Late Friday afternoon, the Washington State Gambling Commission voted 3-0 to open the legal sports betting rule-making process and agreed to move forward with a request to the state legislature to forgive or extend repayment of a $6 million loan that is part of the new sports betting law.
Neither decision signals any immediate movement on sports betting; rather, gambling commission staff is setting the table so that it is ready to move when the first tribal compact that includes sports betting is complete. That likely won’t happen for another few months, at which point the gambling commission will start the rule-making process in earnest.
Washington lawmakers legalized tribal-only sports betting in March, limited to betting on premises at brick-and-mortar sportsbooks. But unlike in some states, there are no firm deadlines in the bill. As examples, Colorado’s sports betting law required that the state be prepared for systems go by May 1, 2020, while Virginia’s new law calls for rules to be approved by Sept. 15. Virginia lawmakers legalized sports betting a month later than Washington lawmakers did.
Compacting first, rules second
And while the WSGC has been doing what it can to prepare for sports betting, the state and its tribes must complete the compacting process to add sports betting as an authorized activity before the commission can roll out proposed rules or begin the licensing process.
“The first step is to get this clarified in compact negotiations,” said WSGC Legal and Legislative Manager Brian Considine during the meeting, which was held virtually. “If the agreement is to issue licenses and write regulations, then we will be ready. At three months or so, if we’re in a good place (with compact negotiations) to start moving forward with rules, then we can do so.”
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— Sovereign Bob (@Sovereign_Bob) July 17, 2020
The gambling board is already in negotiations with four tribes, and it will have to negotiate with each tribe individually, come to an agreement, and then have that agreement signed off on by the state legislature, the governor, and the U.S. Dept. of the Interior.
Considine said rules would cover everything from licensing to integrity, but that at this early stage, he couldn’t say exactly how or even when proposed rules would be rolled out.
“In Colorado, Indiana, Pennsylvania, and others, they do take that first step with licensing so they can start knowing who is going to come into the space, and regulations second,” Considine said. “I’m not saying that’s how it will happen, but that’s what other states have done.”
In fact, the Virginia Lottery did just that, rolling out proposed regulations that covered licensing, consumer protections, voluntary self-exclusion and a sports bettors’ bill of rights just last week, with a second round of proposed rules to follow in August.
Washington’s $6 million question
A second key sports betting item on the agenda dealt with the $6 million loan that the state legislature awarded to the WSGC in March. The loan was added as an emergency provision to the law and was supposed to be used to give the commission a leg up on quashing illegal sports betting.
From the bill:
Sec. 14. The sum of six million dollars is appropriated from the general fund—state for the fiscal year ending June 30, 2020, and is provided solely for expenditure into the gambling revolving account. The gambling commission may expend from the gambling revolving account from moneys attributable to the appropriation in this section solely for enforcement actions in the illicit market for sports wagering. The appropriation in this section constitutes a loan from the general fund to the gambling revolving account that must be repaid with net interest by June 30, 2021.
But sports betting became law before the coronavirus became a major issue in the U.S., professional sports shut down, and stay-at-home orders or restrictions were put in place. When the loan was issued, the intent was that it could be paid back using proceeds from sports betting, such as licensing fees. But with the overall slowdown in the economy, the gambling board, like nearly every other government agency in the U.S., is experiencing a shortfall.
Gambling Commission CFO Chris Stanley outlined a plan to request an extension on paying back the loan to 2022 or ask for complete forgiveness. Ex-officio board member Sen. Steve Conway strongly recommended asking for an even longer extension — into 2023 or 2024 — rather than going back to the legislature a second or third time. In the end, the board agreed that having the loan forgiven would be the goal, but failing that, it would ask the legislature for an extension.
“I am a proponent of asking for forgiveness, and it is up to Brian (Considine) to bring that home,” said board chairman Bud Sizemore. “If he cannot do that, then we ask for another year or two. I don’t want to give up on the idea of additional enforcement.”
The board tabled several other capital projects, including replacing its IT system, in favor of managing the sports betting loan.
