By Chris Gerlacher
On August 1, the Massachusetts Senate approved a sports betting bill and sent it to the Governor’s desk. With the governor expected to sign the bill into law, Massachusetts is on track to be one of the next legal sports betting markets. It could even launch sports betting before Maryland.
Estimates about when Massachusetts sports betting remain speculative. However, NBC Boston quoted Senator Eric Lesser saying that sportsbooks could be live in “maybe October” and “definitely for the fall football season.” That’s a short turnaround time for a new industry that continues to face regulatory challenges.
The push for legalization is understandable. Sports betting’s peak season begins in September at the start of the NFL season. Every month of peak season that Massachusetts misses out on translates to lost tax revenue.
However, there are two good reasons to put speed aside. Sports betting may make a few million dollars in tax revenue. However, the money it generates will pale in comparison to other revenue streams, like sales tax revenue.
Unless sports betting is one of several new industries, Massachusetts won’t transform its budget. On July 28, Governor Baker approved a $52.7 billion spending plan for FY 2023. One of the most generous estimates for Massachusetts sports betting tax revenue is $60 million per year.
So, Massachusetts can afford to take the time to ensure the Gaming Commission is staffed and that regulators have the time and resources to vet potential licensees properly. It has some early signs that it could launch sooner than Maryland, and they’re not all positive.
How Massachusetts Can Avoid Colorado’s Mistakes
The Massachusetts sports betting bill includes details that the Massachusetts Gaming Commission could rewrite almost verbatim. Some of these details include which applicants must undergo background checks and which licenses allow which gambling products. That will speed the rule-making process up and give Massachusetts a chance to launch after football season begins.
However, the issue that matters is how robust the license investigations are. Even on an accelerated timeline, the Massachusetts Gaming Commission must meet its own investigative criteria.
In April 2022, Colorado’s Division of Gaming received an audit that showed serious investigative shortcomings. The Division failed to follow its own investigative procedures to award temporary licenses faster. Many of the sportsbook applicants didn’t have their international compliance records checked.
So, the Colorado Division of Gaming still doesn’t know whether each major brand follows anti-money laundering, advertising, or know-your-customer laws in other markets. Two years into legalized sports betting, and Colorado still doesn’t know whether each of its sportsbooks is safe for bettors.
Division employees blamed the pandemic and staffing issues for failing to meet its own standards. However, adequate time to launch sports betting rather than panicking mid-launch could’ve prevented some of the mistakes that the Division made.
Should Massachusetts Launch Sports Betting before Maryland?
Massachusetts has some of the legislative details in place to launch sports betting quickly. However, it should prioritize proper investigative procedures instead of catching most of football season.
Although Maryland regulators have been criticized for moving so slowly, their sluggish pace could be advantageous. If that extra time is spent on vetting online sportsbooks, Maryland will do a better job at licensing sportsbooks that:
- Catch, prevent, and report attempted money laundering
- Comply with know-your-customer rules
- Follow rules and regulations in other markets
States make modest revenue from sports betting. It’s a great political ploy to generate revenue without raising taxes. However, the greatest benefit is the ability to catch money laundering that occurs through sportsbooks. It’s the safety net that matters more than the revenue.
Massachusetts regulators must withstand intense pressure from impatient sports fans and lawmakers to launch quickly. The issues that matter most aren’t the most popular ones.