After Reaching Last-Minute Deal, Massachusetts House and Senate Pass Retail and Online Sports Betting Bill | White and Williams LLP

On Monday, August 1, 2022, the Massachusetts House and Senate reached a last-minute deal to legalize retail and online sports betting across the state. The bill, which Governor Charlie Baker is expected to sign into law in the coming weeks, would give existing Massachusetts casinos, racetracks and simulcast betting facilities the ability to conduct retail and online sports betting operations. As discussed below, state gaming establishments would also be permitted to partner with third-party online betting platforms, provided such platforms have been duly licensed and approved by the Massachusetts Gaming Commission (the Commission). The bill further imposes a 15% tax on adjusted gross betting revenue for in-person sports betting operations and a 20% tax on adjusted gross betting revenue for online/mobile sports betting operations. .

Notably, the bill prohibits betting involving college teams in the state, except when they are participating in tournaments.

License framework

Under the bill, retail and online sports betting would be regulated by the Commission. Specifically, the bill authorizes the Commission to issue “Category 1” licenses allowing each of the state’s casinos to conduct in-person sports betting on casino premises and to conduct online sports betting. via two individually branded mobile apps or other digital platforms (that’s to say., “skins”) approved by the Commission. Category 1 licensees would be allowed to enter into contracts with third-party online betting platforms (such as DraftKings or FanDuel) to operate the licensee’s online betting “skins” on their behalf, as long as Third-party platform operators have obtained a “Category 3” license from the Commission, which allows the conduct of sports betting via a mobile application or digital platform.

The bill also authorizes the Commission to issue “Category 2” licenses to live state racetracks and simulcast horse and greyhound racing betting facilities. The “Category 2” license authorizes the racetrack/simulcasting facility to conduct in-person sports betting operations at its existing facilities and online sports betting operations through a single online betting “skin”/ board-approved mobile phone. Category 2 licensees would be allowed to enter into contracts with third-party online betting platforms to operate their online betting “skin” as long as the operator of the third-party platform has obtained a license from ” category 3”.

The bill further provides that all licenses must be issued for a term of 5 years and that the license fee for each of the three categories is $5 million. License applicants would also be required to pay an application fee of $200,000 to cover costs associated with reviewing/processing the application and conducting thorough background investigations.

The bill does not mention any licensing, registration or certification requirements for sellers (gambling or otherwise). That said, it is possible that such requirements will be included in future corresponding regulations; the bill specifically provides that the Commission “shall promulgate such rules and regulations as may be necessary for the carrying out, administration and enforcement” of sports betting conducted under the bill.

Sports Betting Marketing/Advertising Restrictions

The bill also includes a provision dealing specifically with marketing/advertising for sports betting operators, stating that the Commission shall promulgate rules prohibiting: (1) false, misleading advertising, marketing or branding or misleading; (2) unsolicited pop-up advertising (either online or via SMS) to people on the self-exclusion list; (3) any form of advertising, marketing, or branding that the Commission “deems unacceptable or disruptive to the viewer experience at a sporting event”; (4) advertising, marketing and branding deemed to be directed directly at a person under the age of 21; and (5) advertise on any billboard or other public signage that does not comply with state, federal, or local law.

Although the Bill explicitly limits the scope of prohibited marketing/advertising activities that can be regulated by the Commission, it does give the Commission at least some discretion – perhaps more specifically, to deal with activities that may reasonably be deemed “unacceptable or disruptive to the viewer”. experience” at a sporting event or “call[ing] directly to a person under the age of 21. That said, it seems unlikely that the limited scope of authority granted to the Commission could be interpreted as authorizing the kinds of strict European-style restrictions on the marketing of sports betting that some fear will soon be implemented in the United States. United.

“Launch” Timeline

Even if Governor Baker signs the sports betting bill into law in the coming days, retail and online sports betting cannot be officially “launched” statewide until the Commission enacts the sports betting regulations and started issuing licenses. We note, however, that the bill appears to contemplate an accelerated “launch” schedule, providing for (1) the promulgation of “emergency” sports betting regulations, which could take effect immediately upon filing with the Secretary of State of Massachusetts and remain in effect for three months, thereby temporarily bypassing the arduous process of public hearing, comment and review required for permanent settlements; and (2) the issuance of “temporary” operator licenses for the “immediate commencement of sports betting operations” upon submission of a license application.

White and Williams will continue to monitor developments in Massachusetts and provide further updates as needed.

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