Rhode Island and Mississippi Join the Post-PASPA Party by Legalizing Sports Betting

It’s been six weeks since the United States Supreme Court issued a landmark ruling to allow states the right to regulate sports betting.

And in that time, both New Jersey – the state that kicked off a seven-year-long legal battle eventually settled by the Court – and Delaware have already launched legal sportsbooks.

That list will soon be doubled, however, as Mississippi and Rhode Island have both moved forward with their own sports betting regulations.

To learn more about each state’s path to putting sports betting on their gambling map, check below for a full rundown on the laws, venues, dates, and other need to know info.

The Repeal of PASPA Paves Way for State-Sponsored Sports Betting

For the last 26 years, the only place Americans were legally allowed to patronize a sportsbook was Nevada.

That limitation resulted from a federal law called the Professional and Amateur Sports Protection Act (PASPA) of 1992, which was also known as the “Bradley Act” for chief sponsor former Senator Bill Bradley. Under the terms of PASPA, single-game sports betting was prohibited everywhere but Nevada, which was “grandfathered” in based on its preexisting laws.

Three other states – Delaware, Montana, and Oregon – received a watered down exemption allowing them to offer parlay card betting on multiple games via their state lotteries.

In November of 2011, wanting to get in on the action like it did with casino gambling in Atlantic City, New Jersey added a referendum to the ballot asking voters whether sports betting should be legalized. More than 60 percent of respondents supported the measure, and the state legislature quickly passed a Sports Wagering Act in 2012.

This prompted a series of lawsuits from the NCAA, NFL, MLB, NBA, and NHL, which combined to allege that New Jersey’s law violated PASPA. The resulting court case dragged on, with New Jersey losing each ruling, but appealing all the way to the Supreme Court.

The highest court in the land elected to take the case in December of last year, and on May 14, they issued a 6-3 decision striking down PASPA altogether. According to the Court, PASPA represented a violation of the Constitution’s 10^th Amendment, which grants states the right to govern their own affairs absent Congressional action.

As PASPA didn’t explicitly outlaw sports betting, but rather precluded states from authorizing their own regulations on the matter, the law was repealed entirely.

From that point forward, states have been free to address sports betting however they see fit.

Several states – including Mississippi along with Pennsylvania and West Virginia among others – anticipated the PASPA ruling and passed sports betting laws last year. Those laws called for the implementation of legal sportsbooks upon any federal action removing PASPA from the equation.

Delaware was one of those states, and in early June, it became the first aside from Nevada to accept a legal sports bet. New Jersey followed up one week later, and it appears as though the Magnolia State will become the fourth state in the Union to allow bettors to back their favorite team at the book.

Mississippi Making Push to Launch Sportsbooks by Mid-July

On June 21^st, the Mississippi Gaming Commission (MGC) concluded a mandatory 30-day review period by approving a set of statewide regulations on sports betting.

The new regulations were called for based on a 2017 law legalizing daily fantasy sports (DFS) in Mississippi. That law, House Bill 967, also inserted language into the state’s Gaming Control Act which repealed a ban on sports betting if and when PASPA was repealed.

Under the recently approved regulations, any of the 28 casinos – both commercially and tribally owned – are eligible to apply for sports betting licenses.

The law also calls for one last 30-day review period, making July 20th the first possible date that casinos can begin accepting bets. And with so many casinos already operating in Mississippi – including major industry players like MGM Resorts International and Caesars Entertainment – the groundwork for an immediate quick launch is already largely laid down.

Shortly after the MGC broke the news about approving regulations, MGM took to its corporate Twitter account to announce that its two local casinos – the Beau Rivage in Biloxi and the Gold Strike in Tunica –would open their sportsbooks on July 21^st:

“It’s official! @BeauBiloxi and @GoldStrikeMGM will welcome sports wagering 7.21.18.”

But given the fact that the tweet has since been deleted, that date may be a case of a social media intern simply jumping the gun.

In any event, Brandon Dardeau – the vice president of marketing for Beau Rivage Resort & Casino – told the local Sun Herald that the casino’s MGM-powered sportsbook would be ready to go on Day 1:

As for Caesars, the global gaming giant doesn’t seem to be as interested in winning the race as its chief rival.

Jonathan Jones – the general manager for Harrah’s Gulf Coast casino – also outlined his property’s plans in an interview with the Sun Herald:

The National Football League (NFL) regular season kicks off in early September, so bettors in Mississippi who prefer Caesars-owned casino brands like Harrah’s will have to wait for a few more months.

Chett Harrison – the general manager of the Golden Nugget Biloxi – offered a similar timeline for his venue:

“We’ve been working on plans since probably early spring. We’ll be ready for football.”

And over at the Hard Rock Biloxi, general manager Todd Raziano seemed to offer up a statewide consensus for a September launch:

“We plan to be open by football season, just like everyone else.”

Favorable Tax Rate Puts Bettors and Books in a Good Spot

Mississippi’s previous laws call for a 12 percent tax on all gambling revenue, and that rate was left intact for sports betting as well.

Of the 12 percent collected, 8 percent is directed to the state’s General Fund, while the other 4 percent heads to the local jurisdiction where a casino is located.

While the number is a bit higher than the 8.5 percent tax taken by New Jersey, it’s still well within industry norms. This is a positive for bettors and sportsbooks alike, as operators will be keeping more of the win in-house. With increased profit margins, major players like MGM and Caesars can reinvest those funds back into their sportsbook venues, adding amenities and running promotions to reward regulars.

As for bettors themselves, state law requires a 25 percent withholding be immediately removed on any gambling win of $5,000 or more. This may seem like the government reaching into a player’s pockets unnecessarily, but most states use a similar withholding system to comply with the federal tax code.

Online and Mobile Allowed, But Only Onsite

If you’re interested in betting on sports via your smartphone or mobile device, Mississippi’s new regulations offer a mixed bag.

Currently, the “Frequently Asked Questions” page of the MGC website includes the following entry:

But in amending the state’s Gaming Control Act last year to allow for DFS, the state inherently legalized at least one form of online wagering given that DFS can only be played through websites like DraftKings or FanDuel.

And indeed, a close look at the newly approved regulations on sports betting confirms that mobile and online play will be permitted – but only under tightly controlled circumstances.

Per Rule 3.15 – which covers “Sports Pool or Race Book Wagering by Electronic Means” – the MGC mandates the following requirements for mobile betting:

“Approved mobile gaming requires, at a minimum, the following:

• 1. The player shall establish a wagering account through the property where mobile gaming will be conducted, and an initial verification of the account must be done in person by a patron at the licensee’s premises before the acceptance of any wager that will utilize mobile wagering;
• 2. Wagers shall only be placed within a facility approved by the Executive Director for mobile gaming; and
• 3. The Executive Director authorizes the device application for mobile gaming.”

When the legal language is deciphered, that passage simply says players must register for a mobile wagering account while onsite at a licensed casino sportsbook. From there, you can use your smartphone, laptop, or tablet to place a bet, but only when you’re still physically located on the property.

That’s a curious way to restrict the rise of online gambling, and it wouldn’t be a surprise to see limited online wagering expand to cover anywhere in Mississippi – especially if revenue projections are being met.

Rhode Island Looks to October for Sportsbook Launch

On June 2^nd, with one stroke of her pen, Governor Gina Raimondo made sports betting a legal industry in Rhode Island.

Raimondo signed Assembly Bill 7200-A, a massive $9.3 billion budget package for 2019, into law. While the bill largely concerned managing the Ocean State’s budget, a late addition included language calling for $23.5 million in revenue taxing legal sportsbooks.

Those sportsbooks will be operated by the Rhode Island state lottery, in conjunction with International Game Technology (IGT), a worldwide gaming industry servicer based in the U.K. IGT does maintain an office in Rhode Island’s capital city of Providence, however, and the company is heavily involved in managing both brick and mortar and online sportsbooks across the U.S.

Under the new law, Rhode Island will open one sportsbook each within the two Twin River casinos, which are located in the cities of Lincoln and Tiverton. The Lincoln property has been open for years now, but the Tiverton venue is set to open its doors on September 1^st.

That gives them one month to set the scene for a new Twin River sportsbook, as legal wagering is scheduled to begin on October 1^st.

Historically High Tax Rate May Be Too Heavy a Burden

One wrinkle that Rhode Island bettors will have to contend with concerns the state’s record-high tax rate on sports betting revenue. The terms of the budget deal call for Rhode Island to collect 51 percent of every dollar won by the two sportsbooks. IGT will get 32 percent of the cut, while the actual casinos will take in only 17 percent of their own action.

Dominick J. Ruggerio (D-4), president of the Rhode Island state senate, released a public statement in which he celebrated the expected revenues to be generated by the 51 percent tax:

In 2017, a sprawling gambling expansion bill authorized in Pennsylvania applied a 36 percent tax on any future sports betting revenue.

House Speaker Nicholas Mattiello (D-15) issued his own statement praising colleagues for beating Pennsylvania’s tax by leaps and bounds:

“I think it is a very good deal. We are in sports gaming earlier than other states and we have a better percentage for the taxpayers than any state that’s doing it right now.”

The taxes taken by local governments don’t usually bother bettors all that much, but with Rhode Island and IGT combining to collect more than 80 percent of the win, the Twin River casinos may not have much reason to invest in their new sportsbooks.

Running a casino involves razor thin margins, especially in a small East Coast state like Rhode Island, where the historical puritanical influence still precludes many residents from enjoying the “vice” of gambling. In a state like New Jersey, where sportsbook revenue is taxed at only 8 percent, Atlantic City casinos have plenty of profit margin to work with. As such, they can reinvest in promotions, technology, training, and staff – all ingredients in a thriving sportsbook.

But with Rhode Island now levying the highest sports betting tax found anywhere in the world, the two Twin River casinos will be keeping just 17 cents from every dollar won. Given margins like that, bettors should expect a barebones experience for the time being, with little in the way of added amenities.

Sara Slane – spokesperson for the American Gaming Association (AGA) – recently explained to Reuters why Rhode Island’s tax rate could backfire:

“High tax rates hinder the legal market’s ability to compete with shady, illegal operators that don’t pay taxes back to the state.”

Chris Grove – senior gaming industry analyst atPlayUSA.com – also told Reuters that casinos won’t be left with enough skin in the game at only 17 percent of the haul:

“The relatively small share allotted for casinos means that those casinos have little incentive to market the product, which will dampen revenue potential.”

Online and Mobile Betting to Come Down the Road

In a public statement, Rhode Island Department of Revenue spokesman Paul Grimaldi confirmed that neither online nor mobile betting would be included in the October launch.

Even so, Grimaldi was quick to point out that Rhode Island is simply playing the long game, waiting to see how land-based sportsbooks are received before diving into iGaming:

“We wanted to start small and make sure we have the operational system down pat in the casinos before we explore online or mobile.”

And IGT has provided further proof that Rhode Islanders will soon be able to wager on sports through their smartphone.

In the company’s May earnings call to investors and analysts, IGT chief executive officer Marco Sala previewed a mobile betting platform known as PlaySpot while hyping potential agreements with state lotteries:

IGT was the sole bidder for the sports betting contract with the Rhode Island state lottery, and that bid included both land-based and digital components.

With that in mind, the likelihood that online and mobile sportsbooks will be operational in Rhode Island sometime soon is quite high.