Industry

Each State Different On Combating Problem Sports Gambling Under New Laws

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Sports wagering is spreading across the country. The Professional and Amateur Sports Protection Act of 1992 fell in May 2018, and as of September 2019 many additional states have joined the fray. Currently, 13 states have active, and legal, sports betting markets.

Here, US Bets will take a look at the states in terms of their respective funding for problem and/or responsible sports gaming under their respective new sports wagering laws.

Just this week, the American Gaming Association published a comprehensive report with a detailed look at all commercial casino states in terms of their commitment to responsible gambling.

Lay of the land

Most of the states to kick off sports betting in the first 1.5 years after PASPA’s demise are commercial gaming states. A couple of states, New Mexico and Oregon, currently have tribal-run sports betting.

Many states already have some sort of funding for addiction and/or problem gambling, but a bump in funding under the expansion into traditional sports wagering is meager — or non-existent — in some states. Additional funding could come through future legislation, as U.S. sports betting is still in its infancy. It’s worth stressing that sports betting, thanks in part to the industry holding onto about 6% of wagers in the form of winnings, isn’t a major revenue generator for states.

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Recently, U.S. sports betting handle since the Supreme Court ruling passed the $10 billion mark, but that represents just a small piece of the potential. According to a 2017 study commission by the AGA, there’s potential for between $237.5 billion and $287.3 billion in annual sports betting handle, if all 50 states legalized and regulated both retail and online/mobile with state-of-the-art options.

While states are doing some of the work, a lot of the responsibility falls on operators, though state regulations do lay out precisely sportsbooks must work to ensure responsible play.

Here’s a look at the commercial casino states that have legalized since May 2018.

Arkansas

According to NPR out of Little Rock in June 2018, a minimum $200k annually under the 2018 ballot initiative that authorized casinos and sports betting will go toward gambling addiction treatment services. However, it doesn’t appear that funding is yet included under the casino rules.

Delaware

The state was the first to kick off single-game sports wagering in the wake of the 2018 Supreme Court ruling. It had parlay wagering prior to PASPA’s demise thanks to being grandfathered in under the federal law. The state has not put in place additional funding from the expansion of sports wagering.

District of Columbia

Under the sports betting law, the first $200k of tax revenue from sports betting is earmarked for the Department of Behavioral Health to prevent, treat, and research problem gambling.

Illinois

The massive gambling package, SB 690, doesn’t specify any funding for problem sports gambling, but money could be allocated from the State Gaming Fund to the Department of Human Services to combat problem gambling associated with sports betting. The state budget approved in June, however, included a major increase in problem gambling funding ($6.8 mm, according to ProPublica).

Indiana

Under HB 1015, adjusted gross receipts are taxed at 9.5%. From there, 3.33% of that tax revenue is earmarked for Indiana’s addiction services fund.

From the 3.33%, the law states that 25% of the money must be allocated to combating problem gaming.

Iowa

No additional problem gambling fund under SF 617. There was discussion of using a quarter of a percentage point of the 6.75% sports betting tax rate for combating problem sports gambling.

Mississippi

No problem gaming funding was added under 2017’s HB 967, the fantasy sports law that paved the way for the state to regulate sports wagering in the wake of PASPA being struck down. Magnolia State casinos pay a 12% rate on casino gaming revenue, including sports betting win.

Montana

Under HB 725, there’s no specified funding for problem sports gambling, but the state Lottery Commission is tasked with developing rules for “contribution and participation in responsible gaming and consumer protection activities and programs.” Montana hasn’t started sports betting yet.

New Hampshire

No additional funding under HB 480, which was signed into law in July.

New Jersey

Under New Jersey’s A 4111, there’s no percentage of tax revenue from sports wagering that goes toward problem gambling help, but some of the money from licensing does.

It costs $100k for an initial sports wagering license, and a minimum $100k to renew it. Half of the initial fee is earmarked for state’s Depart of Health to combat problem gambling. As for the renewal fee, the percentage that goes toward problem gambling is determined by the Division of Gaming Enforcement on an annual basis, dependent upon sports betting regulatory costs.

New Jersey has separate funding for addiction associated with online casino play.

New York

There was no new direct state funding for problem sports wagering under the 2013 authorization of commercial casinos, but the activity is currently confined to those upstate casinos. New York could provide for funding for problem sports wagering under a statewide online/mobile law.

Pennsylvania

Under HB 271, on an annual basis the state will collect 0.2% of total gross sports wagering revenue for the Compulsive and Problem Gambling Treatment Fund. Another 0.2% goes to the Department of Drug and Alcohol Programs for similar initiatives related to problem gambling.

Rhode Island

No additional funding is specified under the authorization of retail and online/mobile sports wagering, but Reuters reported last year that the state said there will be a $25k annual bump thanks to sports betting.

Tennessee

Under HB 1, adjusted gross income from sports betting will be subjected to a privilege tax of 20%. From that 20%, 5% is earmarked for the state’s department of mental health and substance abuse services.

The department must use the money to oversee grant programs related to problem/responsible gaming. The department is allowed to use money for its administrative expenses, but there’s no official requirement under the sports betting law for how much can be used for administrative expenses.

Five cents on the dollar in tax revenue is earmarked for combating/preventing problem gaming, which could make Tennessee, which legalized online/mobile only, the most proactive state to date.

West Virginia

No funding bump under the sports betting legislation, SB 415.