After a lightning round in 2019 that saw 11 U.S. jurisdictions enact sports-betting legislation and several more launch under existing laws, GamblingCompliance looks ahead to some of the key issues that will shape the sports-betting landscape in 2020.
Tribal Sports Betting
Although legislative discussions in 2018 and 2019 largely centered on sports betting through commercial operators, recent developments suggest that 2020 will be the year when Indian tribes stake their claim to a larger piece of the sports-betting pie.
Since the demise of the federal ban under the Professional and Amateur Sports Protection Act of 1992 (PASPA), tribes in four states have introduced retail sportsbooks in their tribal casinos. But the topic of mobile betting has been an open question, as federal case law suggests that bets placed off-reservation are not protected by the Indian Gaming Regulatory Act (IGRA), and tribes have been hesitant to test that case law to date.
Still, several states have considered bills that would explicitly permit tribes to offer online sports betting, and the law passed in Michigan in December introduces a new mechanism to do so, requiring tribes to waive sovereign immunity for the limited purpose of obtaining commercial-style licenses.
In addition, federal legislation was introduced in the U.S. House of Representatives in December that would amend IGRA to clarify that mobile sports wagers would be deemed placed at the location of the server rather than the bettor.
Indian tribes will also be at the center of the debate in California, where a coalition of 18 politically powerful tribes is backing a ballot initiative to allow for retail sports wagering at tribal casinos and racetracks, without a mobile component. Several state lawmakers are preparing to push a competing constitutional amendment that would include mobile betting.
According to GamblingCompliance research, a California market limited to retail sportsbooks at tribal casinos and racetracks as proposed by the ballot initiative would be worth approximately $294m by year five of operations.
But a hypothetical California market that also includes mobile wagering and a broader retail rollout would be worth at least $1.65bn in revenue by year five.
Official League Data
Three states last year approved laws effectively requiring operators to use official league data to settle in-play wagers, and 2020 should reveal whether those states turn out to be outliers or trendsetters.
The data mandate has been the key lobbying provision pushed by a coalition of professional sports leagues, and to date, Tennessee, Illinois, and Michigan have acquiesced to the request.
The three states were among the later adopters of sports-betting legislation in 2019, so the inclusion of official data in their laws could indicate a trend, plus the market sizes of the three states are significant enough to warrant extra attention.
However, none of the states with official data mandates have launched to date, nor have their state regulators adopted final rules governing sports betting.
Each of the state laws requires operators to purchase official data only if it is offered by leagues on “commercially reasonable terms.”
What remains largely unsettled is how regulators are to decide what is commercially reasonable.
In Tennessee and Illinois, the laws are largely silent on how regulators should make that determination, and draft rules released to date do not offer further guidance.
Michigan’s legislation does provide some guidance to regulators, but rulemaking will likely give further indication as to what regulators are looking for and could provide a roadmap for other states considering official data mandates in future legislation.
Meanwhile, official data will not be the only closely watched provision as Illinois, Michigan and Tennessee all prepare their implementing regulations for sports wagering.
In Illinois, regulators will soon determine whether casinos can offer co-branded online sportsbooks, allowing the likes of FanDuel and DraftKings to participate without facing an 18-month wait for three online-only licenses to become available.
The Tennessee Lottery, meanwhile, will either stick or twist with controversial draft proposals to cap payouts, restrict parlays and prop bets, and require pre-approval of all advertising.
Although mobile has been the main focus of the sports-betting picture, and perhaps deservedly so given that more than 80 percent of bets in New Jersey in 2019 were placed online, retail will play a more central role in 2020, particularly in unconventional locations that will expand sportsbooks to venues beyond commercial casinos.
In 2020, sports betting will be launched in Washington, D.C., where retail sports betting will take place at a variety of locations, including the planned William Hill sportsbook at Capital One Arena, which is expected to be the first in-arena sportsbook to launch in the United States.
Sports stadia and arenas are also permitted to be licensed operators in Illinois, which could lead to historic locations such as Wrigley Field and Soldier Field in Chicago hosting sportsbooks.
Legal sports betting will come to bars and restaurants in Montana, Washington, D.C. and possibly New Hampshire and Oregon. Meanwhile, placing bets at traditional lottery retailers, such as convenience stores, will become an option in several jurisdictions, including D.C. and New Hampshire.
2020 will likely provide no rest for the weary, as GamblingCompliance projects another five to ten states will enact legislation over the next 12 months.
Key states to watch include Ohio, where several bills have carried over from 2019 as legislators debate whether sports betting should fall under the authority of the state’s Casino Control Commission or the Ohio Lottery, as well as Massachusetts, where Governor Charlie Baker has been vocal in his support for sports betting.
Several major states that would create significant sports-betting markets will also see additional legislative discussions, including New York, Florida, and the aforementioned California. Each of the three, with mobile included, would be projected to be larger than any existing U.S. market, according to GamblingCompliance research.
However, each of the three states could ultimately require a voter referendum to legalize or expand sports betting, pushing the timetable back for implementation or even raising the prospect of legal challenges if legislation is approved.