Alerts and Updates

Massachusetts Sports Wagering Bill Expected to Be Approved by July

April 1, 2020

Massachusetts Governor Charlie Baker has expressly supported the authorization of sports betting.

From the spate of competing sports betting bills filed since 2019, House Bill 4559 has emerged as the frontrunner and is poised for passage. On March 12, 2020, the Joint Committee on Economic Development and Emerging Technologies submitted H.4559, as amended, to the House Ways and Means Committee with its recommendation for approval. Massachusetts Governor Charlie Baker has expressly supported the authorization of sports betting, which now is expected to pass during the current legislative session.

How Many Licenses?

Pursuant to current language, the bill would permit five “Category SM” online-only licenses for sports wagering. The licensees do not need to be tied to Massachusetts’ land-based casinos, a common requirement in other states that allow sports wagering. Land-based casinos can still form partnerships with online operators to operate as the casino’s “skin.” The bill also provides for four other sports wagering licenses. Land-based casinos may obtain a Category S1 or Category S2 license. The Category S1 licensee can operate up to three online skins, while a Category S2 licensee can deploy up to two online skins. Lastly, Category SH licensees will be permitted to operate a sports pool at a live horse racing track.

How Much Would a License Cost?

The current bill defers to the Massachusetts Gaming Commission to establish an application process, select the licensees, complete the proper due diligence and enforce the wagering restrictions. The total cost of a Category S1, S2 or SM license is projected to be $1 million, with $500,000 paid at the time of the application and the remaining $500,000 due within 30 days after the license award. Further, the bill proposes a $500,000 renewal fee due every five years from the date the initial license was issued. A Category SH license is expected to cost a total of $150,000, with a $50,000 application fee, followed by a $100,000 licensing fee due within 30 days after the license is awarded. The Category SH license carries a $25,000 annual renewal fee.

Tax Structure

Retail sports betting revenue will be taxed at 10 percent and online/mobile sports-betting will be taxed at 12 percent.

What May Players Wager On?

The bill allows for wagering on professional sporting events and NCAA Division I sports only. All other collegiate level sports are excluded, as well as in-play bets on the performance of any individual college athlete. Olympic sports, esports or any wager on the “personal biometric data” of athletes would also not be permitted under the current bill. The bill would ban the use of credit cards to place wagers; debit cards are expressly allowed.

No Official League Data Requirement

H.4559 contains no requirements for the use of official data for in-play bets, or any approved form of wagering for that matter. Official data requirements such as option provisions to require use of official data favoring sports governing bodies that are present in other pending bills (e.g., H.366) are absent from H.4559. The Massachusetts Gaming Commission shall have broad authority to issue regulations, but the bill does not expressly authorize a requirement to use official data. H.4559 does prohibit operators’ use of personal biometric data of an athlete for any purpose.

Other Operating Restrictions

There are some novel provisions in the bill through which the Massachusetts Gaming Commission would strictly monitor and police advertisement and marketing. Operators are restricted from producing advertisements through media whose audience are likely to be comprised of persons under the age of 21. Likewise, advertisements featuring celebrities likely to appeal to minors would be prohibited. Unsolicited pop-up advertisements via the internet or text messages are also prohibited from sports wagering advertisements.

The Road to Passage

H.4559 was reported from the Committee on Economic Development and Emerging Technologies on March 12, 2020. Following this, the bill needs to be approved by the Ways and Means Committee in the House of Representatives and then by the full House. If approved by the House, the bill will go through the Senate in a comparable process. The bill has a hard deadline of July 31, 2020, to arrive on Governor Baker’s desk. We expect the bill to pass.

For More Information

If you have any questions about this Alert, or for more details on opportunities in Massachusetts and the United States, please contact William M. Gantz, Frank A. DiGiacomo, Robert L. Ruben, Adam Berger, Joseph Caputi, any of the attorneys in our Gaming Industry Group or the attorney in the firm with whom you are regularly in contact.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.