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Presentation TitleDatePresenter Name, TitleUnit/Division
Sports GamblingJanuary 27, 2020Brian Considine, Legal & Legislative Manager
WASHINGTON STATE GAMBLING COMMISSION 2
Sports Gambling History
• Popularity increases; 1919 Black Sox scandal
1900s
• Nevada authorizes sports betting (1949); feds pass several laws
1940s - 1970• States begin to
allow sports gambling; Nevada allows in casinos
1970s
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Sports Gambling History
• PASPA is enacted
1992• Nevada
authorizes mobile wagering
2010• PASPA held
unconstitutional
2018
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Christie v. NCAA, et al. & NJ Thoroughbred Horsemen’s Assoc. v. NCAA, et al.
Federal Law: Precluded states and tribes from authorizing, offering or conducting sports wagering and prohibited anyone from operating a sports gambling business under state or tribal law, unless the state was grandfathered in 1992
Supreme Court: May 14, 2018 – PASPA is unconstitutional because the Tenth Amendment prevents federal govt. from requiring states to enforce federal laws or policies. Congress can pass a federal law prohibiting or regulating sports betting, but can’t direct states to enforce the law
Effect: States may authorize or continue to prohibit sports gambling.
*Other federal laws are still applicable*
Supreme Court – PASPA Ruling
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Federal Wire Act of 1961
18 U.S.C. §1084
Effect: Prohibits sports gambling through the use of interstate communications and transactions
Focused on: Transmission of bets/wagers or information assisting in the placing of bets/wagers on any sporting even or contest
State Impact: Ask DOJ to intervene or request that a common carrier to discontinue service to entity engaged in illegal gambling communications/transactions
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Indian Gaming Regulatory Act (IGRA)25 U.S.C. § § 2701–2721 (1988)Effect: Authorizes any Tribe with land in trust for gaming activities to negotiate with a state for a gaming compact allowing gambling activities that are permitted in the state for any purpose by any person, organization or entityFocus on: Regulation of gambling activities on Tribal land, especially “Class III” gambling activities that Tribes must negotiate terms with the state prior to offering the activities at their Tribal facilities.State Impact: State negotiates terms for all Class III gambling and is a co-regulator with Tribes for Class III games
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Types of Sports Wagers
POINT SPREAD
Seattle Seahawks-2.5 -110 -130 O 45.5 -110
Philadelphia Eagles+2.5 -110 +120 U 45.5 -110
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Types of Sports Wagers
MONEY LINE
Seattle Seahawks-2.5 -110 -130 O 45.5 -110
Philadelphia Eagles+2.5 -110 +120 U 45.5 -110
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Types of Sports Wagers
OVER/UNDER
Seattle Seahawks-2.5 -110 -130 O 45.5 -110
Philadelphia Eagles+2.5 -110 +120 U 45.5 -110
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Types of Sports Wagers
FUTURES
Super BowlNBA FinalsNCAA Basketball TournamentWorld SeriesStanley Cup
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Types of Sports Wagers
PARLAY
Single bet w/ 2+ wagers
Must win all wagers in parlay
Higher payoff than individual bets
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In-Game Wagering
Actively wagering on an event while it is in progress
Ex: The favorite gets down early in the 1st qtr. The line shrinks in favor of the underdog. Bet prices change.
Includes prop betsEx: Wager on whether a drive will lead to touchdown, field goal, punt or turnover
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STATE REGULATORYAGENCY TAX LICENSING FEES AUTHORIZED METHODS 2019 REVENUE
(As of 1/8/20)Nevada Gaming Control Board 6.75% gross revenue
taxCasinos, Online $292.6 million
$19.6 million (tax)
Mississippi Gaming Commission 12% gross revenue tax $500-$5k Casinos, Mobile (on property)
$40.8 million$4.8 million (tax)
New Jersey Gaming Control Board Land based: 8.5%Online: 13%
$250k initial$100k Annual
Casinos, Racetracks, Online $269.8 million$36.1 million (tax)
Pennsylvania Gaming Control Board 36% $5k - $10 million Casinos, Racetracks, Online $93.8 million$26 million (tax)
Indiana Gaming Commission 9.5% $100k/$50k initial$50k/10k annual
Casinos, Racetracks, OnlineOTBs
$30.6 million$2.9 million (tax)
Iowa Racing and Gaming Commission
6.75% $45k Initial$10k Annual
Casinos, Racetracks, Online $16.3 million$1.1 million (tax)
New York Gaming Commission 10% Unavailable Casinos $7 million$700k (tax)
Operating States
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STATE REGULATORYAGENCY TAX LICENSING FEES AUTHORIZED
METHODS
2019 REVENUE(As of 1/8/20)
Oregon State Lottery Rev Distribution b/t Lottery and SB Tech N/A Online, Retail Kiosks,Lottery Retail Product
$1.1 million
West Virginia State Lottery 10% $100k Casinos, Online $16.6 million$1.6 million (tax)
New Mexico None N/A N/A Tribal Casinos N/A
Rhode Island State Lottery Revenue Distribution:State: 51%; Vendor: 32%; Casino: 17%
N/A Casinos, Online $15.2 million$7.7 million (tax)
Delaware State Lottery Revenue Distribution:12.5% net to vendors; thenState: 50%; Racetrack/Casino: 40%:Horse Race purses: 10%
N/A Casinos $10.8 million$5.4 million (tax)
Arkansas Racing Commission < $150 mil. = 13%> $150 mil. =20%
Up to $250k application fee$10k renewal every 10 years
Casinos N/A
New Hampshire
State Lottery Revenue Distribution:50/50 b/t DraftKings and Lottery/State
N/A Retail SportsbooksOnlineLottery Retail Product
N/A
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STATE REGULATORY AGENCY TAX LICENSING FEE AUTHORIZED METHODSTennessee Gaming Commission 20% $750k
$50k application feeOnline
Colorado Limited Gaming Control Commission
10% TBD; no more than $125k Annual
Casinos, Online
North Carolina Tribal Gaming Commission N/A N/A Two Tribal Casinos
Illinois Gaming Commission 15% $10-$20 million Casinos, Online
Washington, D.C.
Lottery Land-based: 10%Online: 20%
$500k sports arenas$100k other facilities
Lottery = land-based and onlineArenas/commercial = land-based and mobile
Montana Lottery TBD N/A Lottery retailers, mobile (on property)
Michigan Gaming Control Board 8.4% 3 Detroit casinos pay extra city tax
$100k Initial$50k Annual
3 Commercial Casinos, 23 Tribal Casinos, Online
Legalized; Not yet operating
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Sports Gambling is Mainstream
Sports Radio/TV Office Pools Fantasy SportsMarch Madness
Illegal in-state bookies
Bookie using a website managed by offshore illegal book
Bookie running own numbers and book
Offshore sportsbooks
Black Market in Washington
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Current Sports Gambling Laws:• Constitution: Article 2, Section 24 – 60% vote
for new activities• Gambling Act
RCW 9.46.0335 – Sports pools authorizedRCW 9.46.220 - .225 – Professional gambling statutesRCW 9.46.240 – Prohibition on internet gambling
• RCW 67.04.010 – Penalty for bribery in baseball• RCW 67.04.020 – Penalty for accepting a bribe• RCW 67.04.050 – Corrupt baseball playing• RCW 67.24 – Fraud in a sporting contest
Washington State Law
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Source: Eilers & Krejcik Gaming, LLC
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Possible Operational Models
Sports Book Mobile InternetKiosk
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WAGER
RISK CONTROL
RESULTOPERATORDATA FEEDODDS/LINES BOOKMAKING SYSTEM
BETTOR
MANAGED SERVICES*
*MANAGED SERVICESPAYMENT PROVIDERS
FINANCIAL INSTITUTIONSKNOW YOUR CUSTOMER
GEOFENCINGCUSTOMER SUPPORT
MARKETING
INTEGRITY MONITORING
Strong anti-money laundering policies are CRITICAL
Reporting requirementsSuspicious activity reportsOperating requirements
Need access to data
Money Laundering Considerations
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CONTEST MANIPULATION
Bribes | CheatingMatch-fixing | Point Shaving
Spot-fixing | Tanking
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An individual decides he/she wants to manipulate the outcome of a sporting event
1An agreement is made. The “target” will receive payment for the desired outcome
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The individual identifies a “target” who has the ability to affect the outcome
2 The game is played and the “target” works to achieve the desired outcome
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The “target” is paid for manipulating the game and achieving the desired outcome
5
Fixing a game
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Problem Gambling Considerations
Require implementation of responsible gaming programs
2Regulator(s) to enforce responsible gaming requirements
3Dedicate new funding to prevent and treat sports gambling addiction
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Invest in gambling addiction research and support evidence-based programs
4Establish minimum age for sports gambling and fantasy sports
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Five Pillars for Sports GamblingStrong Licensing and Regulation
Strong Agency Funding
Strong Money Laundering and Professional Gambling Statutes
Strong Sport Integrity Laws and Policies
Strong Problem Gambling and Responsible Gaming Policies
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Questions?Brian Considine, Legal & Legislative [email protected]