Missouri Sen. Denny Hoskins has long said that the road to legal sports betting winds through his Jefferson City office. A week after Missouri’s six professional sports teams and casinos announced that they were aligned and backing an effort to legalize sports betting this session, Hoskins maintained his position. But he’s not the lawmaker who will carry the bill.
The story of how titans from some of the biggest businesses in the state came together isn’t terribly complicated. But how they will move forward and negotiate with a powerful senator who wants to attach Missouri’s “gray machines,” formally known as video lottery terminals, to legal sports betting is the challenge.
Hoskins’ vision of legal sports betting also involves legal VLTs. Casino companies in Missouri — or anywhere, for that matter — do not want legalization of VLTs, which can cut into their business. The issue is big enough that when Penn National Gaming’s Jeff Morris was able to bring representatives from all the casinos plus the Kansas City Chiefs, Kansas City Royals, St. Louis Cardinals, St. Louis Blues, Sporting KC, and the Kansas City Current together, it was a key discussion point.
“As you know, we’ve been at it for a few years,” St. Louis Cardinals President William DeWitt III said of his state considering legal wagering. “We knew the VLTs were a big issue for casinos and thought we would come together and see if we can manage the bifurcation of that issue for them.
“So we had conversations, good conversations [with lawmakers last year], but we didn’t really get to a place where we made a deal, so, one, it failed again that the VLTs were part of it, and two, we started seeing other states being able to do it. So it was kind of like we kept doing the same thing with the same result and it just wasn’t working.”
Some give, some take
In order to find a way to craft legislation that might have a better chance of getting to Missouri Gov. Mike Parsons’ desk, Morris invited his casino counterparts and the pro team executives to meet. They got together multiple times beginning in the middle of last year to discuss the issues, and eventually settled, or as St. Louis Blues Executive Vice President and Chief Revenue & Marketing Officer Steve Chapman said, “I’ll give you a great line from our GM Doug Armstrong — I think we are all comfortably uncomfortable, which probably means you’ve found a great compromise.”
As a group, the casino-pro team coalition supports statewide digital sports betting with operators tethered to existing gaming locations. Each location would be entitled to three digital partners, or skins, but capped at six per gaming company. Both Penn National (Barstool Sportsbook) and Caesars own three properties in the state, and the remaining three skins from their properties would be assigned to the six professional sports teams. Boyd Gaming (FanDuel), Century Casinos, and Affinity Gaming each have two retail properties, and Bally’s has one.
In the end, there would be 39 skins to go around, more than enough to allow every major operator and plenty of others the chance to gain market access.
New #GambleOn! @BrianneDoura joins us to talk about diversity in the industry, problem gambling funding, and much more, plus @BergenBrennan & I cover New York vs. New Jersey, Missouri entering the sports betting fray, and the trouble with parlays: https://t.co/6gxyQZdzyd
— Eric Raskin + (@EricRaskin) January 20, 2022
The teams, which agreed not to have brick-and-mortar sportsbooks at their facilities, would be able to partner with a digital operator, market and advertise sports betting, and build out sports lounges in their facilities where patrons could comfortably watch games and wager on their phones.
A key part of the agreement is the idea that while no retail books would be allowed in stadiums or within an adjacent “entertainment zone,” the stadiums and the surrounding areas would not be geofenced. So even if the Cardinals are partnered with, for example, PNG’s Barstool Sportsbook, a fan in the bleachers could bet on the app of DraftKings, FanDuel, Caesars, or any other operator while inside of Busch Stadium.
The setup would be different from what other pro teams have negotiated. So far, legal wagering at sports facilities is only happening in Washington, D.C., and in Arizona, and is legal but not yet live in Illinois, Maryland, and Ohio. In Washington, D.C., geofences prevent a competitor’s platform from being available in a stadium. As an example, in Capital One Arena — and a four-block exclusion zone around it — only the Caesars app is available. Bettors must exit the venue and the exclusion zone in order to access another app.
The agreement, which is possibly the first of its kind where major stakeholders came together ahead of bills being filed, has already been incorporated into multiple bills in Missouri. Dan Hegeman and Tony Luetkemeyer have filed in the Senate, and Phil Christofanelli and Dan Houx have filed in the House.
“I think it is unusual, but I think it shows the level of momentum within the industry to see sports betting pass and to see Missouri keep up with our surrounding states,” Hegeman told Sports Handle via email. “I always think it helps to have more advocates for legislation than less, but the fact still remains that the bill must go through the legislative process.”
And therein lies the rub.
Hoskins: I am a ‘no’ on this bill
Hoskins has been carrying the torch for legal wagering in Missouri since 2018. Over time, he’s proposed unique ideas, including charging operators an additional fee on top of taxes that would be used to fund maintenance and infrastructure projects for the state’s entertainment facilities, field houses, cultural facilities, convention centers, recreational facilities, and paying the NCAA and pro teams a royalty based on handle rather than gross gaming revenue. The bills have moved through the Senate every year, but none has gotten to a floor vote, in large part because Hoskins is adamant that VLTs be legalized in the same bill as sports betting, and his peers haven’t necessarily agreed.
Right now, Hoskins is none too happy while perceiving that the casinos and pro teams are attempting to move forward without him.
“I’ve been working on this for five years,” Hoskins told Sports Handle last week. “Number one, if you think I am just going to sit back and let somebody else take the bill, make the compromises, and have the discussion, you don’t know how the Senate works.
“Any sports betting comes through my office. It’s great that they have been working together, and they gave language to Dan Hegeman. But I am a ‘no’ on this bill. I can run circles around anyone who brings it up and tie it in knots. It’s not what I want to do, but I will, and I will make someone look silly in committee.”
The Blues’ Chapman said that while the casinos and teams were able to come to an agreement, there was no concerted effort to cut Hoskins out of the process. He’s concerned that there may have been a miscommunication. Some of the teams met with Hoskins last week, and the senator had some choice words. But Chapman said he wasn’t even aware there was a reason Hoskins’ ire was up at that time.
“He’s obviously very key and very important to this,” Chapman said. “We had no intention or any direct purpose of going around Senator Hoskins. We thought we were going to talk to him [about this]. I think there were some misunderstandings there, so I hope through some meetings and discussions we can move forward. There was never any intention to leave him out or go around him.”
Said the Cardinals’ DeWitt: “We certainly appreciate his deep dive on this issue the last couple of years. But what I described earlier is a marketplace that has started to figure itself out over the last few years in terms of agreeing to a framework. As it is related to Senator Hoskins, I think it is just a function of communicating to him that this agreement has nothing to do with the politics of Jeff City.”
Should Hoskins decide that he wants to try to kill the bills, he has several options available: the filibuster is still in place in Missouri; Hoskins could load the bills up with so many amendments that no lawmaker would want to pass them; or a bill could languish on a chamber floor without ever getting a vote. It is, he said, “easier to kill a bill than to pass a bill in the Senate.”
Hoskins may well have been a victim of his own politics in the past. While some of his bills have made it to what’s called the “Calendar for Perfection” in the Senate, there has been little or no movement on the floor. He did, however, say that he is open to discussion.
“I told the teams and casinos since they decided not to include me in negotiations, they have to sell me on the bill,” Hoskins said. “I just met with the teams [last week], and I tore into them, and said, ‘Hey, this is the way it’s going to be.’ Any language is going to be approved by my office, my door has always been open … but these guys are going to somebody who is not a fan of VLTs.”
Multiple avenues to legalization exist
Hoskins further suggested that maybe sports betting and VLTs could move as separate, but united, bills. In some instances, bills walk in tandem through the legislative process, meaning that each issue has its own bill, but one can’t move without the other. There’s also always the potential to merge multiple bills on the same issue, or as is seen from the smallest state to the nation’s capital, there may be something to trade to get a bill done. What might that be? Hoskins isn’t saying, but to the coalition, it’s a no-go to have sports betting and VLTs intertwined in any way.
“We’re certainly open to talking to Senator Hoskins on anything he wants to talk about,” DeWitt said. “But the way the marketplace has played out, that’s kind of dictated what things will look like. I just don’t know that the range of outcomes he thinks exist are still out there.”
Last week, a Jefferson City lawyer filed nine ballot proposals for legal sports betting in Missouri on behalf of some pro sports teams in St. Louis https://t.co/HZW7GjO89Q
— KMOX St. Louis News (@kmoxnews) November 1, 2021
Setting aside what looks to be a fight coming in the Senate, stakeholders are pleased with the progress they’ve made. In past sessions, the available bills were so unattractive that a group of professional teams late last year got together and filed nine proposed referendums as a way to skirt the legislative process. Casino operators, meanwhile, have been trying to educate lawmakers.
In the nearly four years since the Supreme Court made sports betting a states’ rights issue, Missouri has gone from potentially being a first mover to seeing its residents interested in betting travel to Illinois or Iowa or Tennessee — all of which offer statewide mobile wagering. It has additionally been giving the side eye to Kansas, which has also been unable to come to a consensus.
“One of the benefits to being last to the table is you get see how everyone else eats,” Chapman said of watching more than 30 U.S. states and D.C. legalize or launch sports betting since 2018. “Seriously, the best way to get something done is through compromise, and you wish that were true of a lot of other things besides sports betting legislation. When you have the right people in the room trying to find the best solution so we have a great solution for the state, then it works.”
Missouri coalition could be a model
Penn National Gaming owns three properties in Missouri and many more across the U.S. Morris, vice president of public affairs, has been tasked with lobbying and educating legislators for years. In that time, some states have legalized with the open, competitive market that operators favor while others have chosen to go with monopolies or retail-only options.
"You should expect to see the Barstool Sportsbook app launched in every state where it is legal across the US by the end of 2021." Penn National Gaming CEO Jay Snowden discusses the new @BSSportsbook that just launched in Pennsylvania, saying it is still "in the first inning." pic.twitter.com/6Ij55rgtgX
— CNBC (@CNBC) November 11, 2020
Penn National in 2020 purchased a minority stake in Barstool Sports and launched the Barstool Sportsbook app to stay relevant in the digital wagering space. Last year, PNG also acquired Canada-based theScore to open access to other markets. Morris’ desire to bring all sides together in Missouri is born, in part, out of frustration, but also of the hope that more than 30 markets later, he can create something of a blueprint going forward.
“We wanted to see if we had any success, and if we do, maybe this can be a model in the remaining states that are considering legal sports betting,” he said. “We look forward to continuing to work with the legislature, teams, and our partners in Missouri, and are hopeful that we can finally get this over the goal line this spring.”
