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Policymakers to draw boundary on college sports betting

Whether bettors should be allowed to place wagers on collegiate sporting events and whether legalization would be successful without collegiate betting emerged as a key consideration in the first of two days of Beacon Hill hearings on sports betting legalization Tuesday.


About a year after the U.S. Supreme Court granted states permission to legalize an activity that had previously been mostly sequestered to Nevada and illegal operations, the Committee on Economic Development and Emerging Technologies on Tuesday began to dig into the bevy of issues that would come with the implementation of sports betting.


Gov. Charlie Baker and a handful of lawmakers have filed their own proposals laying out how a legal sports betting industry should be shaped and regulated in Massachusetts. Baker's bill would prohibit any betting on college or amateur sports, at least one proposal would prohibit betting on contests that involve Massachusetts colleges and others would make the full range of NCAA sporting events open to bets.


"I understand both sides of this coin and I think I can equally argue either side. The pro collegiate betting argument is that it's already being bet on. The NCAA tournament, everyone knows who is running pools and everyone knows who is betting on it ... It's a huge piece of the market, so if you prohibit college betting you are ignoring an active black market," Gaming Commission Associate Counsel Justin Stempeck told the committee. "On the other hand, if you allow college betting on sports, you have to be cognizant of the added pressures it puts on student athletes and they're perhaps the most susceptible to these pressures because they're not making millions of dollars on a professional league contract."


Gaming Commissioner Gayle Cameron, who as a New Jersey state trooper worked undercover to bring down organized crime-connected sports betting operations, told lawmakers that the experts she has spoken with all say that allowing legal betting on college sports is key to undermining the thriving illegal wagering market.


"Law enforcement professionals will tell you that you just keep the black market alive and well by not allowing college betting. The NCAA March Madness is the biggest betting event anywhere in the world," Cameron said. "I also believe that we have a better chance to protect college athletes by bringing some sunshine, by having a clearer path that shows you if there is something going on, by having investigations which can lead to exposing if there is someone out there getting to college athletes."


Baker's bill (H 68) would not allow betting on any college contests, and Secretary of Housing and Economic Development Mike Kennealy said Tuesday the governor is trying to take a "measured approach" by limiting betting to professional sports.


"I would say we're trying to strike a balance here between entering the market and realizing new revenue on one hand and on the other hand taking a somewhat conservative approach," Kennealy said. "We would argue the best way to do this is on professional sports."


A number of lawmakers signaled their disagreement, including Rep. Shawn Dooley. Dooley, a Norfolk Republican whose district includes Plainridge Park Casino, argued that Massachusetts did a good job incorporating responsible gaming protections into the 2011 expanded gaming law and could similarly address issues associated with betting on college sports if it again expands gaming options.


Sen. Brendan Crighton, who has filed his own sports betting legislation (S 201), testified to his colleagues that it is imperative that Massachusetts sports books take action on college games, even though his own bill would prohibit betting on any game that involves a Massachusetts school.


"We cannot compete with the legal market unless we allow betting on NCAA games," the Lynn Democrat said. "This betting is going on currently and we're not going to be able to offer a model that lures folks away [from the illegal market] unless we include what is one of the more popular forms of betting."


Sen. Eric Lesser, co-chair of the committee, asked Crighton how he squares his insistence on college betting being allowed with his own proposal to not allow betting on certain college contests.


"After speaking with a number of colleges in the state ... they don't really have any interest in being a part of this," Crighton said. "I don't really think Massachusetts college sports, though I root for all of our teams and they do a great job, I don't think they're really a driving force behind college sports betting, so I don't think that will hurt us in attracting folks outside the illegal market."


In joint testimony submitted to the committee, the state's three licensed gaming operators -- MGM Springfield, Plainridge Park Casino and Encore Boston Harbor -- said they support allowing bets on professional, collegiate and amateur games, but not on high school sports.


"While some states have moved to restrict betting on in-state collegiate teams, such a measure is counter-productive. Banning wagers on in-state teams merely keeps betting on the illegal markets, where it cannot be monitored," the three casino companies said. "Legalizing such wagers allows the state to track each bet, and identify, document, and address any suspicious betting patterns."


The three in-state casino operators testified from the same book at Tuesday's hearing. The three companies submitted joint testimony in which they said they would support allowing some online operators, like Boston-based DraftKings, to get a piece of the sports betting pie. The companies said they should be the only ones allowed to take bets at physical locations and that mobile betting should be reserved for themselves and "a limited number of daily fantasy operators with proven sports wagering experience."


"These operators have already made tremendous investments and are large drivers of economic activity, jobs and tourism for the commonwealth. The Massachusetts casino industry has invested over $4 billion and created over 7,000 jobs," the companies wrote. "Moreover, certain daily fantasy operators have proven their ability to offer real-money sports wagering in a highly regulated gaming environment and have invested over several years to develop a client-base, brand, and product offering that has strong customer demand."


In its own testimony, Plainridge Park Casino parent company Penn National Gaming expanded on a suggestion in the joint testimony and wrote that mobile operators should only be permitted if they are "tethered" to a casino through a partnership.


DraftKings, the Boston-based company that has grown to be one of the daily fantasy sports and mobile betting industry leaders, pushed back against that idea.


"To fully realize the potential for mobile sports wagering, the legislation should allow mobile operators to receive licenses directly from the regulator rather than requiring partnership with land-based facilities, like casinos or racetracks," DraftKings CEO Jason Robbins said. "A mobile-only license would enhance transparency and accountability. Regulators would be dealing with the mobile company directly, not indirectly through the prism of a casino licensee. DraftKings and our competitors should have a direct relationship with the regulator — and that means being directly accountable to the regulatory authority, the legislature, and ultimately, the residents of Massachusetts."


The Economic Development Committee's hearing is scheduled to continue Wednesday, when members of the general public will have an opportunity to testify before the committee on all things related to sports betting. Eight states, including Rhode Island, are currently accepting legal bets and a handful of others have authorized but not yet launched sports betting.


In 2013 and 2014, 12.6 percent of Massachusetts residents had placed a bet on a sporting event in the last year, Gaming Commission Chairwoman Cathy Judd-Stein said Tuesday morning. By 2015 that percentage had climbed to 17.9 percent before falling back to 16.9 percent in 2016, she said, citing the commission's research into the topic.


"It's an important issue to the commonwealth. It's one that surely contains economic benefits, however it is a complicated issue and one that we want to make sure we vet appropriately and properly," House co-chair Rep. Ann-Margaret Ferrante said.

 

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