Virginia is set to become the second US state to allow mobile sports betting without a land-based tethering requirement. Delegate Mark Sickles, the man responsible for drafting the legislation passed by the state in March, talks to Robin Harrison about its progress.
Retail betting reigns supreme in the US. Not necessarily in terms of activity—mobile accounted for 89.2% of Pennsylvania handle in February, and 88.2% in New Jersey—but states have tended to have mobile licenses, where legislation permits, tethered to a land-based operator.
It’s perfectly understandable. After all, New Jersey’s impetus for pressing ahead with its challenge to the Professional and Amateur Sports Protection Act (PASPA) was a desire to prop up its casino and horse racing sectors.
But that’s not to say states without any form of brick and mortar gaming are precluded from legalizing sports betting. We’ve already seen Tennessee, which has no land-based casinos, pass a mobile-only betting bill in May 2019.
Progress towards a roll-out has been delayed in recent months, however. A House subcommittee has put forward a bill to strip the Tennessee Education Lottery Corporation of certain rule-making powers, amid a debate over capping prize payouts to 85% of stakes. A bill in Maine, which would have made mobile licenses available without a land-based partner, saw an attempt to override Governor Janet Mills’ veto fail in February this year.
This leaves Virginia, another state with no casinos, with an outside chance of being the first state to launch mobile-only betting.
The state’s legislature passed House Bill 896 in March, and it is awaiting the signature of Governor Ralph Northam. This is unlikely to be quick—the Governor has five weeks to make recommendations, amend bills and propose technical corrections, following a two-month legislative session.
The bill itself only comes into effect from 1 July. And as its author, Delegate Mark Sickles, points out, the Virginia Lottery Board (which will be tasked with regulating the market) “needs a lot of time to get organized.”
“They don’t want it to fail,” he says. “They’re taking it very seriously, step by step.”
He admits that there is some pressure to get the market live before the National Football League (NFL) season kicks off in September—assuming the coronavirus pandemic has subsided by then—but that “would take a miracle.”
Nevertheless, Sickles is not expecting any shocks from Governor Northam, nor any controversial changes. Any amendments the governor proposes require 51 votes in favor in the House, and 21 backers in the Senate. Should he veto the bill, two-thirds of lawmakers in each chamber would need to back it to override the decision.
“But that won’t happen with this bill,” Sickles adds.
Sickles began work on his sports betting proposal almost as soon as the Supreme Court overturned PASPA in May 2018, he says. This isn’t because he’s a great fan of sports betting, the delegate is quick to add, but because he was eager for Virginia to get its share of revenue and bring at least some offshore activity into the legal realm.
Should Northam, as expected, sign HB896 into law, Virginia would become only the second southern US state to legalize mobile betting. Bets are being taken in Mississippi, Arkansas and New Mexico, but only in land-based casinos. North Carolina, meanwhile, will only allow betting in tribal casinos. Tennessee’s issues with its mobile betting legislation have been outlined above.
He points out that in other southern states, the existing land-based industry would naturally be wary of a product that takes people out of its venues as a potential stumbling block to widespread mobile wagering in the region.
“There [also] probably is a wariness of letting it into peoples’ homes,” Sickles adds. “We didn’t have that issue.”
That is largely because there’s currently nowhere else for sports betting to take place. Virginia, following an extensive study into the impact of casino gaming, passed House Bill 4 to clear the path for the construction of its first land-based casinos. These venues, when built, will be permitted to host a sportsbook, but with operators and locations yet to be determined, the first bets will be placed long before the casinos open their doors.
Instead, Virginia’s plans to construct land-based facilities met the most resistance. Sickles lives in the northernmost part of the state, near the border with Maryland. Just across the Potomac River lies MGM Resorts’ MGM National Harbor.
He says that despite Virginia’s legislative review commission recommending putting a casino in that region, this faced fierce opposition from MGM’s lobbyists. He estimates that about 30% of MGM National Harbor’s customers are coming from Virginia, meaning a casino in Richmond would put the venue’s revenue and footfall under threat.
The operator was therefore a “strong supporter” of his bill, Sickles says. “Once you have something you want to protect it,” he points out.
“If they were to get a license to offer mobile betting, they would use it to drive traffic to their Maryland venue,” he explains. “There’s not a groundswell of support for a casino in northern Virginia. The places we did authorize casinos are in distressed cities, and [the casino] is viewed locally as a financial savior—whether that turns out to be true or not we’ll see.”
He says there was pressure to combine his mobile betting bill with the casino legislation, something that he resisted, on the basis that there were totally different motivations behind each.
“Mine came about because of the SCOTUS decision, theirs came from a desire to turn their economies around in distressed cities.”
That’s not to say there was not some coordination, to reconcile the betting markets for brick and mortar and mobile.
However, markets on the state’s collegiate teams will not be among the approved betting options. This proved to be a key point of contention. Originally the bill aimed for a total ban on collegiate betting—“the universities are really opposed to betting on Virginia sports,” Sickles notes.
“[My] bill failed when we took out the ban on betting on Virginian teams, so we had to resubmit it with the ban,” he says.
“We did not ban betting on collegiate sports outside Virginia. We did [however] ban proposition bets for all college sports, so you can’t bet on a player’s performance during the game.”
He says there didn’t seem to be too much opposition to this compromise among prospective licensees, but admits that this could benefit the existing offshore industry.
“We have a $4bn betting industry in Virginia now, all illegal, so people who bet on Virginia Tech or the University of Virginia will just do it on one of the existing apps,” Sickles says. “That’s the argument against what we did. Our state Senate had a different view of this.”
“When my bill first went through they took it out, but we could only get 40 votes, so we had to accept the House position,” he continues. “I do agree with the Senate arguments, that we did leave a big chunk of the market to illegal operators, but that’s the way it is, and that’s what our universities wanted.”
Despite this, he remains hopeful that the legal market will still be able to effectively compete against illegal operators, and even see these offshore competitors apply for a license.
“As far as [illegal gambling] as a moral issue is concerned, I’m sure I have many friends that do it now,” he says. “I don’t think they’re evil people—it’s out there and easy to do.
“So it’s an interesting experiment to see how we will do competing against them.”