Off the boil

US sector loses its lobbying mojo

Jun 20, 2024

The US online sector regroups after drawing a legislative blank in 2024.
UK parliamentary election date betting scandal deepens.
Florida could provide tribal OSB template, suggests Deutsche Bank.
The Swedish gambling regulator bans more skins.

Some’ll win, some will lose, some are born to sing the blues.

Losing the argument

Waxing: Gambling lobbyists have recently lost their touch after notching up a notable run of successes, particularly post-PASPA, with legal sports betting having spread to 38 states plus the District of Columbia.

Waning: That record of success has seemingly evaporated in 2024 with sports-betting legislative efforts blanking so far this year. Moreover, measures that might be seen as being detrimental to the industry are in the offing in key states.

Massachusetts is knocking on the industry’s door, inquiring about policies that limit or ban bettors.
Illinois significantly increased the tax rate on operators, shifting from a flat 15% tax to a graduated rate with a low end of 20% and a high end of 40%.
An increasing number of states are banning credit card gambling transactions.
The NCAA has convinced several states (Ohio, Maryland, Vermont and Louisiana) to prohibit player prop bets on college athletes. Nine states already prohibited these bets and several more are considering them.

If you can break it there: However, some would argue the industry’s waning political clout has been evident for some time. New York was the first state to take a stand against the industry, incorporating a hefty 51% tax rate into the request for proposal framework. But it wasn’t the first state to heavily tax the industry.

That honor goes to Pennsylvania at 36%, albeit with an effective rate of around 25%, and the lottery-run monopoly states of Rhode Island (51%) and New Hampshire (51%).
Still, the industry never drew a line in the sand over the tax rates. Opening the New York market was still seen as a win, and the 51% tax rate was viewed as something of a loss leader.

There was an unspoken belief that the industry lobbyists would be able to do two things: go back to their winning ways and convince future states to implement far lower tax rates and convince New York to lower its tax rate post hoc.

That hasn’t happened. And New York being New York, other states are pointing to it as a model.

California doesn’t know how to party: The bigger loss came the following year in California. The failed ballot initiatives of 2022 shattered the industry’s image of invincibility. The mobile sports-betting ballot initiative – Prop 27 – didn’t merely fail, it was a historical loss, receiving just 17.7% support.

The resounding loss led to what has been called an “apology tour,” with the newly humbled sports-betting companies coming back to California with their tail between their legs.

A couple of fights left: The timeline of events, beginning with New York, moving through California and right up through Illinois, indicates a fighter past their prime. Throw in the growing advertising and social harm concerns, and one has to wonder what political capital the sports-betting industry and its lobbyists have left.

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The thick of it: The betting scandal around the date of the UK election is escalating after revelations just this morning that a second Conservative Party candidate has been found to have placed a bet on the date of the election a matter of days before Prime Minister Rishi Sunak declared a snap poll.

The BBC is now reporting that the candidate in question, Laura Saunders, is married to the party’s director of campaigning, Tony Lee.
Meanwhile, a police officer from Sunak’s protection team has been suspended from his duties pending the outcome of an investigation on the part of the UK Gambling Commission over alleged betting on the date of the election.

Limbo: At a conference hosted by CMS yesterday, UKGC CEO Andrew Rhodes said the release of the third tranche of White Paper consultations had been delayed by the election. “Everything is on ice,” he added.

Defending the controversial upcoming release of new statistics on problem gambling, Rhodes countered criticism over the junking of the previous ‘gold standard’ health survey by suggesting that “presupposes previous methodologies were 100% accurate.”
“No methodology is 100% accurate,” he added. “The health survey was less frequent and there were a limited number of questions on gambling.”

Minor oversight: The Netherlands Gambling Authority is probing the age-restriction controls of lottery games. Youngsters are able to gamble easily across licensed charity lotteries, including Postcode Loterij and VriendenLoterij, the regulator said, as the operators have not installed age-checking software.

Dunked on: Canadian police are investigating former Toronto Raptors forward Jontay Porter, who was recently banned from basketball for life after betting on his own team to lose. Porter also disclosed confidential information about his injury status to sports bettors, later claiming he did so to pay off significant gambling debts.

The Ontario Provincial Police have now opened a criminal investigation into the matter, after an initial probe found the former NBA player’s actions warranted further scrutiny.
US officials have charged four men with wire fraud in connection to the case, however Porter has not been charged and is said to be working with federal agents.
The Canadian force said it will share information with its US counterparts.

The Ohio Casino Control Commission has approved changes to its advertising and promotional rules and has expanded the scope of what integrity monitors may do.

Pennsylvania: A bill to prevent gambling companies from directly advertising to gamblers on the state’s self-exclusion list has been introduced in the state Senate.

New Jersey: A responsible gaming task force has been created through an executive order from Gov. Phil Murphy.

Florida read across

The blueprint: The decision on the part of the Supreme Court to deny the challenge to Florida’s renegotiated compact with the Seminole, which grants the tribe a monopoly over OSB and potentially iCasino until 2051, “essentially provides a blueprint” for the tribes in California.

The analysts at Deutsche Bank noted this week’s decision is likely not the end of the legal drama, with West Flagler and associates likely to continue their legal fight in various state courts.
But this won’t stop the Seminole’s Hard Rock being the sole OSB operator in the state.

Show me the way to go home: For the California tribes, the template from Florida “essentially allows them to potentially amend their current compacts to permit sports betting and avoid a ballot initiative, which, despite being successful for the tribes in 2022, was costly,” said DB.

“Much like Florida, however, should the tribes successfully amend the compact, the opportunity for the traditional online operators would remain cloudy.”

Get with the program: Still, the shape of the California tribal market, where there are 70+ tribes, suggests hopes that these tribes might “simply partner” with OSB operators “lacks an understanding around tribal politics.”

“Given the sensitivity around the control of gaming in the state, we believe it is naïve to expect the tribes to turn over any element of gaming to outside entities, without a significant and ongoing financial return,” the team wrote.

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Swedish bans

Shedding skin: Swedish gambling regulator Spelinspektionen has banned four more businesses for allegedly offering illegal skin gambling platforms, as licensed operators warned the authorities are not doing enough to combat black market trade.

The regulator said Gamevio Ltd, Bigskin Trading Limited, Santeda International BV and Samilland.co were acting without licenses and did not carry age controls.
Two other skin operators were banned in April: Newera Frozen PTE Limited and Aprodi Limited were discovered to be marketing via video platforms such as YouTube and Twitch.

Directing traffic: Swedish gambling operator Aktiebolaget Trav och Galopp (ATG) claimed the channelisation has plummeted over the last six months and that traffic to illegal operators has risen tenfold since 2019.

ATG chief exec Hasse Lord Skarplöth said the figures were “deeply concerning”, adding that regulators needed to crack down harder on illegal operators.

Fight the power: Separately, a Swedish court has overturned fines handed out by Spelinspektionen to two bet365 subsidiaries in the country. Hillside (Sports) and Hillside (Gaming) were hit with penalties of $6.23m and $1.35m respectively in April last year for player harm failings.

The operator appealed both and the fines have now been reduced to $3.82m and $382k respectively.
The Administrative Court said its revised fine is “proportionate and fair” with regard to the “violations in question, Hillside’s financial circumstances” and the case’s “mitigating and aggravating factors.”

Chile regulator

Suits you: During the first half of this year, Carlos Baeza, legal advisor to Betsson, Betano, Coolbet, Latamwin, Betwarrior and 1xBet, filed two lawsuits against the Superintendency of Gaming Casinos (SCJ) and the Undersecretary of Telecommunications (Subtel) for exceeding their powers in 2023.

He also filed another lawsuit against the state lottery Polla Chilena de Beneficencia for unfair competition.
All this followed the Supreme Court ruling on September 12, 2023, which blocked 23 betting sites, including the above-mentioned operators.
Although the industry continues to function, this ruling served its detractors to label them as illegal.

This is the modern way: Faced with this scenario, Baeza changed his strategy and asked: What factors caused this scenario? What should be done? And what is missing to recover lost ground? Subsequently, he deemed two modifications necessary:

First, modernize the SCJ and, second, provide real figures of the impact of casino platforms on Chile, but through an independent body.

For Baeza, the SCJ has an “anachronistic” institutional design (from the early 80s) and is more political than technical.
Today, “the superintendencies are regulatory agencies, collegiate and independent bodies, that is to say, they are autonomous and without political burden,” he said.
Operators hope to include this proposal to modify the SCJ in the bill that is currently in the Senate.

Calendar

Jun 20: Canadian Gaming Summit
Jul 17-20: National Council of Legislators from Gaming States, Pittsburgh

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