After Reaching Last-Minute Deal, Massachusetts House and Senate Pass Retail and Online Sports Betting Bill

On Monday, August 1, 2022, the Massachusetts House and Senate reached a last-minute deal to legalize retail and online sports betting throughout the state. The bill, which Governor Charlie Baker is expected to sign in the coming weeks, would give Massachusetts’ existing casinos, racetrack and simulcast betting facilities the ability to conduct retail and online sports betting operations. As discussed further below, the state’s gaming establishments would also be permitted to partner with third-party online betting platforms, so long as those platforms have been appropriately licensed and approved by the Massachusetts Gaming Commission (the Commission). The bill further imposes a 15% tax on adjusted gross wagering receipts for in-person sports betting operations and a 20% tax on adjusted gross wagering receipts for online/mobile sports betting operations.

Notably, the bill imposes a ban on wagering involving in-state college teams, except when they are playing in tournaments.

Licensing Framework

Under the bill, retail and online sports betting would be governed by the Commission. Specifically, the bill authorizes the Commission to issue “Category 1” Licenses allowing each of the state’s casinos to conduct in-person sports betting on casino premises and to conduct online sports betting through two individually-branded mobile applications or other digital platforms (i.e., “skins”) approved by the Commission.  Category 1 Licensees would be permitted to contract with third-party online betting platforms (such as DraftKings or FanDuel) to operate the licensee’s online betting “skins” on their behalf, so long as the third-party platform operators have obtained a “Category 3” License from the Commission, which authorizes the conduct of sports betting through a mobile application or digital platform.

The bill also authorizes the Commission to issue “Category 2” Licenses to the state’s live horse racetracks and simulcast horse and greyhound race betting facilities. The “Category 2” License authorizes the racetrack/simulcast facility to conduct in-person sports betting operations at their existing facilities and online sports betting operations through a single online/mobile betting “skin” approved by the Commission. Category 2 Licensees would be permitted to contract with third-party online betting platforms to operate their online betting “skin,” so long as the third-party platform operator has obtained a “Category 3” License.

The bill provides further that all licenses shall be issued for a 5-year term, and the license fee for each of the three categories is $5 million. License applicants would also be required to pay a $200,000 application fee to cover the costs associated with reviewing/processing the application and conducting thorough background investigations.

The bill does not mention any license, registration or certification requirements for vendors (gaming-related or otherwise). That said, it is possible that such requirements may be included in future corresponding regulations; the bill provides specifically that the Commission “shall promulgate rules and regulations necessary for the implementation, administration and enforcement” of sports betting conducted pursuant to the bill.

Sportsbook Marketing/Advertising Restrictions

The bill also includes a provision specifically addressing marketing/advertising for sportsbook operators, stating the Commission shall promulgate rules prohibiting: (1) advertising, marketing or branding that is false, deceptive or misleading; (2) unsolicited pop-up advertising (online or via text message) directed to persons on the self-exclusion list; (3) any form of advertising, marketing or branding the Commission “deems unacceptable or disruptive to the viewer experience at a sports event”; (4) advertising, marketing and branding deemed to appeal directly to a person younger than 21 years old; and (5) advertising on any billboards or other public signage that fails to comply with state, federal or local law.

Although the bill explicitly limits the scope of prohibited marketing/advertising activities that may be regulated by the Commission, it does give the Commission at least some discretion – perhaps most notably, to address activities that can reasonably be deemed “unacceptable or disruptive to the viewer experience” at a sporting event or “appeal[ing] directly to a person younger than 21 years old.” That said, that it seems unlikely the limited scope of authority granted to the Commission could be interpreted to permit the types of strict, European-style sportsbook marketing restrictions that some fear could soon be implemented in the U.S.

“Launch” Timeline 

Even if Governor Baker signs the sports betting bill into law in the coming days, retail and online sports betting cannot officially “launch” statewide until the Commission promulgates sports betting regulations and begins issuing licenses. We note, however, that the bill appears to contemplate an accelerated “launch” timeline, providing for (1) the promulgation of “emergency” sports betting regulations, which could take effect immediately upon filing with the Massachusetts Secretary of State and remain in effect for three months, thereby temporarily bypassing the arduous public hearing, comment and review process required for permanent regulations; and (2) the issuance of “temporary” operator licenses for the “immediate commencement of sports betting operations” upon submission of a license application.

White and Williams will continue to monitor developments in Massachusetts and provide further updates when appropriate.

Associate at White and Williams LLP | 215.864.6274 | rothz@whiteandwilliams.com | View Bio | See More Posts