sports gambling presentation title · washington state gambling commission 5 federal wire act of...

Presentation TitleDatePresenter Name, TitleUnit/Division

Sports GamblingJanuary 27, 2020Brian Considine, Legal & Legislative Manager

WASHINGTON STATE GAMBLING COMMISSION 2

Sports Gambling History

• Popularity increases; 1919 Black Sox scandal

1900s

• Nevada authorizes sports betting (1949); feds pass several laws

1940s - 1970• States begin to

allow sports gambling; Nevada allows in casinos

1970s


Sports Gambling History

• PASPA is enacted

1992• Nevada

authorizes mobile wagering

2010• PASPA held

unconstitutional

2018


Christie v. NCAA, et al. & NJ Thoroughbred Horsemen’s Assoc. v. NCAA, et al.

Federal Law: Precluded states and tribes from authorizing, offering or conducting sports wagering and prohibited anyone from operating a sports gambling business under state or tribal law, unless the state was grandfathered in 1992

Supreme Court: May 14, 2018 – PASPA is unconstitutional because the Tenth Amendment prevents federal govt. from requiring states to enforce federal laws or policies. Congress can pass a federal law prohibiting or regulating sports betting, but can’t direct states to enforce the law

Effect: States may authorize or continue to prohibit sports gambling.

*Other federal laws are still applicable*

Supreme Court – PASPA Ruling


Federal Wire Act of 1961

18 U.S.C. §1084

Effect: Prohibits sports gambling through the use of interstate communications and transactions

Focused on: Transmission of bets/wagers or information assisting in the placing of bets/wagers on any sporting even or contest

State Impact: Ask DOJ to intervene or request that a common carrier to discontinue service to entity engaged in illegal gambling communications/transactions


Indian Gaming Regulatory Act (IGRA)25 U.S.C. § § 2701–2721 (1988)Effect: Authorizes any Tribe with land in trust for gaming activities to negotiate with a state for a gaming compact allowing gambling activities that are permitted in the state for any purpose by any person, organization or entityFocus on: Regulation of gambling activities on Tribal land, especially “Class III” gambling activities that Tribes must negotiate terms with the state prior to offering the activities at their Tribal facilities.State Impact: State negotiates terms for all Class III gambling and is a co-regulator with Tribes for Class III games

8WASHINGTON STATE GAMBLING COMMISSION


Types of Sports Wagers

POINT SPREAD

Seattle Seahawks-2.5 -110 -130 O 45.5 -110

Philadelphia Eagles+2.5 -110 +120 U 45.5 -110



MONEY LINE





OVER/UNDER





FUTURES

Super BowlNBA FinalsNCAA Basketball TournamentWorld SeriesStanley Cup



PARLAY

Single bet w/ 2+ wagers

Must win all wagers in parlay

Higher payoff than individual bets


In-Game Wagering

Actively wagering on an event while it is in progress

Ex: The favorite gets down early in the 1st qtr. The line shrinks in favor of the underdog. Bet prices change.

Includes prop betsEx: Wager on whether a drive will lead to touchdown, field goal, punt or turnover


STATE REGULATORYAGENCY TAX LICENSING FEES AUTHORIZED METHODS 2019 REVENUE

(As of 1/8/20)Nevada Gaming Control Board 6.75% gross revenue

taxCasinos, Online $292.6 million

$19.6 million (tax)

Mississippi Gaming Commission 12% gross revenue tax $500-$5k Casinos, Mobile (on property)

$40.8 million$4.8 million (tax)

New Jersey Gaming Control Board Land based: 8.5%Online: 13%

$250k initial$100k Annual

Casinos, Racetracks, Online $269.8 million$36.1 million (tax)

Pennsylvania Gaming Control Board 36% $5k - $10 million Casinos, Racetracks, Online $93.8 million$26 million (tax)

Indiana Gaming Commission 9.5% $100k/$50k initial$50k/10k annual

Casinos, Racetracks, OnlineOTBs

$30.6 million$2.9 million (tax)

Iowa Racing and Gaming Commission

6.75% $45k Initial$10k Annual

Casinos, Racetracks, Online $16.3 million$1.1 million (tax)

New York Gaming Commission 10% Unavailable Casinos $7 million$700k (tax)

Operating States


STATE REGULATORYAGENCY TAX LICENSING FEES AUTHORIZED

METHODS

2019 REVENUE(As of 1/8/20)

Oregon State Lottery Rev Distribution b/t Lottery and SB Tech N/A Online, Retail Kiosks,Lottery Retail Product

$1.1 million

West Virginia State Lottery 10% $100k Casinos, Online $16.6 million$1.6 million (tax)

New Mexico None N/A N/A Tribal Casinos N/A

Rhode Island State Lottery Revenue Distribution:State: 51%; Vendor: 32%; Casino: 17%

N/A Casinos, Online $15.2 million$7.7 million (tax)

Delaware State Lottery Revenue Distribution:12.5% net to vendors; thenState: 50%; Racetrack/Casino: 40%:Horse Race purses: 10%

N/A Casinos $10.8 million$5.4 million (tax)

Arkansas Racing Commission < $150 mil. = 13%> $150 mil. =20%

Up to $250k application fee$10k renewal every 10 years

Casinos N/A

New Hampshire

State Lottery Revenue Distribution:50/50 b/t DraftKings and Lottery/State

N/A Retail SportsbooksOnlineLottery Retail Product

N/A


STATE REGULATORY AGENCY TAX LICENSING FEE AUTHORIZED METHODSTennessee Gaming Commission 20% $750k

$50k application feeOnline

Colorado Limited Gaming Control Commission

10% TBD; no more than $125k Annual

Casinos, Online

North Carolina Tribal Gaming Commission N/A N/A Two Tribal Casinos

Illinois Gaming Commission 15% $10-$20 million Casinos, Online

Washington, D.C.

Lottery Land-based: 10%Online: 20%

$500k sports arenas$100k other facilities

Lottery = land-based and onlineArenas/commercial = land-based and mobile

Montana Lottery TBD N/A Lottery retailers, mobile (on property)

Michigan Gaming Control Board 8.4% 3 Detroit casinos pay extra city tax

$100k Initial$50k Annual

3 Commercial Casinos, 23 Tribal Casinos, Online

Legalized; Not yet operating


Sports Gambling is Mainstream

Sports Radio/TV Office Pools Fantasy SportsMarch Madness

Illegal in-state bookies

Bookie using a website managed by offshore illegal book

Bookie running own numbers and book

Offshore sportsbooks

Black Market in Washington


Current Sports Gambling Laws:• Constitution: Article 2, Section 24 – 60% vote

for new activities• Gambling Act

RCW 9.46.0335 – Sports pools authorizedRCW 9.46.220 - .225 – Professional gambling statutesRCW 9.46.240 – Prohibition on internet gambling

• RCW 67.04.010 – Penalty for bribery in baseball• RCW 67.04.020 – Penalty for accepting a bribe• RCW 67.04.050 – Corrupt baseball playing• RCW 67.24 – Fraud in a sporting contest

Washington State Law


Source: Eilers & Krejcik Gaming, LLC


Possible Operational Models

Sports Book Mobile InternetKiosk


WAGER

RISK CONTROL

RESULTOPERATORDATA FEEDODDS/LINES BOOKMAKING SYSTEM

BETTOR

MANAGED SERVICES*

*MANAGED SERVICESPAYMENT PROVIDERS

FINANCIAL INSTITUTIONSKNOW YOUR CUSTOMER

GEOFENCINGCUSTOMER SUPPORT

MARKETING

INTEGRITY MONITORING

Strong anti-money laundering policies are CRITICAL

Reporting requirementsSuspicious activity reportsOperating requirements

Need access to data

Money Laundering Considerations


CONTEST MANIPULATION

Bribes | CheatingMatch-fixing | Point Shaving

Spot-fixing | Tanking


An individual decides he/she wants to manipulate the outcome of a sporting event

1An agreement is made. The “target” will receive payment for the desired outcome

3

The individual identifies a “target” who has the ability to affect the outcome

2 The game is played and the “target” works to achieve the desired outcome

4

The “target” is paid for manipulating the game and achieving the desired outcome

5

Fixing a game


Problem Gambling Considerations

Require implementation of responsible gaming programs

2Regulator(s) to enforce responsible gaming requirements

3Dedicate new funding to prevent and treat sports gambling addiction

1

Invest in gambling addiction research and support evidence-based programs

4Establish minimum age for sports gambling and fantasy sports

5


Five Pillars for Sports GamblingStrong Licensing and Regulation

Strong Agency Funding

Strong Money Laundering and Professional Gambling Statutes

Strong Sport Integrity Laws and Policies

Strong Problem Gambling and Responsible Gaming Policies

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Questions?Brian Considine, Legal & Legislative [email protected]

sports gambling presentation title · washington state gambling commission 5 federal wire act of...

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