Massachusetts law could require sportsbook closures
Massachusetts law could mandate regulators award online sports betting licenses to more than 20 operators that would then have to cease operations within a year, an unprecedented scenario that could sow chaos in the regulated market.
The state’s 2022 sports betting law has separate requirements for awarding “temporary” sportsbook licenses and “permanent” licenses. Under an interpretation of the law discussed during a regulatory meeting Thursday, officials weighed the possibility it would effectively mandate awarding licenses to books that would then be required to shut down within a year.
With the exception of the Hard Rock Sportsbook, which was deemed by a court to violate federal law, no sportsbook in any of the more than 30 states with legal wagering has been required by statute to shut down.
Massachusetts law allows no more than 15 online sportsbooks, eight of which have to partner with existing brick-and-mortar gaming facilities in the state. More than 30 sportsbooks have filed formal notices of interest to operate in Massachusetts, most of which are aiming to earn one of the up to seven licenses not explicitly partnered with the retail properties.
Under the scenario considered Thursday, Massachusetts regulators would have to award temporary licenses to all applicants that qualified by law and state regulations. Since the law explicitly prohibits more than 15 permanent licenses, all operators that didn’t earn that qualification would then be forced to shut down, a scenario Massachusetts Gaming Commission Chair Cathy Judd-Stein Thursday called “untenable.”
“Because (sportsbook licenses) are capped at the begging and not at the end, we have a real challenge,” Judd-Stein said during Thursday’s commission meeting.
State gaming officials questioned how customers could withdraw money from shuttered accounts, receive payouts from futures wagers and be aware of the risk of a book ceasing operations, among a host of other issues under this scenario. Bettors could potentially go months depositing and wagering with a sportsbook only to have little notice that the operator would soon shut down.
It would also create further confusion between regulated and unregulated markets, a distinction many American bettors still struggle to understand.
The 15-operator cap already created a difficult sportsbook selection process in one of the nation’s most anticipated online sports betting states. Nearly every major US operator has expressed interest in Massachusetts and would publicly argue it is qualified for one of the few available permanent licenses.
Along with US market share leaders FanDuel, Caesars and Boston-based DraftKings, other major US books including PointsBet, BetRivers, Bally Bet and Hard Rock have filed formal notices of intent. Well-funded operators looking to build traction in the US including bet365 and BetFantics have also applied.
Massachusetts Gaming Commision Chair Cathy Judd-Stein: “Because (sportsbook licenses) are capped at the begging and not at the end, we have a real challenge.”
BetMGM, Penn Entertainment’s Barstool Sportsbook and WynnBet are effectively guaranteed one of the 15 online licenses via their partnerships with respective Massachusetts casinos. MGM Springfield, Penn’s Plainridge Park and Wynn’s Encore Boston Harbor all can choose one additional online partner. The state’s two simulcast racing facilities can partner with one online sportsbook and one retail partner apiece, though neither has announced such a deal yet.
Most if not all of the unaffiliated books would pursue temporary licensure even knowing that they may not earn permanent licenses. That would create a plethora of temporary betting options – and an even more confusing imbroglio once they were forced to shut down.
Members of the Massachusetts Gaming Commission, which will award all online and retail licenses, indicated Thursday they wanted to avoid the unprecedented and uncomfortable scenario that potentially required a dozen or more sportsbooks to case operations but cautioned they may have their hands tied by the law.
Regulators weighed delaying the temporary license process and instead tying it with permanent licensure, a more thorough and complex process. This would eliminate the possibility of a retroactive operator shutdown but would likely delay the launch timeline and may not even be possible under the constraints of the law, Judd-Stein cautioned during Thursday’s meeting.
Commissioners asked legal counsel for further clarification of the law, a process that could help avoid an unwanted mass-market shutdown but further prolong the online sports betting launch process. Legal questions are an additional hurdle to what commissioners reiterated at their most recent meeting was already a lengthy and complex process.
State gaming officials could provide no further launch timeline during Thursday’s meeting but hoped for more clarification at a meeting the following week. Commissioners have previously indicated the process would take around six-to-nine months, which is roughly the average timeline in most of the more than 20 other states with legal online sports betting.
Commissioners also considered letting retail sportsbooks open before online books but took no concrete action.
Massachusetts Gov. Charlie Baker signed his state’s sports betting bill into law next month. Under the best current projection, the state’s legal sportsbooks would miss most if not all of the lucrative NFL and college football regular seasons but could be open by the 2023 Super Bowl and NCAA Men’s Basketball Tournament, perennially the two most-wagered upon US sporting events.