The American Gaming Association on the future of US sports betting

The American Gaming Association (AGA) has arguably never been so in demand. With over 20 states now with sports betting bills in one form or another, the clamor for testimony and public comment from the trade association has never been higher. And it’s a responsibility the AGA has shouldered well. When asked about the AGA for this article, one gaming executive said it was making the case for legalized sports betting “professionally and intelligently.”

Of course, there will always be detractors, with some arguing the association is something of a closed shop. For anyone outside the US looking to enter the gambling market, “you either pay your $75,000 to the AGA and join in, or you might as well go home,” according to one exec.

But it’s hardly surprising that the AGA is committed to supporting its members above all else. And right now, those members are focused almost exclusively on the massive opportunities offered by regulated sports betting.

Here, Will Green, senior director of research at the AGA, talks to EGR NA about collaborating with the professional sports leagues, what ideal legislation looks like, and the relationship between sports betting and online gambling’s wider expansion.

EGR North America (EGR NA): The AGA has noted previously how the sports betting legislation in West Virginia is aligned with a lot of the AGA’s principles, but what do you like about it?

Will Green (WG): There’s a lot of provisions in this bill that align with our newly adopted principles, which consist of five broad legislative buckets. These are five areas that we, as an industry, gained rare consensus on and which will help eliminate the illegal sports betting market and make the forthcoming legal US sports betting market competitive.

That includes an integrity provision, what a proper tax rate should be, responsible gaming provisions, allowance of betting on mobile and online, and addressing betting on collegiate sports as well as in-state events.

EGR NA: And West Virginia has a lot of these principles in place?

WG: They didn’t come to us and say, ‘what are your principles?’ because we don’t lobby there, but they are close on several things. West Virginia does allow for mobile and online betting, and collegiate event betting, as well as in-state events. It proposes a tax rate of 10% on GGR. And it limits sports betting to the five existing commercial gaming facilities in the states that already hold licenses.

EGR NA: One of the big concerns facing the industry is channelization – how operators can offer a product that can compete with offshore bookmakers when operators will have to contend with state taxes and other fees that eat into margins very quickly. How do you see this playing out?

WG: Something like 16 states have active bills. One third of those have legislative provisions, meaning they have specified tax rates, while the remaining two thirds are enabling bills, but they leave everything to the regulator. Within the bills that do have provisions, we’re seeing tax rates proposed as low as 6%, which is lower than Nevada [6.75%] to as high as 36%. In Kentucky, there’s still the 20% of handle bill. So, as you can see, it’s an extremely broad range, which means everyone is waiting for the pizza to fall on the plate.

EGR NA: If a state like New Jersey put a tax rate of 18% on sports betting would that create a model for others to follow?

WG: I think the states are going to do what the states want to do regardless of who goes first. I think you can see that with the provisions which have been laid out so far.

EGR NA: In terms of the sports league and their proposed integrity fees, we’ve seen it as high as 1% and as low as 0.25% in the recent New York bill. Do you sense the leagues have a number in mind they will accept? accept?

WG: It is our intent to work together with the leagues and we look forward to hopefully being able to do that. Imagine the things we could achieve together. But I can’t really answer that question because I haven’t had that dialogue. What I will say is that maintaining the integrity of sporting contests is something that everyone is committed to. We’re all on board.

EGR NA: But would you agree that most people don’t view the integrity fee as something that is needed to safeguard integrity?

WG: In a lot of states we have seen no such integrity fee provisioned. West Virginia doesn’t have a 1% fee. I would say the bill that has the highest chance of success now that West Virginia has been passed is Iowa. That bill has no handle or integrity fee either. In terms of whether the leagues have softened, I don’t know [if they have] but what I do know is that legislation is progressing right now and it doesn’t have that fee in there.

“Maintaining the integrity of sporting contests is something that everyone is committed to. We’re all on board” 

We are trying to work with the leagues. We have all the same goals, so imagine how quickly stuff could get done and get passed. It could be easy to think there’s two competing forces here, but the silly part is that we’re actually all reaching for the same goal. We want to protect gaming integrity, destroy the black market and we want to work with the leagues to make that happen.

EGR NA: So why do you think there isn’t that collaboration yet?

WG: I don’t think we’re as far apart as a lot of people are making it out to be. For example, both of us believe that our adopted principles that states should have the option to allow betting on mobile devices. We both believe that there should be wagering on an event through a transparent market that will help protect the integrity of those games. We both believe that protecting the integrity of the game is paramount.

What I’m saying is that there’s a lot of these areas where we’re aligned and you’re starting to see this play out in all of these bills. I think the best way to overcome any sticking points is by sitting down and talking about it and working together to create the best legislation that we can; we haven’t done that yet.

EGR NA: So you see Iowa as the next most likely to progress?

WG: A lot of people characterize 2018 as the year of sports betting, and in a lot of ways this is true with the court ruling. It’s obviously going to be a momentous year. However, when it comes to the states actually regulating, I think a lot of the work is going to be done in the future. I don’t think this issue goes away on a state-by-state level after 2018 or 2019. In terms of which states will act on sports betting the fastest, which is a different question, I would say Delaware where parlay sports betting is already legal, then Mississippi and New York.

EGR NA: This doesn’t seem to have been given much consideration, but what happens if the Supreme Court says that PASPA is constitutional?

WG: I recommend asking someone in government relations as that’s not necessarily my area. However, I will say that, yes, there is a plan and that this issue isn’t going to go away. I think you will see a lot of sides be active at the federal level.

“We want to protect gaming integrity, destroy the black market and we want to work with the leagues” 

EGR NA: Is it fair to say the AGA is largely forgoing the federal efforts at the minute?

WG: Bills which exist at the federal level right now aren’t our bills. We are not driving them. But the great thing about them is that they have elevated the conversation and raised really important points about what needs to happen in a legal sports betting market and why the vast illegal market is such a problem. It means Congress is calling for hearings on this topic, which is really important. I don’t think that would happen without the presence of legislation.

EGR NA: Where does the AGA stand on online poker and online casino because it’s hard to find a strong stance either way from your organisation on this?

WG: We don’t have consensus is the short answer. And because we’re such a vast organisation with many different members, we’re not going to have consensus on it with so many different pieces in place.

EGR NA: When sports betting was pushed to front of mind, there was a suggestion that poker and casino could ride its coattails and we’d see more complete online gaming bills, but that’s not necessarily been the case. Why is that?

WG: We’ve seen an egaming bill in Pennsylvania last year, we’ve seen the introduction of egaming bills in Michigan and we’ve seen the introduction of an egaming bill in Massachusetts this year, so it’s not like the conversation isn’t happening.

EGR NA: How much do you believe in the notion of the ‘domino effect’ which is so often brought up when discussing online gambling legislation?

WG: I think that when states get involved, yes, more states will want to get involved. What I don’t know is how rapid it will be. You sometimes find that if a state introduces a bill, the state next door hears about it and thinks maybe it should introduce the same bill. And I think we’re already seeing that.