Less than a year after Maine Gov. Janet Mills’ sports betting peace offering to the state’s four Indian tribes, the first round of proposed regulations include the most stringent advertising guidelines in the country, would force operators to pass at least 60% of revenue to tribes or the state, and could keep top operators from considering entry into the ninth-smallest state in the U.S.
Maine lawmakers last April passed a law crafted and backed by Mills that put legal digital wagering in the hands of tribes and all but shut out the state’s two retail sportsbooks, owned by PENN Entertainment and Churchill Downs Inc., from mobile betting. Legal sports betting was a pawn in negotiations between the state and its four federally recognized tribes, none of which enjoy the same level of sovereignty as others across the U.S.
Despite the fact that Maine’s tribes have no gaming experience, they will have a mobile monopoly in Maine, and the proposed rules include enough idiosyncrasies that major operators could choose to stay out of the state.
Such a move is not unprecedented. When Arkansas lawmakers set the tax rate for betting at 51% in 2018, all of the big operators chose to stay out of the state, meaning handle, and ultimately tax revenue, are far below similarly sized states. Arkansas has a population of 3.01 million and, in January, the state’s retail casinos and three digital platforms accepted $33 million in bets. For comparison, Iowa‘s (3.2 million population) retail and 18 digital platforms had handle of $233.6 million, while Kansas‘ (2.94 million population) retail and six digital platforms had handle of $206.1 million.
Three other states have a 51% tax rate, but in New Hampshire operators pay that rate in exchange for a monopoly, while Delaware is retail only. In New York, operators get volume in the biggest legal sports betting state in the U.S., and there is already a movement afoot to lower the tax rate.
Conversely, in the smallest state in the nation, Wyoming (581,381 population), the four biggest operators in the U.S. — BetMGM, Caesars Sportsbook, DraftKings, and FanDuel — are all live and took a combined $14.3 million in wagers in January. That’s about half the volume of Arkansas, which has more than five times as many residents.
“Major operators are willing to enter smaller states if the barrier is reasonable to deal with,” one industry insider told Sports Handle. “Bigger operators want to be coast to coast and in every state that they can be, [but only] if you make it so regulations are reasonable.”
Launch still months away
Under Maine’s new law, the number of mobile platforms is capped at four, one for each tribal nation, and up to 10 brick-and-mortar sportsbooks would be allowed at the state’s off-track betting parlors and its two casinos. The bill also allows for the tribes to eventually offer iCasino.
The state’s Gambling Control Unit is the regulator and, earlier this year, it posted 56 pages of rules for public comment. By the March 1 deadline for responses, Gambling Control Unit Chief Milt Champion said 24 interested parties had filed 581 comments that he and his staff are now working through.
I’ll just give my money to NH and now MA til this state figures it out
— Adam Swidler (@BigPapaSwid) March 12, 2023
Every comment will be logged and responded to. Some may be incorporated into the rules, others not. Either way, Champion estimates it will take his small staff at least through April to finish reviewing the comments and reworking the proposed regs. After that, the revised regulations would need to be posted and another public-comment period of at least 14 days would be opened.
Once the rules are approved, the state can begin reviewing and vetting applications, which typically takes 60-90 days. Though Champion isn’t pointing to a launch date, if you do the math, late summer or just ahead of football season appears to be the earliest possible option.
Maine will be unique
The new law requires revenue sharing between operators and their partner tribe.
“The fee paid by an operator to a management services licensee may not exceed 30% of the operator’s adjusted gross sports wagering receipts, except that the director may approve a contract authorizing the management services licensee to receive up to 40% of the operators adjusted gross sports wagering receipts if the director determines that the management services licensee has demonstrated that the fee is commercially reasonable given the management services licensee’s capital investments and the operator’s projected revenues,” the law reads.
The law also precludes PENN’s Hollywood Casino and Churchill Downs’ Oxford Casino from having tethered mobile platforms. However, PENN, which owns Barstool Sportsbook, could partner with a tribe to have a digital presence.
The law sets the gambling age at 21 and would allow for betting on college and professional sports. Fees in the state will be reasonable — $4,000 for a facility license, $200,000 for a mobile license, and $40,000 for management service providers and suppliers.
Expert says lack of oversight has the potential to create a level of addiction to gambling nationally that will rival the opioid epidemic. https://t.co/rthbUTj6I9
— Spectrum News Maine (@SpecNewsMaine) March 7, 2023
The proposed regulations set the toughest advertising and marketing parameters in the country — stricter even than those in Massachusetts, which have been considered the benchmark to date. The proposed regs would essentially ban any promotional advertising other than on an operator’s platform or app, mirror Massachusetts in prohibiting advertising or marketing on college campuses, and also would only allow television advertising during a live event on the channel that the event is being broadcast on. Operators would not be allowed to use any celebrities in advertising, and promotional credits would not be deductible.
“My position is that no one is going to get credit for bonus play,” Champion told Sports Handle. “The rationale behind that is we’re a small state, there’s not a lot of revenue here. … I want everybody to realize that your giveaways are going to come out of your pocket, not ours. There will be no freebies.
“What you can say is ‘Hey, we’re DraftKings, we’re licensed in Maine, you can visit our app,’ then in the app you can do your bonuses. But I don’t need to see Kevin Hart six times in a half-hour show, or the Mannings or other celebrities.”
Oddities of proposed rules
Maine broadcasters have already pushed back, saying the proposed television advertising rule is a violation of First Amendment rights and that it would hurt their business. In addition, the “no celebrities” rule goes a step further than even the most stringent states, which generally ban using celebrities that would appeal to minors, but allow others.
The proposed rules are “well beyond the scope of Massachusetts” and are “clearly out of line with other jurisdictions,” according to an executive at a major operator.
Some other unique guidelines:
- From Chapter 54, which deals with surveillance, (3)(d): “an overview of each kiosk or self-service sports wagering terminal with enough clarity to identify all persons accessing the kiosk, and to determine if an individual is participating in sports wagering; (e) Wagers be embedded or stamped into the monitoring and recording.” This seems to imply that footage from surveillance cameras must be clear enough that one could read the bet placed on the kiosk, which is not required in any other U.S. jurisdiction.
- In Chapter 58, which deals with wagers, proposed rules require operators to petition to add an event or sport for wagering a minimum of 30 days ahead of the event. Operators will likely push back and ask for a shortened time frame.
- In Chapter 63, which deals with responsible gaming, (2)(F) reads, “A process that permits a person to place restrictions on another person who has joint authorization of bank account used to fund an account for sports wagering.” Conceptually, the idea is that one person couldn’t drain a joint account by wagering, but stakeholders say it’s nearly impossible to track this kind of information and would potentially require legal changes to banking rules.
- In Chapter 62, which deals with advertising and promotions, operators would be required to submit advertisements and promos 10 days in advance. Stakeholders have pushed back and won on similar timelines in other states due to the fast-changing nature of sports betting.