There’s now an additional bill on the table that would usher in sports betting in Connecticut. Only problem is that it’s deeply flawed. On Wednesday, SB 540, which would make sports betting and online lottery games legal, was referred to the Committee on Finance, Revenue and Bonding. It is one of several floating around the state General Assembly that discusses sports wagering in the state.
At the tail end of February, Connecticut’s Public Safety and Security Committee (PSSC) held an informational hearing to learn about the sports betting industry. During that meeting, state lawmakers came down fairly hard in questioning of representatives from the NBA and Major League Baseball, which seek control over sportsbook data and have jointly peddled a 1-percent “integrity fee” or a “royalty” on all sports bets that licensed operators would have to pay to the leagues.
The fee amounts to 20-25 percent of a typical sportsbook’s typical hold, ultimately taking revenue from an operator, and tax dollars from the state, to give to leagues. That hearing closed, leaving the general impression that those committee members were dubious about any such fees and other league-sponsored provisions. At a subsequent PSSC public hearing, stakeholders including a representative from the state lottery and another from Foxwoods Resort Casino, rebuked the leagues’ positions, arguing that they would be detrimental to the state.
The Committee on Finance, Revenue and Bonding is apparently of a much different mind.
Connecticut Sports Betting Bill Imposes Huge Tax Rate, Gives Leagues Direct Cut of Action, Plus Near-Full Control Over Data and More
A few steps down from the leagues’ 1 percent starting point, SB 540 calls for a 0.25 percent “betting right and integrity fee” for the leagues — as well as a 15 percent tax rate for the state on gross sports wagering revenue and a tiered structure with regard to how sportsbooks obtain data, which the pro leagues seek to control. The fear there, basically, is a data monopoly.
That 15 percent state tax is significantly higher than the current 6.75 percent sport books pay in Nevada and the 10 percent in the new West Virginia law. Iowa’s leading bill would impose a 7.66 percent rate. Combined with the 0.25 percent “betting right and integrity fee,” SB 540 would put about 20-25 percent of an operators’ revenue out the door before kickoff.
Operators would have to purchase data from leagues for “tier two” wagers. The bill defines a “tier one sports wager” as one “solely by the final score or final outcome of a sporting event and is placed before the sporting event has begun. ” A “tier two sports wager” is anything that is not a tier one wager, for example, in-game wagers and proposition bets.
A bill in New York marked the first appearance of such a “tiered” structure regarding data in a state bill. SB 540 would allow mobile sports betting “over the Internet through an Internet web site or a mobile device.”
In addition, the bill would allow sports governing bodies to request that the state’s Commissioner of Consumer Protection to impose restrictions on wagering on its games. This is not a unilateral right of the leagues as it appears in some states, representing a workable middle ground.
The PSSC bill under consideration is House Bill 5307, which would require the Commissioner of Consumer Protection to adopt regulations for sports wagering if and when the federal ban on sports wagering outside Nevada is eliminated. That could occur as soon as April 2, when the Supreme Court of the United States may issue it decision in Murphy v NCAA, which examines the constitutionality of the law.
As a whole, SB 540 completely flies in the face of concerns expressed at the first PSSC hearing and of testimony given before the PSSC on March 15 — particularly the call for a “prudent” tax structure.
The individual who delivered a thorough and straightforward takedown of the league-sponsored provisions and the impact they would have, Foxwoods’ Seth Young, will be testifying with regard to this bill at a Finance, Revenue and Bonding committee public hearing on Monday, April 2 (could be a big day).
Here’s a preview:
The new CT sports betting bill is the opposite of everything I testified about last week.
I'll be testifying again on Monday, where I continue to hope that actual fact and common sense will prevail.
— Seth Young (@sethyoung) March 28, 2018