As states jockey for position in the newly legal sports betting industry, West Virginia looks to be ahead of the game as one of the next to offer a chance to wager on sports as early as this fall.
The Supreme Court’s ruling in May striking down a 25-year federal ban on sports betting has opened the door to let individual states decide if they want to permit it or not, and at least four have taken steps to allow it.
Along with Pennsylvania, New Jersey and Mississippi, West Virginia’s legislature passed a bill in March that permits sports betting at casinos and racetracks, putting them in line to join the states that currently allow it — Nevada and, now, Delaware.
The West Virginia Lottery, which serves as the regulatory agency for statewide gambling activities, is in the process of developing rules and regulations so its five casinos can move forward with offering sports bets in the coming months, according to public relations manager Randy Burnside.
“Our goal is to have sports books operational … by the start of football season,” Burnside said. “There’s a lot that needs to be done before we can get to that point, but we know our facilities are looking to aim for that.”
That’s true for Penn National Gaming, the parent company for Hollywood Casino at Charles Town Races in Jefferson County, W.Va.
Jeff Morris, vice president of public affairs for the company, said the casino operator is “really thrilled about West Virginia, in particular.”
Morris said the state’s legislature showed great foresight in passing a law prior to the repeal of the federal ban. He also commended West Virginia’s decision to propose reasonable tax rates on receipts and application fees that are competitive with other states.
Under the West Virginia law, casino operators would have to pay a $100,000 licensing fee and all receipts are subject to a 10 percent tax.
“We’re looking at plans now for what to do with a sports book” at the Charles Town facility, Morris said. “Provided they’re ready to go by the fall, we’re excited to get going when football season arrives.”
According to a state-hired consultant’s “conservative estimate,” Burnside said West Virginia casinos could produce between $5 million to $9 million in sports-betting revenues in the first year.
“It’s something we view as an amenity that will hopefully bring folks to our state and into our facilities,” he said. “… I know we’re excited to be one of the first to have legislation on the books and be ready to go. We’re hoping we can capitalize on that.”
While Pennsylvania, too, has taken steps to legalize sports betting, the proposed costs for casino operators could make some of the state’s 12 casino operators think twice about participating.
The state has proposed a license fee of $10 million and a tax rate of 36 percent, more than triple the rate proposed in West Virginia and New Jersey, making it “the highest in the world,” according to Morris.
Penn National Gaming also owns the Hollywood Casino at Penn National Race Course in Grantville, Pa., just off Interstate 81 near Harrisburg.
“When you consider sports betting, the margins are incredibly tight,” Morris said. “It’s important that legislation and regulations are set so that we can compete with the illegal betting market, which is still out there.”
Illegal sports betting is estimated to be a $150 billion industry already, which isn’t expected to go away if wagers on sports become legal.
“It’s not like by legalizing sports betting … the illegal market is going to disappear,” Morris said.
The Pennsylvania Gaming Control Board, which serves as the regulatory agency for the nation’s second-largest commercial casino state behind Nevada, is working through the rollout of its initial rules and regulations for sports betting, spokesman Richard McGarvey said.
McGarvey said the process is expected to take several months, and there’s no timeline yet for when casinos could be given the go-ahead to begin taking sports wagers.
“We’re more or less in a wait-and-see,” he said. “We’ll have to see how it all plays out.”
There’s likely to be some back and forth between regulators and gaming operators, considering that what’s currently proposed in terms of fees and taxes could leave operators “struggling to see if they can turn a profit,” Morris said.
“I think that’s why you see West Virginia moving so much more quickly,” he said, adding that plans to allow wagers via mobile applications — where roughly 60 percent of bets are currently placed — is welcomed by operators.
“We’re really excited for the opportunities in West Virginia and hope to talk some sense into the folks in Pennsylvania to see if we can find something that can compete with the neighboring jurisdictions,” Morris added.
A bill signed into law by Gov. Tom Wolf last October stipulates that only casinos can apply for a license to offer sports gambling at the facility or through an online app. The tax would be paid out of casino profits, not from the bettor.
Still years away?
On the other end of the spectrum, Maryland appears to be still a couple years away from legalized sports gambling, and that’s if the state’s voters decide to allow it at all.
“It will have to wait until the next session because Maryland, unfortunately, didn’t get the ball across the goal line (this past legislative session),” said Del. Mike McKay, R-Washington/Allegany.
While lawmakers failed to pass a bill that would legalize sports betting in the event of a federal repeal, the legislature can still call a special session this summer to get a state constitutional amendment in time for the November general election.
The deadline to pass a bill and get the referendum on the ballot would be Aug. 20, according to state Sen. George Edwards.
Edwards, R-Washington/Allegany/Garrett, said he recently received a briefing from the Maryland Department of Legislative Services, showing sports betting revenues could range from $7 million to $24 million depending on the tax structure and permitted facilities.
However, he was noncommittal when asked if he thought a special session was a possibility before the August deadline.
“Evidently, they’re taking a look at it, but I wouldn’t hold my breath,” Edwards said, although he acknowledged that it would be smart for Maryland to pass legislation to keep pace with neighboring jurisdictions.
“We’re going to have people going there,” he said. “We might as well try to keep them here.”
If a special session isn’t called, it would likely be discussed during the 2019 session that begins in January, but the next chance to put it to voters would be in 2020.
McKay, who supports legalized sports betting, said the state legislature’s indifference on one bill, which passed through the House of Delegates last session but failed in the Senate, boiled down to whether to allow sports betting at Maryland’s racetracks, too, along with casinos.
He and Edwards said that could be a topic of debate again in the 2019 session.
In any case, lawmakers’ inaction to pass a sports betting bill was “a missing of the mark” for the state “because it’s going to be popular,” McKay said.
For a resort like Rocky Gap, which has more than just slots and table games, the ability to add sports wagering to its portfolio would make the facility even more attractive as an entertainment destination in Western Maryland, he said.
“Whatever we can do to make it worthwhile, to make Rocky Gap be successful, we need to do that,” McKay said.