Some of the sports wagering bills going through the legislature’s digestive process this year bring to mind Hughes Mearns poem that begins:
Yesterday upon the stair I met a man who wasn’t there…
Some bills establish a process by which someone can bet on sporting events remotely. But whether in doing so they are the person who isn’t there is open to question. So today, let’s look at the casino industry’s efforts to avoid paying admission fees for the largest segment of new gamblers it hopes to attract by legalizing sports betting, people the industry thinks should not be considered there.
This issue is important for the Missouri Gaming Commission’s worthy causes—including veterans homes and cemeteries—and for the casino industry’s home dock cities, which also rely on income from the casino admission fees. And, of course, there’s the museums proposal from Jefferson City that also asks for admissions fee money.
Reading the bills instead of just listening to the casino industry explain them raises or should raise some red flags. We will raise a few today—and we won’t even get much into the industry’s effort to direct the conversation in the direction of how much it is willing to be taxed.
Casino attendance has been declining since its peak in FY 2010-2011, dropping in fiscal year 2018 to its lowest level in twenty years. Casinos hope that opening sports books in the casinos will draw people back, particularly new people, and those new people will discover other kinds of gaming while they’re there for sports wagering.
It’s unlikely to produce a BIG turnaround in attendance, certainly nothing that will return casinos to the halcyon days when they were reporting fifty-million admissions or more (a decade ending in fiscal year 2012). But as the bills are now written, it will add millions to the casinos profits, although a relatively small amount compared to the overall adjusted gross receipts, largely because they don’t think about seventy percent of the sports bettors should be counted as casino admissions. We’ll confront that strategy in a minute.
The proposed legislation gives our thirteen casinos a monopoly on sports betting. The bills require casinos to have a specific area set aside and staffed within the casino to handle those bets. A person who enters the casino wanting to bet that the Cardinals will beat the Cubs by more than fifteen runs must go to that specifically defined area where that person will offer to make a wager. The casino will accept that offer and, when the final score is St. Louis 19, Chicago 3, the bettor will be paid. If the score is 19-4, the casino keeps the bettor’s money. The acceptance, handling, processing and final resolution of the bet is handled within that prescribed area of the casino.
But the casinos also want to allow betting through use of computer, whether it’s a big desktop tower or a cell phone or maybe the increasingly sophisticated things people put on their wrists these days. And that is likely to be most of the sports bettors. They call it “remote” betting although some definitions of “remote” are debatable.
A webpage that keeps track of gaming trends in Nevada and elsewhere, playnevada.com, reports that 70 percent of all sports wagering in New Jersey, the first state to legalize online sports betting after last year’s Supreme Court ruling, were placed online. It also reported Nevada, which seemingly has video gambling machines in every supermarket, business, bathroom, airport terminal, and anywhere else that people go, reports mobile sports wagering is used from twenty-five percent to more than fifty percent of the betting in Nevada’s many sportsbooks. It’s difficult in Nevada’s case to be more specific because—and this is something we might come back to in a later post for a different reason—Nevada does not separate mobile and on-site wagering. That’s why it’s harder in Nevada than it is in New Jersey to determine what percent of sports wagering is done outside casinos.
Missouri’s proposed legislation would separate on-site wagering from remote wagering, which could be detrimental to veterans services or to home-dock communities that rely on in-person wagering in the sports book area but also could provide a major increase in casino profits. Missouri’s casinos want it that way and expect the legislature to rubber-stamp the idea.
As we compose this, we don’t know the final form sports wagering legislation will have if it makes it to the governor this year. So we’re going to construct a scenario based on common provisions in the bills and a few differing provisions in some bills.
Missouri’s proposals don’t let just anybody dial a casino, and bet on sports. A bettor first has to go to the casino (where that person presumably will have to enter, thus triggering a two-dollar admission fee for the state) and register, open a betting account, and get a password. That person then can leave and bet from anywhere in Missouri. At least one proposal allows betting from other states if the other state lets Missourians place bets there. It’s called reciprocity. On the other hand is a proposal that allows betting a few feet from the gambling area—-which doesn’t sound very “remote.”
If those provisions are in the bill that gets passed, the way will be clear for Betting Bertie to place a bet in say, Boonville, even if he is in Bevier. He does. And he loses. Since he was not in the casino personally there is no admission fee paid to the state. The bucks Betting Bertie of Bevier bet at Boonville go straight to the boat’s bottom line. The casino gets richer. The veterans and the home dock community get no benefit at all from this increased business because Betting Bernie doesn’t set his boots inside the Boonville boat. At least that’s the way things are proposed.
Now comes the part likely to get the casino industry lathered up.
We argue, and we would bet that a number of members of the legislature might agree, that requiring Betting Bertie to physically go to Boonville to register as a bettor constitutes the creation of a presence within the sports book area. The bills require casinos to keep detailed records in the casino of Bertie’s betting.
If Betting Bertie does not place a bet, it’s as if he’s not present that day. But if he does put down a bet that is accepted by the casino, processed by the casino, and paid off by the casino in the sports book area as required, he has activated that established presence and has electronically entered that casino. And because the casino has accepted the bet, processed it, and paid it, it has acknowledged that he has had that presence in that casino.
Because the casino has decided to admit him to the sportsbook area with his bet, the two-dollar admission fee should apply as surely to him as it would apply to someone who walked in. A bet is a bet whether it is made by someone sitting in a comfortable chair staring at all the big screen teevees or whether it is made by someone sitting in an office chair in Bevier. Both parties have entered the casino, one physically and the other electronically. Admission is admission—at least if the casino wants either bettor’s money. It cannot get Bertie’s money if it does not acknowledge the presence it as established for him by accepting his application and giving him his password.
Casinos will argue that physical and electronic admissions are different. But the end result is the same—the casino is most likely to win and the principle of winning is the same whether that person walks in or phones in. There is no bet if there is no acknowledged presence.
To put it more directly: The casino recognizes the arrival of the electronic bettor because it maintains a space for that person’s arrival thanks to the required registration and subsequent password issuance. The password is the equivalent of the turnstile the on-site bettor has to go through to place a bet.
By making the password the electronic equivalent of the turnstile, the legislature can make sure that casinos don’t game the system further than they already do by claiming seventy percent of sports betting is different from the on-site betting, thus benefitting only the casino and not improving funding for veterans (and others) and home dock cities. The casino industry likes to cite Las Vegas practices in advocating a part of this bill and remember: Nevada does not separate mobile and on-site betting.
There is precedent within existing law that argues for our point.
If free passes or complimentary admission tickets are issued, the excursion boat licensee shall pay to the commission the same fee upon these passes or complimentary tickets as if they were sold at the regular and usual admission rate.
The provision kept casinos in the early days when real excursions were anticipated from declaring that everyone entering the gaming floor had been given a free pass or complimentary ticket. As proposed statutes are written now, electronic entrance to the gaming floor and remote placement of bets is the equivalent of a free pass or complimentary ticket that, without existing law, would be treated as a non-admission. A strong argument can be made that it should not be considered as any kind of a free pass or complimentary ticket. And we suspect there are people who would support the concept—veterans groups and home-dock communities for example—who would be losers because the casinos are proposing an end-run around the admissions issue. Why shouldn’t these bills consider remotely-placed bets to be “admissions” when the bets are received, processed, and (if necessary) paid in the casino or on behalf of the casino by a third party that conducts the wagering at the casino?
The answer is simple: the casinos don’t want them treated that way because if remote betting is not considered an “admission” there is no admission fee obligation to the state and to the host communities. The casino thus increases its gross receipts without increasing any payments for veterans homes and cemeteries or home-dock communities and other causes. As we’ve noted before, they’re already getting tens of millions of dollars in windfalls because the admission fees are not inflation-adjusted each year and they fight aggressively if anyone suggests they should be. By not considering remotely-placed but in-house processed bets as “admissions” their windfall will get windier.
Some additional proposed language that on first blush seems to be fairly benign appears on second blush to be much less than that. Here’s how that works:
One of the bills appears to make that point when it says, “All sports wagers…shall be deemed initiated, received, and otherwise made on the property of an excursion gambling boat within this state.” While that language would appear to support the points just made, please note the phrase “on the property.” Another bill seems to clarify that wording by saying sports bettors can wager on sports at “a hotel, restaurant, or other amenity that is operated by the certificate holder and subject to the supervision of the (gaming) commission.” A restaurant twenty feet from the turnstile to the gaming floor is an okay place “on the property” from which to place a bet. We suspect there are some folks who don’t think that quite qualifies as “remote.”
The definition of “on the property” is troublesome. On one hand, the casino must establish a specific area where sports wagering is done and processed by the casino. On the other hand are suggestions that someone can be anywhere, even right outside the turnstile leading to the casino, or in a room of a hotel owned by the casino. These provisions seem to sanction avoidance of physically entering the specified area or of even entering the broader casino betting floor while on casino property, thus avoiding an “admission” and thus avoiding the two-dollar admission fee..
That is why it is important that the use of the password—from wherever—should constitute entrance to (or admission to) the specific area set aside for sports wagering and thus trigger the admission fee.
We hope the General Assembly’s final version of a sports wagering bill does not allow the casinos to ignore existing standards that require admission fees—that help veterans, home-dock communities and others—for seventy-percent of those the industry hopes to lure inside its specified sports betting areas physically as well as electronically.
—because the man who isn’t there
really will be there.