Controversial Arkansas sports betting regime moves a step closer
Profit-sharing clause which would see local casinos keep 51% of online sportsbook betting profits survives subcommittee vote
Legislators in Arkansas have advanced a bill to allow mobile sports betting in the Natural State, despite the presence of a controversial profit-sharing clause which could severely impede online sportsbooks.
The Joint Budget Administrative Rule Review Subcommittee approved enabling legislation, ahead of a potential final vote on the bill next week, with a launch potentially in time for March Madness.
Under the bill, Arkansas’s three land-based casino properties: Oaklawn Racing Casino Resort, Saracen Casino Resort, and Southland Casino and Racing will all be allowed to offer online sports betting.
Casino operators will be able to partner with a maximum of two online sportsbook ‘skins’ to operate in the licensed Arkansas market.
A fourth casino, which recently gained approval in Pope County, has yet to be built but will also be able to operate an online sportsbook. Arkansas casinos have offered sports betting in retail sportsbooks since 2019.
Representatives from DraftKings and BetMGM had requested to be able to operate more than four online sports betting skins, however, Arkansas Racing Commission (ARC) members limited final rules to just two skins per retail location following lobbying by local casino operators.
Under the new rules, remote registrations are allowed, with wagering on professional, college, and amateur sports permitted in the Natural State. There is also no mandate by the state to use official league data in respect of sports betting.
Full details of the amendments can be accessed here.
A key issue in the run up to the bill’s passage has been the inclusion of a controversial profit-sharing clause requiring state-licensed casinos to retain at least 51% of profits made from online sports betting, a clause which severely impacts operator profitability.
Placing this in context, most operator agreements with land-based casinos usually allow online sportsbooks to retain 85% to 95% of all profits made.
Initial online sports betting rules approved by the Arkansas Racing Commission in December included the clause, which has since been the subject of considerable protest from mobile sportsbook operators.
Representatives from a number of mobile sportsbooks including DraftKings and FanDuel have opposed the motion, suggesting in hearings taking place earlier this week that the 51% clause discriminated against out-of-state operators and violated federal legislation.
The mobile operators have been joined by their land-based counterparts, who have suggested the clause is an attempt to scupper the expansion of online sportsbooks into the state.
Arkansas state authorities, including the state Attorney General’s chief of staff Brian Bowen, have defended the clause, suggesting it would hold up if challenged in the courts.
The legislation now passes to the Arkansas Joint Budget Committee for approval, and based on current guidelines, the earliest it can pass a vote is February 22.