters of establishing a white market.

There’s no data on the size of the South Carolina sports betting black market, which also includes local bookies. However, based on the state’s population and the AGA’s estimate of $150 billion each year in illicit wagers nationwide, South Carolina could already be home more than $2 billion in annual bets. That would include March Madness brackets and other office sports wagering pools.

NFL owner sees sports betting in the Carolinas

Another silver lining to the situation is that the NFL has warmed, slowly but surely, to sports wagering. Even though South Carolina doesn’t have a franchise, it could benefit from the league’s embrace of betting. Carolina Panthers owner David Tepper said in July after acquiring the franchise that sports betting in the Carolinas is a matter of when, not if.

“Eventually it’s going to hit North and South Carolina,” he said. “It has to, from a revenue standpoint. You have issues with paying teachers and other things down here, and tax revenue so it’s inevitable.”

Stakeholders and state officials are aware of the benefits of being early in a region.

North Carolina has also begun to digest the opportunity for sports wagering. Nearby Tennessee is set to consider a sports betting bill in 2019. Georgia doesn’t have a bill on the table, but there have been past talks of bringing casinos to the Peach State, as Atlanta represents a large untapped casino market. MGM, a top player in nationwide sports betting expansion, has lobbied for a $1.4 billion casino in downtown Atlanta. The firm’s MGM National Harbor in Maryland was also a $1.4 billion project.

An Atlanta casino-resort with sports betting would draw South Carolina license plates.

South Carolina would be wise to get out in front. According to South Carolina’s 15th Circuit Solicitor Jimmy Richardson, the state should make up its mind in the near future. 

“If we’re the 49th state [to legalize sports betting], you’re probably better off not even doing it,” he said (clip below). “If you’re the first state in the region, you’re going to gain more money.”

Photo by Jon Bilous / Shutterstock.com