Last Friday marked the third anniversary of the Supreme Court’s ruling that paved the way for legal sports betting to come to states not named Nevada. And as the fourth year of this new American gambling era begins, the pace of expansion is showing no signs of slowing down.
2021 began with a bang when both Virginia and Michigan took their first mobile sports bets in January, and that was followed by notable legislative movement in New York, Florida, Arizona, Connecticut, and Wyoming (along with less notable hints of progress elsewhere). It feels like there is just as much happening on the sports betting legalization front in 2021 as there was in 2018.
But not all of what is happening is necessarily encouraging.
Daniel Wallach, one of America’s foremost sports and gaming attorneys and the co-host of Conduct Detrimental: The Sports Law Podcast, appeared on the most recent episode of the US Bets industry-focused podcast Gamble On, where he isolated three current trends that are all potentially problematic for the vertical moving forward.
Competition is critical
There’s no state that any reasonable observer would say has gotten sports betting regulation 100% right so far — from New Jersey’s ban on in-state college sports wagering, to Tennessee’s dalliance with a payout cap, to Illinois’ on-again-off-again remote registration policy, they’re all flawed in some way. But Wallach sees larger flaws coming to the fore now, particularly as some of the most populous states in the nation inch toward regulating sports gambling.
“What I’m seeing as an emerging trend in states with very strong governors is the moving further and further away from more of a competitive landscape and having more of a restricted environment that favors a couple of operators — New York and Florida being two examples,” Wallach said on Gamble On. “Are they outliers, or are they maybe a trend toward the future? California’s shaping up to be the same way.”
It remains unclear how many licensed operators there will be in New York, but the number is certain to be a fraction of how many neighboring New Jersey allows. And Florida is pointing toward the Seminole tribe holding all the cards — to mix gambling metaphors — which leads directly into Wallach’s second point of concern.
“What are we going to do about tribal participation in online gaming?” he asked. “We now have three states that are going to move forward with compacts that allow tribes to have mobile betting, so for the same reasons that I’ve indicated and argued that maybe there’s an IGRA issue in Florida, the same issues infect the compacting process in Connecticut and Arizona, where tribes are being given the opportunity to operate mobile sportsbooks pursuant to amended compacts.
“The reason that hasn’t raised much dust in Arizona is that everyone’s happy. There’s no disgruntled stakeholder. … But I think Connecticut might be more of a microcosm for what I expect to see in Florida. … You have a tribal mobile monopoly, almost, in Connecticut, where the two tribes will control two out of the three skins, and the horse racing industry and the off-track betting locations are getting no participation in mobile. They were shut out of the legislation, and that could be a scenario where you could see litigation over the scope of IGRA.”
Make your voice heard!
Wallach’s third troubling trend builds directly off the first two: “the absence of the voice of the bettor and the consuming public in the policy-making world.”
He noted how the daily fantasy sports community rallied in protest in 2015 when faced with a possible ban of DFS in New York, and thinks sports bettors could use a similar movement.
“It just seems to me that in all these public policy discussions, and the hearings that are taking place in state legislatures across the country, the customer has absolutely no advocate,” Wallach said. “These are all industry representatives. They’re tribes, they’re casinos, they’re racetracks. The voice of the consumer, which powers this whole thing, is not being heard, because there’s no organized representation.
“And if you look at what is emerging out of New York and Florida, these are two extremely consumer-unfriendly sports betting proposals. And where’s the outcry? The outcry is coming from the stakeholders that want in and are being cut out. But I think there’s a lack of organized movement, where the sports bettor can exercise their voice and have the power of numbers, and that’s completely missing here, in contrast to the daily fantasy sports legislative movement that depended almost entirely on a grassroots movement to get the state legislatures to listen.”
New York, Florida, and California are as big as states come and as powerful as any could be in terms of influencing others that have yet to climb aboard the sports betting train. That makes this a major inflection point for this rapidly growing industry.
Nothing develops in a purely linear fashion; there are always steps backward mixed in with the steps forward. But the backward steps might be the ones leaving lasting footprints if enough major states enact legislation that does not result in a satisfactory experience for the sports bettor.
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