With one more vote, and the stroke of a pen, Washington State will be the first to legalize sports betting in 2020.
Late Thursday night, the Senate approved ESHB 2638, a tribal-only sports betting bill that will not permit statewide mobile sports wagering, in the face of heated objections by several lawmakers. The 34-15 vote was a huge victory for the state’s tribes, but at least one card-room owner is threatening a legal challenge to what could be the country’s first sweeping tribal-only sports betting legislation.
“I’m going to call it an overwhelming bi-partisan victory,” said Kevin Zenishek, executive director of casino operations for the Northern Quest Casino, which is owned and run by the Kalispel tribe. “The state has been conservative about gaming. The card rooms were allowed to have table games to be a stimulant to the bar and restaurant industry. That’s why you’ve never seen (commercial) casinos … Washington was never meant to have commercial casinos across the state. I think the legislature just showed that they still showed that they believe that, and (acknowledged) the good work that the tribes have done for state.”
Legal challenge coming?
The bill must go back to the House for concurrence after it was amended during its Senate journey before being sent to Governor Jay Inslee for signature.
The question is whether or not a new law will hold up to a legal claim. Maverick Gaming owner Eric Persson has gone on record as saying he’ll spend whatever it takes to strike down the law should Inslee sign it. At issue is an emergency clause that was added in the House, that would mean the law goes into effect immediately. The clause would allow for an immediate $6 million infusion of cash to the Washington State Gambling Commission, but it would also prevent voters from weighing in on sports betting.
Maverick Gaming and other commercial stakeholders could potentially pursue a ballot initiative to put sports betting to the voters. In Washington, the number of signatures required for a ballot initiative is 8% of the total number of votes cast in the previous gubernatorial election, and a petition to file a referendum must be received by the Secretary of State’s office by July 2, so it appears possible that a referendum could be filed and land on the November ballot.
Maverick provided the following statement from Eric Persson to Sports Handle:
“On behalf of our 2,200 employees and their families who live and work here in Washington State, we are profoundly disappointed that the State Senate has approved a tax-free monopoly for sports betting in Tribal casinos that is also tied to a manufactured ‘emergency’ to prevent a public vote. There is a win for all licensed gaming establishments that helps both Tribal and non-Tribal communities and lawmakers have decided not to pursue it, giving up millions of dollars in tax revenue that could support local and state priorities. While more legislative process lays ahead before this bill reaches Governor Inslee’s desk, we are evaluating all options regarding our opposition to this deeply flawed proposal for legal sports betting.”
Should Maverick, or any other entity, file a legal claim after the bill becomes law, it’s unclear if the Washington State Gambling Commission and tribes could move forward, or if the claim would slow the road from legal to live sports betting. It appears a legal action would focus on the bill’s emergency clause, without which a decision on whether or not to expand gambling in Washington would go to a voter referendum.
11 proposed amendments failed
“If the bill faces a court challenge, we are confident the emergency clause will remain in place as it has been well documented the market for illicit betting is growing in the state, and the legislature had an urgent interest to act this session to protect the public,” said Zenishek. A former Washington Attorney General offered an opinion last month that the emergency clause would hold up to a lawsuit.
On Thursday night, Senators Doug Ericksen and Ann Rivers were the key opposition in the 90-minute debate. Eleven amendments, ranging from adding card rooms to the mix to imposing labor guidelines to adding a 10% tax on gross gaming revenue were offered and failed or were withdrawn.
“We had a chance to extend a hand to the little guy, and we chose not to do it,” Rivers said in debate. “I can’t vote for this when it represents an uneven playing field.”
Ericksen, who spoke for at least half of the debate time, beat the drum on equity and fairness in his quest to get card rooms added to the bill. Among his arguments:
- “It’s hard to have ‘one Washington’ in passing a law that benefits only one group of people. I am not sure how anyone could be against equity for all.”
- “Tonight you are negotiating a deal. Tribes would love to have a deal where they pay no taxes. I’d like that deal, too.”
- “I gave out handouts showing the ‘grandeur’ of the new casinos, so (the tribes) can’t cry poor.”
Though the tribes won’t be paying taxes — that’s not allowed under the Indian Gaming Regulatory Act — they do give back to Washington’s communities. In testimony over the last few weeks, tribal leaders said their groups often provide health care, educational services, elder care, and other services not just on their reservations, but in surrounding communities. They’re also collectively one of the largest employers in the state, and in the end lawmakers didn’t seem to want a massive expansion of gambling.
“It’s wise for the state to take a very small step with our trusted partners,” said Senator Karen Keiser during the debate. “This is a very small first step with our trusted partner that will allow us to begin to shut down the illegal market.”
No mobile, betting on WA college teams
Operators disagree — the bill has no mobile component, which is considered critical to squashing the black market, and sports betting will only be accessible to those who visit a tribal casino. Mobile sports betting in other states where it is legal has accounted for as much as 90% of all dollars legally wagered. The bill also prohibits betting on Washington collegiate athletic teams.
The bill will have to go back to the House after the Ways and Means Executive Committee on Monday accepted two amendments, one to funnel $6 million immediately to the gambling commission and one to prohibit sports betting on any minor-league sports. Neither should cause much alarm in the House, which initiated the emergency clause and suggested the $6-million infusion.
“Washington will be the first test for a dominated tribal state that went through a legalization process to allow sports betting,” said Brendan Bussmann of Global Market Advisors. “While the regulatory structure still needs to be set, there’s not reason why, assuming things continue to remain on track that sports betting could be live by this fall.”
North Carolina currently has a tribal-only sports betting law, but if affects only two casinos in the state. Washington’s tribes managed to do what tribes across the country are also hoping to do — get exclusivity on legal sports betting. Earlier this week, the subject came up in hearings in Connecticut and Minnesota, both of which have strong tribal presences, but have been unable to move sports betting forward.
To date, Michigan is the only state that has brokered an agreement between commercial and tribal interests. In that state, both will be entitled to offer retail and mobile sports betting, which is set to launch via the Detroit casinos next week.
“The tribes in Washington State came together united to pass a strong bi-partisan bill to offer sports wagering in the state,” Zenishek said. “For us, it demonstrates that the legislature recognizes us as trusted partners who have worked well with regulators and the need to protect the public interest.”