State lawmakers begin sports betting talks after SCOTUS ruling

Monday's ruling from the U.S. Supreme Court that states are free to legalize sports betting opened the door to the possibility of a further expansion of gaming in Massachusetts.

The decision in Murphy v. National Collegiate Athletic Association, which the state of New Jersey brought as a challenge to the Professional and Amateur Sports Protection Act (PASPA), would allow Massachusetts to legalize an activity that the Massachusetts Gaming Commission estimated could generate between $9 million and $61 million in state tax revenue a year.

The court's 6-3 decision, in which Obama appointee Elena Kagan joined the high court's five Republican-appointed justices in the majority, does not mean that it will soon be legal to place wagers on sporting events throughout the country. Instead, it gives individual states the authority to decide for themselves whether to make sports betting legal.

"The legalization of sports gambling requires an important policy choice, but the choice is not ours to make," Justice Samuel Alito wrote for the majority. "Congress can regulate sports gambling directly, but if it elects not to do so, each State is free to act on its own." 

Ultimately, the decision to legalize sports betting lies with the Legislature and Gov. Charlie Baker. The ruling came as a bill (S 2273) that would create an eight-person special commission to "conduct a comprehensive study and offer proposed legislation relative to the regulation of online sports betting" if the Supreme Court deems any part of PASPA is unconstitutional pends before the Joint Committee on Economic Development for a fifth month.

Rep. Joseph Wagner, House chairman of the committee reviewing the bill, said at a February hearing on the bill that he agrees that Massachusetts should consider sports betting on an "expedited basis" if the Supreme Court allows.

"It's big business, it's serious money potentially and the revenue impacts for the commonwealth, favorable revenue impacts, are likely substantial and I think we need to try to get ahead of the curve," he said in February.

On Monday, Wagner said his committee was "sort of in a wait and see mode" on sports betting but that those talks "now become front burner discussions."

"I have spoken, in particular, with my Senate co-chair about an approach to how we might look at this and I've had conversations with the speaker as well," Wagner said. "It's something we need to do a deep dive on and we need to do it expeditiously. Other states will move quickly on this and I think the challenge will be to be quick out of the gate in an effort to look at this in a comprehensive way, but not so quickly that we do something and don't get it right."

The Boston Red Sox, Boston Bruins and Boston Celtics each declined to comment to the News Service on Monday and instead referred to statements issued by their respective leagues, largely saying that the leagues will work with lawmakers as states consider legalizing betting. The New England Patriots did not respond to an inquiry from the News Service.

"Never Had a Conversation"

Baker said after the decision was issued Monday that he expects conversations with Democratic leaders in the House and Senate about how to proceed will begin "probably starting today." The governor, speaker, and Senate president have a previously scheduled meeting planned for the afternoon. 

"Off the top of my head, without knowing anything about what the decision actually says or how it frames it, I would say it's certainly something we should look at. I promise you that the vast majority of the states around the country will certainly take a look at it and it really becomes a question of whether this is something that people believe ought to be part of their revenue stream, ought to be part of their entertainment industry or not," Baker said.

Baker said he has never personally placed a bet on sports in jurisdictions where the gambling activity is already legal, such as Las Vegas, and couldn't handicap the appetite in the State House for an expansion of gambling in Massachusetts into the sports betting arena.

"I've been here three years. I can't speak for the lieutenant governor. I have never had a conversation with anybody in the Legislature about this so I don't know the answer to that question," he said.

Attorney General Maura Healey's office said it is reviewing the Supreme Court's ruling and that it will focus on the consumer protection issues surrounding wagering if the Legislature pursues sports betting. Healey was an opponent of casino gaming who has since advocated a cautious approach to further expansion of gambling as Massachusetts works to bring casinos authorized under a 2011 law on line.

About 20 minutes after the Supreme Court's ruling came down Monday morning, Boston-based daily fantasy sports provider DraftKings announced that it will enter the sports betting market, saying the "addition of online and mobile sports betting holds the potential to generate billions of dollars annually for cash-strapped state governments."

"I think there's going to be a big push by several states to be ready for NFL season and we'll be ready as well," CEO Jason Robins said on a conference call with reporters. 

Robins said DraftKings began developing a sports betting product in July when the Supreme Court agreed to hear the New Jersey case and the product has been "a very key part of what we've focused on" for the last year. 

He said DraftKings has had discussions about sports betting with Massachusetts lawmakers and is hopeful the Legislature will take action before its session winds down in July. 

"I think the prevailing thought was to wait and see what the Supreme Court does before deciding on any course of action," he said. "Now that a decision has been issued we would expect to see some ramp up in that discussion in Massachusetts." 

In a statement, anti-gambling organization Stop Predatory Gambling said, "This litigation was conceived in greed by powerful gambling interests in partnership with a handful of self-serving politicians to benefit a privileged few. It’s a naked money grab from the wallets of ordinary Americans cloaked as a 'states' rights' case. While the Court's ruling centered on lofty questions involving states' rights, the real-world consequences of its decision are severe."

"Out of the Shadows"

Anticipating that the Supreme Court might strike down some or all of PASPA, the Massachusetts Gaming Commission this year laid out issues for lawmakers to weigh if they consider legalizing betting.

In its white paper, the Gaming Commission said legislators need to consider whether the federal Wire Act may still constrain legal betting regardless of how the Supreme Court rules, whether to allow only existing gaming licensees to take bets or if the market should be opened to newcomers, and whether Massachusetts would accept bets online.

"The introduction of a new aspect of the emerging gaming industry in Massachusetts presents an opportunity to bring a significant amount of gaming activity and revenues out of the shadows and into the legal market," the commission wrote. "With that transition would come the opportunity to cultivate the associated economic benefits -- including tax revenues -- while providing consumers of sports betting with protections not afforded them by illegal bookmakers."

The commission cited an Oxford Economics for the American Gaming Association study last year that estimated Massachusetts would collect $8.6 million in annual tax revenue if it allowed betting at brick-and-mortar casinos only and taxed the sportsbook's gross gaming revenue at a "low tax" rate of 6.75 percent. The state might collect $61.3 million if it allows betting at casinos, retail locations and online, and agrees to a "high tax" rate of 15 percent.

In addition to considering a tax rate, the commission suggested that the Legislature think about who it would allow to provide sports betting -- the state's casinos, racetracks and off-track betting parlors would likely be interested in jumping into the industry -- and whether bettors would be allowed to place wagers on their phones or online.

"These questions, when contemplated within the framework of the overarching policy objectives, bring to light many of the important issues regarding both the scope of a potential sports betting regime and the potential legalization strategies necessary for a thoughtful regulatory approach," the commission wrote.

The commission said the state's three licensed casino operators -- MGM, Wynn Resorts and Penn National Gaming -- would be interested in taking wagers if Massachusetts makes betting legal.

"Sports betting could be another amenity at Plainridge Park Casino and help generate additional visitation to the property, as well as drive incremental tax revenue for Massachusetts," Jeff Morris, vice president of public affairs and government relations for Penn National Gaming, which operates Plainridge Park Casino in Plainville, said Monday. "We welcome the opportunity to discuss legal sports betting with legislators, the Massachusetts Gaming Commission, and other key stakeholders."

MGM Resorts, which is expected to open MGM Springfield in August, applauded the Supreme Court's ruling Monday. 

"We look forward to working with legislators and policy makers to achieve a regulatory outcome that benefits states and consumers alike while ensuring the integrity of sports," the company said in a statement. "Having spent decades building trust with regulators, successfully operating sports books in Nevada, and hosting the world's leading sporting events, MGM Resorts International is extremely well positioned for a post-PASPA environment." 

Robert DeSalvio, president of Encore Boston Harbor, said the casino industry supports legal and regulated sports betting and that he "looks forward to what we expect will be a thorough and thoughtful process" including the Legislature and Gaming Commission. 

In 2017, a UMass Lowell-Washington Post poll found that 55 percent of Americans support making gambling on professional sports legal in all states and that one in five people surveyed had placed an illegal bet. Thirty-three percent of respondents disapproved of allowing gambling on professional sports in all states, and another 12 percent had no opinion, according to the poll.