Long read: Business as usual

During the rush to build new US-legalised sportsbooks, many believed illegal sports wagering would immediately die down — but they were wrong. Larry Gibbs explores why this is and asks whether initial post-PASPA actions are to blame

Members of the casino industry and sports bettors alike will forever see May 14, 2018, the day that PASPA was repealed, as Independence Day. When an act or law is enforced, its intention is often to prevent or at least slow down the progress of an illegal act.

However, as we approach the five-month mark post-PASPA, it seems obvious that things haven’t changed much in the illegal offshore wagering market. Nor, for that matter, in the illegal street-level bookmaking game. Although change takes time, is it possible that individual states are moving through the legislative path too slowly?

Will new federal legislative outcries from prominent US Senators including Chuck Schumer (D-NY) and Orrin Hatch (R-UT) further delay the process and help illegal factions maintain a two-decade competitive advantage?

Will their intentions for uniformity, taxation and mandates for “integrity” work?

Or potentially enable the public and bettors to carry on believing that political forces should not join the sports leagues enforcing their games. In effect, now that it’s unbroken, let’s not fix it. These are all good questions to be debated and answered. But shouldn’t they have been settled first before opening the doors to the store? Meanwhile, the “illegal” competition is seizing any advantage for as long as possible. And like any competitive business, they’re utilising any potential incentive to maintain a long-standing customer base.

State vs. federal rule Besides incumbent Nevada, the honeymoon for state rule had barely begun in four new states (New Jersey, Delaware, Mississippi and West Virginia) before a dangerous call for divorce from the US Senate emerged. While several states, including New York, Florida and California, are stalling in their legislative progress, momentum is building again to collect support for a federal plan.

Senate Minority Leader Schumer is trying to initiate a bipartisan debate in Congress based on three core principles: ensuring consumer protection, protecting problem gamblers and maintaining the integrity of the game.

His proposal comes on the heels of a similar proposal by Senator Hatch of Utah.

In response to Schumer’s proposal, the NBA, MLB and PGA Tour issued a joint statement, which read: “As legaliaed sports betting spreads across the states, there is a need for consistent, nationwide integrity standards to safeguard the sports millions of fans love.

"We strongly support the legislative framework outlined by Senator Schumer, and we encourage Congress to adopt it.” The problem here is timing. Nearly one-third of the Senate is up for re-election in November, with any federal legislation focused on sports betting unlikely until after the midterm election.

In the interim, it is more likely that calls for federal legislation will build coinciding with league support.

Also, Schumer’s plan proposes strict guidelines banning players under the age of 21, while restricting advertising for the young and vulnerable.

Both Schumer and Hatch’s plans unite in protecting the purity of the game. But if progress is slow and individual states start dragging their heels then illegal wagering will be the winner.

Understanding ‘the market’ Street bookmakers have been around for decades, offering unsecured credit and the opportunity to create their own terms. Latterly, personalised websites have also become part of their 21st century convenience.

Although this segment will never completely disappear, swifter uniform policies and well-known national guidelines could help.

In the offshore segment, well-trained teams of phone operators often take a significant portion of the action (perhaps as much as 30% for call-in wagers), catering to an older clientele who shun the internet.

Many personal relationships have been established for several years and VIPs have utilised their long-standing status to acquire bonuses, rewards, etc. For the sophisticated bettor, the opportunity exists to play within a more even or global wagering line. At present, bettors within each US state are restricted by law to wager within state borders.

As an example, a player should expect a crush of local money invested on popular local teams — an uneven amount wagered on, say, the Jets, Giants, Yankees or Mets in New Jersey or New York. Depending on perspective, this remains a competitive advantage.

Winning with a low profile Another unfortunate tradition has been rumoured among new legalised US sports wagering bettors. Long common in illegal offshore wagering and in Europe, it sees successful, large bettors being flagged by casinos and barred from further sports wagering action.

The prevailing excuse has been to protect against money laundering or against illegal wagering funds becoming incorporated in the pools.

It’s reminded many of the argument involving skill vs. luck in daily fantasy sports. However, this time the adversary is the casino.

Echoing the birth of legalised online gaming in the US, New Jersey has again been first out of the gate when it comes to legalised sports wagering. And the state that led the charge repealing PASPA has an interesting policy involving skill and wagering. “Patrons cannot be barred from wagering based solely on their winnings or skilled play,” David Rebuck from the Division of Gaming Enforcement of New Jersey announced.

He went on to explain that New Jersey’s Supreme Court had previously ruled that only those on an exclusion or self-exclusion list, or who had violated the Casino Control Act or State regulations, would be excluded. “These same rules apply to sports wagering,” Rebuck continued. “However, a facility can act against skilled players, such as lowering an individual’s bet limit. Additionally, online accounts may be closed by an operator for misconduct.” To date, two bettors have reportedly been banned under these clouded conditions. These could be the first of many cases as legalised sports wagering spreads throughout other US states. As an interesting footnote, should this policy become stricter and more pervasive, a restricted legal sports bettor may have only a few sportsbook choices available to them per state — but they’ll be able to choose from hundreds of illegal online wagering sites.

Legally convenient Undoubtedly, the ability to settle bets is the biggest selling point that new legal US sportsbooks have over any illegal competition. For two decades, anyone choosing to wager sports online has had to accept the risk of NOT getting paid.

Legalised wagering brings with it a guarantee that all winning bets will be honoured at all US casino and racetrack sportsbook locations.

Behind this is another potential major legal advantage. Still largely unknown to new bettors and account holders, most current state policies dictate that all tickets must be cashed at casino and/or racetrack sportsbook locations. This includes online account withdrawal requests paid onsite. While this is a useful marketing strategy for casinos, as it encourages ancillary wagering, it’s not so useful for punters.

This is especially true if they’re used to online horse racing websites, where winning funds can be paid into users’ bank accounts as soon as 24 hours after a race.

A giant advantage could be obtained by negating the need for an extra trip to a location to pick up winnings. In retrospect, we cannot blame the four initial states for opening their sportsbooks as soon as possible after the PASPA ruling. While more states consider joining them, shouldn’t everyone be on the same page with a set of rules to live by?

Most crucial, like any business, shouldn’t the priority be a plan based on what customers prefer? In this case, that could mean observing what worked or currently works to provide optimum results.

Here’s hoping that all US legislators, casinos and gaming affiliates unite as quickly as possible to seize every advantage, while at the same time protecting bettors.

But for now, it’s business as usual this week legally AND illegally in the sports wagering industry.

Larry Gibbs is vice president of US Gaming Services, a full-service consulting and marketing research organisation with 15 years’ experience in US online gaming.