Winners and Losers: Landmark West Virginia Sports Betting Bill Almost FinalBy Brett Smiley | Published: March 2, 2018 at 3:43 pm
The West Virginia Lottery Sports Wagering Act passed the state’s House of Delegates on Friday by a sweeping 77-22 margin after SB 415 cleared the Senate 25-9 two weeks ago. Due to a minor amendment, the West Virginia sports betting bill will head back to the state senate possibly as soon as Saturday, when it is expected to pass and then go to the desk of Governor Jim Justice, who is expected to sign. (Update: it passed in senate on Saturday.)
If and when finalized, the bill will legalize sports wagering in West Virginia, pending the elimination of the 1992 federal ban on sports betting outside Nevada — the Professional and Amateur Sports Protection Act — which may come as soon as Monday when the Supreme Court of the United States may strike down the law on constitutional grounds in the New Jersey-led Murphy v NCAA.
While numerous states across the country (particularly in the northeast) are moving legislation through one chamber or another, the Mountaineer State has been preparing for sports betting for over a year after commissioning an economic impact study and convening various stakeholders to hash out an agreeable bill. We’re going to assume this thing is completed soon, and take a look at the winners and losers.
Landmark West Virginia Sports Betting Bill Passes Both Chambers, Goes Back to Senate for Concurrence And Passage Expected: Winners & Losers
Why is this landmark? This is the first of over two dozen legal sports betting bills to pass both chambers in 2018. Pennsylvania managed one in 2017 (it has problems) and others laws passed in 2017 calling for the study of sports wagering, but if/when SB 415 goes through, it will be the first this year to establish a workable framework and put the state in position — if PASPA gets repealed — to begin taking wagers (possibly in 60 days in a post-PASPA world).
But first a few key points about the bill: The West Virginia Lottery Sports Wagering Act gives the state lottery regulatory and licensure responsibilities. The state will allow existing casino and racetrack licensees — there are five of them — to apply for licenses along with a $100,000 application fee, requiring renewal every five years at the same rate. The state will levy a 10% tax on operators’ gross sports wagering revenue.
The study by Eilers and Krejcik gaming research firm commissioned by the state projected that the West Virginia sports betting market would create in $13.4 million in revenue the first year, $21.7 million the second, $29.7 million in year three, $29 million the fourth year, and $28.7 million in five years. Finally, SB 415 will allow mobile sports wagering via approved online platforms or apps.
(1) West Virginia sports betting enthusiasts. Obvious one here. The goal of the state, the sports leagues and every other proponent of legal sports wagering is to create a legal, regulated, safer environment that moves (much of) an estimated $200 billion in illegal wagers in the U.S. annually into a place where it can be taxed and better monitored.
(2) The West Virginia Lottery representatives who moved this legislation through in an expeditious fashion, with one of its stated goals to get first (or close) to market with a smart, functional framework, which they have accomplished. There are roughly 10 million U.S. citizens within 90 miles of the West Virginia casinos in nearby Ohio, Pennsylvania and Virginia. The state hopes and expects to draw a lot of those folks.
— Danielle Boyd (@danyeller714) March 2, 2018
(3) The state’s casinos and racetracks. They include the Wheeling Island Hotel-Casino-Racetrack, Mountaineer Casino Racetrack and Resort, the Hollywood Casino at Charles Town Races in Ranson, and the Mardi Gras Casino & Resort, near Charleston, plus the Greenbrier Resort in White Sulphur Springs, which is owned by West Virginia Governor Jim Justice.
(4) The casino’s to-be operators. During a Senate Finance Committee hearing, one senator suggested that the state manage the sportsbooks. The Lottery folks recoiled. They’re going to use experienced operators, perhaps William Hill or other Nevada-based operators. It’s not yet clear which entities are in contention.
(5) The West Virginia legislature. They did their homework, held hearings, did not get fooled by the leagues (more below) and moved deliberately to (just about) get it done.
"I don't see why we should give you 1% for anything" says Senator Facemire to MLB's Blair. "Why should we pay you to protect you own interests. Especially 1% off the top. "It's ike we're paying the insurance premium" on your game." #hammer
— SportsHandle (@sports_handle) February 12, 2018
(6) Beneficiaries of the new tax revenue. Per SB 415: Net profit shall be deposited into the State Lottery Fund created “until a total of $15 million is deposited; thereafter, the remainder shall be deposited into the Public Employees Insurance Agency Financial Stability Fund to stabilize and preserve the future solvency of PEIA, and such amount may not be included in the calculation of any plan year aggregate premium cost-sharing percentages between employers and employees.”
(1) Major League Baseball, the NBA and other sports leagues. The leagues made have made a shapeshifting argument for an “integrity fee” and/or royalty fee and/or intellectual property fee and/or some combination. The beginning of the end of the joint MLB/NBA lobbying effort for a 20-25% cut of sportsbook revenue occurred on February 12 at a WV Senate Finance Committee hearing. There, an MLB lobbyist offered an absolutely nonsensical argument about why the leagues deserve an off-the-top cut of revenue that insulted the intelligence of anyone with one-third a functioning brain. (The argument went: they wanted their cut on all wagers because taking a cut on revenue would put them in the untenable position of having to root against one set of fans.)
Sports betting goes to the @WVGovernor.
— Shawn Fluharty (@WVUFLU) March 3, 2018
It was proof positive that the league’s basket of half-baked, contradictory arguments were an attempt all along to roll over gullible or uniformed elected officials. That lobbying effort hit another brick wall in Connecticut on Thursday where lawmakers explicitly called out the inconsistent arguments, citing NBA commissioner Adam Silver’s press conference remark in February that the leagues were indeed asking for a “royalty” payment.
(2) Precedent for the leagues. How important is/was West Virginia’s bill in the overall picture for the leagues? MLB Commissioner Rob Manfred himself held a conference call with West Virginia media on Friday regarding sports betting in the state, reports the Wheeling News-Register.
Ironically, during House debate on sports betting bill, MLB Commissioner Rob Manfred was on a conference call w/ https://t.co/0dOtN7erog. media urging its defeat unless pro sports get a cut of the action via an "integrity fee."
— Phil Kabler (@PhilKabler) March 2, 2018
Silver has been outspoken about sports betting and Manfred has expressed qualified support here and there, but this is the first instance to my knowledge of the MLB honcho himself entering the fray and advocating for a league cut of wagers. For integrity. Or whatever.
As Connecticut lawmakers noted at the hearing on Thursday, speaking to an MLB and NBA official:
Rep. Jeffrey J. Berger: To acquiesce to your request, NV and no other state would not be subject to that fee, and we might be at a disadvantage.
Now they're discussing Wire Act! Seely says states won't be competing that way. (This ignores taxation/revenue and operate revenue)
— SportsHandle (@sports_handle) March 1, 2018
So why the heck will any state agree to pay a dime at this point? One state has already said No. Nevertheless, Missouri and Illinois and Indiana have bills on the table that indeed would pay the leagues their fee.
(3) Opponents of sports betting. This group is comprised mostly of individuals or groups such as Stop Predatory Gaming, which field an amicus brief in Murphy v NCAA regarding gaming and addiction. It’s a legitimate concern. Some people are addicts. Many are already addicted and playing in an illegal market. If you think you have a problem, go read this article.
We’ll have a final update on Saturday or next week or whenever the bill gets a final vote in the Senate, and reaches the Governor’s desk.