Casinos, DraftKings voice differing views on sports betting

Gambling companies are voicing differing views on how best to regulate sports betting as state lawmakers hold hearings on legalizing the industry in Massachusetts.

Boston-based DraftKings, which has emerged as a major player in the national sports gambling landscape, said in testimony Tuesday that it wants the state to allow it and other online operators to offer sports bets outright.

But the state's three casinos — MGM Springfield, Encore Boston Harbor and Plainridge Park — said they prefer lawmakers to require online operators to partner with an established casino to get into the sports wagering business. They also want the number of sports betting licenses limited to five or seven operators.

DraftKings CEO Jason Robbins said states that have set limits on online sports wagering have done so to their detriment, with revenue and tax projections falling below expectations.

"DraftKings and our competitors should have a direct relationship with the regulator — and that means being directly accountable to the regulatory authority, the legislature, and ultimately, the residents of Massachusetts," he said in testimony submitted to the legislature's Joint Committee on Economic Development and Emerging Technologies.

MGM Springfield President Michael Mathis said the casino companies are generally open to allowing certain, established online companies to receive sports betting licenses without partnering with a casino.

But he argued that it's in the best interest of the state and consumers to let the casino industry drive sports betting because the industry is already highly regulated and made major investments in the state through its multi-million dollar casinos.

"You can do it directly, but you'd be better protected doing it as sublicenses," said Mathis.

Professional sports leagues, meanwhile, are seeking compensation for the potential impacts of gambling on their industry.

Representatives from Major League Baseball and the National Basketball Association told lawmakers they support proposals requiring sports betting operators pay the leagues a royalty fee of about 0.25% of their sports betting revenues.

The sports leagues also want the ability to work with regulators to address bets that could open the door for abuse or corruption, such who commits first foul in a basketball game or if the first pitch of an inning is a ball or a strike.

Tuesday's hearing was the first of two this week focused on nine bills submitted to legalize sports wagering. The next hearing is Wednesday.

Republican Gov. Charlie Baker has proposed legislation that would authorize the state's Gaming Commission to license companies to offer sports bets. It doesn't require online operators to partner with a casino to seek a sports betting license, however.

Baker's bill also wouldn't allow betting on high school, college or amateur events or esports, even though the casino companies argued in their testimony for allowing for college sports bets.

The casinos also urged lawmakers to impose the lowest tax rate possible. Tax rates in states that currently allow sports betting range from Nevada's 6.75% to Rhode Island's 51%, they said.

Baker's bill would impose a 10% tax on sports bets made inside casinos and a 12.5% tax on bets placed online, including on daily fantasy sports contests like those currently offered by DraftKings. It would also require a $100,000 application fee for an initial sports betting license that would have to be renewed every five years for a fee.