Massachusetts sports wagering flawed by local college betting ban

When sports wagering goes live in Massachusetts early next year, Bay State bettors won’t be able to place wagers on colleges and universities within the state.

No bets on Minuteman football at UMass. Nothing for high-profile Boston College. Forget about getting down on Harvard hoops.

Massachusetts Gov. Charlie Baker signed sports wagering legislation into law on Aug. 10, but its ban on wagers for in-state schools will likely leave money on the table for the state. It could also push some gamblers to place bets in nearby New Hampshire, Connecticut, Rhode Island or New York, or even illegally.

The state’s lawmakers wrote into the legislation that bettors won’t be able to place those kinds of bets, although they allowed wagering on tournament events in which Massachusetts schools play.

This puritanical view of betting was something Nevada got past more than two decades ago.

Nevada changed in ’01

Since the 1950s, bettors had been prohibited from betting on in-state teams because it was believed criminal elements could influence the outcome of games through bribes or other coercion of players and coaches.

But the Nevada Gaming Commission lifted a long-standing ban on betting on UNLV and University of Nevada, Reno games in January 2001. It was part of a series of sweeping changes involving sports wagering that was debated for four months before adoption.

The commission, headed at the time by Brian Sandoval, a former governor and current UNRpresident, made it clear that Nevada-regulated sports betting could withstand scrutiny no matter what collegiate teams were the subject of a bet, including those in the state.

Nevada sportsbooks historically have alerted authorities, including administrators of the NCAA, when unusual betting patterns suggested someone was trying to fix a game’s outcome. After all, sportsbooks do so to protect their own interests as well as the integrity of a sport.

Other lawmakers tripped up

Brendan Bussmann, gaming industry analyst with Las Vegas-based B Global, indicated the Massachusetts ban could actually hurt the industry.

“The ban on local colleges and universities does nothing to protect any student-athlete that is based in Massachusetts,” Bussmann said. “It only enables the offshore books to continue to take these wagers.”

Yet Massachusetts isn’t alone in its approach, according to Bussmann.

“Legislators continue to get tripped up over the college wagering issue, making it more complex than it needs to be,” he said. “States like Massachusetts, Nebraska, New Jersey and others have put similar limits in place to try to regulate the market. While there is money being left on the table, this should be about integrity, and the right thing to do is to create a fully regulated market.”

Ultimately, two Las Vegas companies are likely to prosper in Massachusetts once sports betting begins next year.

Executives from MGM Springfield, owned by MGM Resorts International, and Encore Boston Harbor, operated by Wynn Resorts Ltd., told Massachusetts regulators last month that they already have space dedicated for sportsbooks. The pair are among the 42 firms expected to compete for up to seven online sports wagering licenses.

Massachusetts assesses a $5 million licensing fee, good for five years, and a $100,000 fee just to apply for a license.

“The Massachusetts Gaming Commission has been preparing for this moment for several years, and the Legislature has debated this for several sessions,” Bussmann said. “While the bill is far from perfect, it does provide strong properties like Encore Boston Harbor and MGM Springfield to bring forward a strong sportsbook for a state that loves sports.”

He added that because Bay Staters are avid sports fans, sports wagering will likely be a success.

“The Gaming Commission has laid out a solid plan to implement sports betting over the next several months,” he said. “It has the opportunity to beat out jurisdictions to advance this effort and allow wagers in state on the (New England) Patriots, (Boston) Celtics and Red Sox, among others. This will turn into a strong market in the northeast corridor and recapture some of those dollars that are currently going to other states.”

Higher tax rates

It also helps that Massachusetts has legislated tax rates that are higher than Nevada’s but still lower than some neighboring states that have drawn bettors away.

Massachusetts law calls for a 15 percent tax on the gross gaming revenue of in-person brick-and-mortar sportsbooks and revenue from fantasy sports contests and 20 percent on revenue from mobile wagering.

By comparison, Nevada taxes at a rate of 6.75 percent, with other fees equaling about 1 percent.

New Hampshire and Rhode Island tax operators 51 percent of their gross revenue.

Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on Twitter.