Mass. Lawmakers Still 'Fact-Finding' About How — Or Whether — To Allow Legal Sports Betting

Will Massachusetts bettors be able to plunk down a legal wager on the Super Bowl champion New England Patriots when they take the field week one against the Pittsburgh Steelers?

"I wouldn't bet on it," said Sen. Eric Lesser, who as co-chair of the Joint Committee on Economic Development and Emerging Technologies has been studying sports betting to prepare for possibly writing a bill that would expand yet another form of gaming to Massachusetts.

Along with House co-chair Rep. Ann-Margaret Ferrante, Lesser said Thursday at a State House News Forum on sports betting that he and Ferrante are still in listening mode. They have not yet settled on questions like whether to allow online bets, whether to take bets on college games or what tax rate to set on wagers.

"We're still in the fact-finding stage of all this. As I think has been well-reported, this is a complex issue," Ferrante said. "It is an issue we want to be very diligent with and we want to make sure that if Massachusetts is to go forward with this, that we do it properly."

While eight states, including Rhode Island, currently accept legal bets, Massachusetts is among a handful of states moving toward allowing adults to legally wager on the outcome of professional sporting events.

Gov. Charlie Baker earlier this year proposed a bill that would allow betting at licensed casinos in Massachusetts and through online platforms like DraftKings.

James Chisholm, director of global public affairs for Boston-based DraftKings, said lawmakers should feel a sense of urgency around standing up a legal and regulated betting market because people will be betting on the Patriots' upcoming season no matter what.

"They absolutely will — it just won't be legal. There will be no consumer protections, there will be no responsible gaming education, and there will be no revenue for the state," Chisholm said on a second panel Thursday morning. "But people are absolutely going to be betting on it."

At the end of the month, the Legislature will dig into the question of legalizing sports betting in Massachusetts in earnest with a two-day hearing that will include invite-only testimony and a public comment period.

The Joint Committee on Economic Development and Emerging Technologies plans to gather in Gardner Auditorium on May 28 to take testimony from stakeholders like the Massachusetts Gaming Commission. It will return the next day to hear from the public.

Gaming Commission Chairwoman Cathy Judd-Stein said she plans to testify, and said the commission will issue an update to its 2018 white paper on sports betting in time for the hearing.

Lesser has been consulting with former U.S. Sen. Bill Bradley (D-N.J.), who was also formerly a NBA player, while he studies sports betting. Lesser said the first question for the committee and Legislature is whether to make betting legal at all.

"There is the threshold question here of whether we want to do sports gaming in Massachusetts," he said. "I think it's important before we rush into a decision of what a legalization would look like that we answer that threshold question of whether we want it."

Lesser and Ferrante each said they have not yet formed their own opinions on whether or how to legalize betting, but the chairs highlighted a number of issues the Legislature will have to think through: a tax rate, whether there is a role for the Massachusetts State Lottery, how to manage the risk that comes with accepting bets and how to ensure the integrity of the games and wagers.

Ferrante said there is one thought that has been keeping her awake at night as she has studied sports betting.

"We had a group of representatives from a players' association come in and very bluntly they said, 'Madam chair, people bet on horses and they bet on dogs. Do not put us in that same category,' " she said. "And so the preservation of human dignity and the preservation of integrity, if we can get as close as we possibly can to ensuring those and resolving some of the other issues there is an appeal to the revenue that it could bring in. If we can't, then $31 or $35 million is too low a number to sacrifice those two things."

Legislators will also have to wrestle with the question of integrity fees or another form of compensation for the sports leagues that run the contests that would be subject to betting. Though no state has yet included an integrity fee to go to the leagues in its legislation, the NBA and others have been pushing for a 0.25% fee on all wagers placed on any specific league's games.

"It is modest compensation that fairly treats the leagues as stakeholders and partners. If this happens in Massachusetts, it is new and exciting and a lot of people see a lot of opportunities. But you cannot escape the fact that absent our games, there is no new market to bet on or to be excited about," Alexandra Roth, associate counsel for league governance and policy at the NBA, said at Thursday's forum. "Our games are powering this industry and doing so as there is an additional integrity and other risk being placed on us, and we think it is fair for us to share in some of the direct compensation."

In addition to the leagues, the Legislature will also have to contend with a variety of other stakeholders who are eager for a piece of the action, like Suffolk Downs, the thoroughbred track and simulcast center in Revere and East Boston that already accepts online wagers on races.

"It's gone very well for Massachusetts residents without any integrity concerns," Chip Tuttle, the chief operating officer of Sterling Suffolk Racecourse, said. He said Suffolk Downs, under the oversight of the Gaming Commission, has processed about $500 million in online wagers over the last five years.

"I would make the argument that we're already in the business and as the commonwealth considers expanding the business, we deserve a seat at the table," he said.

The state lottery has been watching the Legislature's early moves around expanded betting with great interest. For years, Treasurer Deborah Goldberg and lottery officials have argued the lottery needs to be able to sell its products online in order to compete with casinos, daily fantasy sports and, possibly soon, sports betting.

Lottery Executive Director Michael Sweeney said Thursday that the lottery's current financial picture — profits are running about $100 million ahead of last year, the agency appears poised to return nearly $1 billion in local aid to cities and towns, and the lottery could challenge its all-time revenue record this year — does not tell the whole story.

"We have been doing very well, but what I like to remind people is that the night before the Titanic hit the iceberg, it was setting a new record for crossing the Atlantic Ocean," he said. "That's where the lotteries in this country are now ... we really need to pivot towards where technology is. You have to move to where the customers are and the technology that they're engaging."

Lesser and Ferrante declined to estimate when, or whether, their committee might produce a bill. They said the May 28 and May 29 hearings will get the ball rolling.

The governor initially said his "preferred option" would be for the Legislature to pass a sports betting bill before its August recess in order to start taking bets on the next NFL season. Last month, he said that "it would be great" if the bill would get done before lawmakers wrap up formal sessions this calendar year, moving the goal posts from the Legislature's August recess to its Thanksgiving and holiday season break.

Baker included the assumption of $35 million in revenue from sports betting in his fiscal year 2020 budget, to be spent as local aid. House and Senate leaders have not loaded sports betting revenues into their budgets.

House Speaker Robert DeLeo said last month he does not "think it's as easy as some people may suspect it may be" to develop and pass a sports betting bill.