"What leads to a competitive sports betting market is options for players, low tax rates and consumer protections"

Sports betting in the US is booming. At least that's what many factors point to. Bigger handles, more markets, new players and the latest technologies are all part of what seems to be a winning combination, poised to drive growth for this gaming vertical in the future. And every year, new states join the growing number of jurisdictions with their own sports betting rules in place, seeking to get a piece of the gaming pie.

This year, both Kansas and Maine joined the ranks of other 30+ US jurisdictions with gaming in place. For Brandt Iden, Head of Government Affairs, Sportradar, this is good news: legislators are seeing the benefits of regulating the activity, and this is translating into new opportunities for stakeholders. "We’ve got a majority of the states now that have something in place, and I believe we’re going to get there with all the states eventually," he tells Yogonet in a video interview. "These things will work themselves out and the United States is going to be a great market for sports betting."

In conversation with Yogonet, the expert and former Michigan representative, and current member of the American Gaming Association's Board of Directors, discusses the keys behind appropriate sports betting legislation, what states are set to join the legal betting landscape, and why the 51% New York tax rate should not be an industry standard. Moreover, he provides updates on various legal and legislative battles currently taking place in the US sports gaming landscape, and what to expect of newcomers including Kansas, Maine and Ohio.

Sports betting is now legal in Maine after Gov. Mills signed a bill into law. What would say are the main pros and cons of this law, and what would you say has changed for sports betting to finally become a reality in this state?

It’s great to see this finally happen; it’s been a long time coming. This legislation was vetoed previously and so now this is about the third year that the legislature’s been working on it. What they were able to do was come up with a piece of legislation that was very specific to the three tribes there. This was very important to both the legislature and to the governor.

Those tribes are compacted. They’re big economic drivers and they wanted to make sure that they had exclusive control over the marketplace, and that’s the type of legislation that you see there now. It would potentially allow them to partner with the big commercial operators - the FanDuels and the Draftkings- and they’d have the ability to do that while still at the same time giving them exclusivity over sports betting.

This legislation also allows for retail sports betting in the commercial market; for the racetracks that are already in Maine. So you will have retail betting and mobile sports betting: it should be very exciting. The next step will be for the State of Maine to start promulgating the rules to get mobile sports betting up and running. 

The director came out publicly with some comments that this may take a little while. That’s to be understood: sometimes this happens. States got to work through some things, but they looked at other states that have got similar legislation, like Michigan, for example, because of the large tribal presence that we have. Perhaps this could get done a little bit more quickly and we could hopefully see a launch in 2023.

Maine Gov. Janet Mills

What do you expect the sports betting landscape to be once the market actually goes live? Do you believe tribal exclusivity could limit the potential of this market?

We’re now four years after PASPA was overturned and the market in each state is very different, and it was set up that way. Gaming has always been a state's right. This wasn’t about sports betting for the Supreme Court: this was about granting the states the ability to regulate this in the way that they deem appropriate.

Now we’re coming up on 35 jurisdictions with some sort of mobile betting or retail betting. You see 35 different sets of regulations and that’s going to happen. The state of Maine worked through this and they determined that this is the best way to go for them. That doesn’t mean that model transitions over to what Massachusetts is going to do as they debate their legislation. 

Maine, for the most part, is a fairly small market; just over a million people. They’re going to have a lot of options: this is going to provide three separate skins potentially. This is going to give players a lot of different markets to bet in, and hopefully, that may put some pressure on Massachusetts now to legalize as well.

Kansas Gov. Laura Kelly

Kansas has also now joined states that have signed a sports betting bill into law, through legislation that directs most of the tax revenue to a fund that seeks to lure pro teams to the state. What’s your take on this legislation?

That’s going to be exciting. The most interesting piece about that is the 10% tax rate on sports betting, with 80% of the money that the state collects going into a specialized fund that will be used to lure sports teams into the state. Kansas currently has one pro soccer team, but no other professional sports in the state.

Kansas City, a border city between Kansas and Missouri, has got the Royals and the Chiefs, so they’ve got football and baseball. Obviously, Kansas would like to see one of those teams perhaps come over from Missouri into the Kansas side of Kansas City, so the legislature thought about that when they were crafting this legislation.

I don’t really think that, at the end of the day, there’s going to be enough in that pot, which would probably be around eight million dollars a year. These are big franchises; they’re going to need to be lured with big dollars. But here’s where I do think there’s a game-changer in the Kansas legislation: pro sports teams would be allowed to partner with operators to put in a sportsbook.

And that is something they may be interested in doing: putting an actual retail sportsbook in the stadium, which is something that we’ve seen in other states that have been grappling with legislation. It is an opportunity for those sports teams that are right on the border, so I’m excited to see how that will shake out. I’m sure there'll be a lot of discussions. It also may entice Missouri to get it done. Obviously, the legislative session is now over: they were unable to get it across the finish line.

Meanwhile, Ohio is getting ready for launch, with a sports betting application window to open by June 15. What’s your assessment of this case?

It is going to be a huge market, and by that I mean there’s a lot of competition. They are providing a lot of skins there, and there are a lot of folks who can participate in the different-tiered licenses. Bars, restaurants, and taverns will all be able to participate. They’ll be able to do that in Kansas as well, but at a much smaller level.

It has low, competitive tax rates, which make for a competitive industry. In order for this industry to continue to flourish, we need competitive tax rates, a lot of competition, the right consumer protections - that’s what’s going to make this industry continue in the upward trend that it’s been on. It will continue that way when you have states like Kansas and Ohio that are implementing good legislation.

Now speaking in broader terms, what is your assessment of how sports betting legalization has expanded this year thus far? Minnesota is making a last-minute push for legalization*. What’s your take on their odds?

*The interview was carried out before legislation failed in the state, on May 22.

It’s been a little bit slower than 2021; that’s just natural. In the legislative cycle, election years are sometimes a little bit slower. We’re seeing that this year: 2022 is a big election year across the country, and because of that, sometimes the legislative activity slows a little bit. Gaming is one of those issues that sometimes get pushed back when states are dealing with budget, health care, and education; all these other big issues that are out there right now and that state legislative bodies have to deal with.

We still do have a few states that are still out there. We have Minnesota, which is making a last-minute push. However, I’m going to speculate and say that it probably will not make it through the senate this year. It’s just not a priority in these remaining days that they have. They wrap up at the end of the month, and I don’t think that there’s enough time for a negotiated deal to come to fruition there.

Massachusetts, I think, still has a lot of potential. They go all year, which means that a deal could be done all the way up to the end of 2022. We could still see a deal: lots of time there. The session has also started in North Carolina, which has retail sports betting at tribal casinos. They’re now pushing for mobile, and I think they have a great chance this year. It's another state that’s been talking about this for a long time and they finally have legislation at a good spot, so I would place a wager that North Carolina may get it done this year.

Michigan House of Representatives

You played a key role in helping legalize sports betting in Michigan, a state now home to a healthy industry with 15 operators and good revenue figures. What conditions do you see as key to a good sports betting landscape?

Michigan is my home state. I spent the better part of my entire six years in the legislature working on this. It took me five and a half years to get it done. I also had a veto, so I’m sympathetic to those folks in Maine that also had that happen to them. 

The Michigan legislation is, in my opinion, a fantastic model for the rest of the country that has both a commercial and tribal component to it. We were able to integrate those and make it a very successful market. In 2021, we had about $150 million in state revenue between iGaming and sports betting. It was a fantastic year, and we’re continuing to grow.

What leads to a great market is making it competitive. You have to make plenty of options available to consumers; you have to keep tax rates low; and you have to make sure that you’re providing for the proper consumer protections. The goal here is to get folks who are playing offshore and get them to play in the state. We know that they exist and that they’re playing on illegal books, and we want them to play in state. 

You can do that with a lot of options for them, giving them good lines - and you can do that with low tax rates. Then we protect those players by adding the proper level of responsible gaming initiatives and other measures. That’s what created a great market in Michigan, and we’ve seen that in a lot of other states. Those are the types of key principles we like to model and we like to advocate for as we move into other states.

Another state seeking legalization is California, which has seen major operators join efforts to qualify a sports betting measure for the November ballot. But polls indicate citizens are divided on this issue, and we also have other gaming interests proposing alternatives. What do you think must happen in order to get all stakeholders on board in a case like this one, in which you have contrasting opinions?

We believe that there’ll be two proposals on the ballot, one which is already qualified, and the other which has put forth signatures and should likely qualify in July. That means there’ll be a proposal for retail-only, and a proposal for mobile. Now these two proposals can work jointly with each other, and they were designed that way, so you could potentially have both initiatives pass, allowing for both retail and mobile.

Tribes have come out pretty forcefully against the mobile initiative and there’s a tremendous amount of money being poured into the initiative from both sides, for and against. And so voters are turning on their televisions, they’re reading the newspapers, they’re on social media, and they’re getting inundated with advertisements for and against, and that’s going to happen all the way up until November.

This will likely be, in my prediction, probably the most money ever spent on a ballot initiative in the state of California, and I predict that this will be the largest of any when you combine all the money being spent by all sides. At the end of the day, what that means is there’ll be a ton of confusion, and oftentimes when there’s confusion, voters just have a tendency to vote “no” on the issues. They hear lots of different things, they are inundated with advertising… Sometimes it leads to frustration and they just end up voting “no” or they take a pass and don’t vote on the initiatives at all, unfortunately.

I could predict that both initiatives may fail. That’s typically what we’ve seen happen when there are competing initiatives. It’d be tough for the industry because California is a massive market we’d love to see come to fruition. I think it’s going to be an uphill battle this year, and that’s just how it’s going to play out, unfortunately. 

Florida Gov. Ron DeSantis signing a compact with the Seminole Tribe

A state going through a very particular situation is Florida, which is off to a rocky start. The market was legalized and a compact was in place between the state and the Seminole tribe, but it has now been paused due to a judge's order. What can we expect in regards to a new launch?

The Governor entered into a compact with the Seminole Tribe, giving full exclusivity to the Hard Rock Casino folks. And because that compact does a lot -it not only provides sports betting and potentially iGaming, but also allows table games, it allows for a lot of other social services- it’s a massive compact for the state. It provides for a lot of initiatives and things that the Seminole tribe has been looking for and negotiated.

The Seminole Tribe launched around fall of 2021. The app was up for about maybe two weeks and then immediately was pulled down due to court injunctions. Some of the commercial folks and the pari-mutuel facilities there have now engaged in a battle with the US Department of Interior and this will go to the Supreme Court.

I originally envisioned that something may be done this summer. That’s not going to happen. I believe that this decision gets pushed off until early 2023, or late 2022. How that goes lies in the court’s hands. There's going to be a lot of discussion and debate on that. I don’t predict that we’ll see anything in Florida until 2024, unfortunately.

What happens is going to be a mix of the court decision, and then one of those entities may have to go to the ballot the following November. Sports betting in Florida may be a long way off. I was initially optimistic and hoped that we may see it sooner, but it doesn’t look like it’s going to happen. I’ll play out in the courts and it’ll be a long road.

In regards to the general landscape in the US, we have seen it change a lot lately. New York has now become the leader by adding mobile operations taxed at a high 51% rate. Do you think that New York could set a precedent for the industry?

I certainly hope the answer to the question is “no.” The 51% New York tax rate remains the highest in the country, and earlier in the month MGM said they don’t see a path to profitability in the state under where things currently stand with the taxes, so they’re backing off on their marketing spend. This was inevitable: this was going to come eventually. At 51%, this is not a model the industry is looking to replicate. 

But you can look at Kansas. Tax rates were part of the conversation, but 51% was never a consideration, and that’s good news. I think that states are looking to optimize taxes and bring in as much money as they can. But they’re also beginning to recognize, through industry stakeholders advocating and educating them in the process, that sports betting is a very low-margin business. There’s just not a tremendous amount of money there because of that, so it cannot be taxed at a high level.

That’s a conversation that will continue in states that haven’t opened up yet, and I believe states will go back and look at their tax rates and talk about whether or not they need to increase them. It’s incumbent upon the industry, and those of us that are part of this, to continue to educate our lawmakers and our folks in the industry and in the legislative process and say: “Look, sports betting is a low marking industry, we need to work to keep those tax rates low, we need to work to keep it competitive.”

Together we can make sure that this rocket ship continues to go up, because it’s headed there. I love where we’re at. We’ve got a majority of the states now that have something in place, and I believe we’re going to get there with all the states eventually. These things will work themselves out and the United States is going to be a great market for sports betting. We’re well behind Europe, we’ve got ways to go, but we’re going to get there and I'm very excited about it.

Watch the full video interview with Brandt Iden on our YouTube channel.