Update, Feb. 17, 2022: A legislative subcommittee on Thursday advanced mobile sports betting in Arkansas after voting to approve a rule splitting profits between casinos and sportsbooks.
The vote came less than 10 minutes into the meeting after Brian Bowen, chief deputy for the state Attorney General’s Office, addressed questions about the legality of the rule. Bowen limited his responses in anticipation of potential litigation, but he told the subcommittee that the Attorney General’s Office believes it can defend the rule.
The rule gives 51% of net revenue to casinos. A representative for national sportsbooks including DraftKings and FanDuel argued in an earlier meeting that the rule is inconsistent with the federal Commerce Clause.
Carlton Saffa, chief market officer for Saracen Casino, on Thursday again assailed the argument as a “hail Mary” attempt by sportsbooks to protect a business model under which they typically receive 85%-95% of the revenue.
A final vote in the full committee is expected next week.
If approved, mobile betting could go live in early March.
Original story, Feb. 16, 2022:
The launch of mobile sports betting remained on hold Wednesday after a legislative subcommittee recessed without approving a rule on how casinos and vendors will split the revenue.
The administrative rules subcommittee will meet again at 8 a.m. Thursday.
At issue is a proposed rule that gives Arkansas casinos 51% of net revenue for mobile sports wagers. National sportsbooks including DraftKings and FanDuel have contested those terms, arguing that profit-sharing should be worked out between vendors and casinos, not mandated by the state.
A representative for the sportsbooks added to their objections at Wednesday’s meeting, arguing that the rule is inconsistent with the Commerce Clause, a federal rule that prohibits differential treatment of in-state and out-of-state economic interests. Lobbyist and former state lawmaker John Burris told the committee that no other state has such a rule for their sportsbooks.
Burris suggested that the committee seek an opinion on the Commerce Clause from the state attorney general’s office. State Rep. Denise Garner, D-Fayetteville, later asked whether the attorney general’s office had already weighed in on the matter, but the meeting was recessed before she could receive an answer.
Burris’ argument received strong pushback from representatives for Saracen, Oaklawn and Southland casinos. They noted that the profit-sharing rule applies to any vendor, whether they come from inside or outside the state, and said it’s therefore not discriminatory.
Carlton Saffa, Saracen’s chief market officer, called the Commerce Clause argument a last-ditch effort by sportsbooks propped up by “cherry-picked case law.” He urged the committee to approve the rule in time for the NCAA’s March Madness basketball tournament, warning that casinos and the state will miss out on revenue if they don’t.
Casinos had hoped for mobile betting to go live before the Super Bowl, but the launch was delayed after gaming officials adjusted the revenue rule by changing “net gaming revenue” to “net casino gaming receipts.”
The delay also allowed questions about app technology to be answered at Wednesday’s meeting. State Rep. Jim Wooten, R-Beebe, pressed a spokesman for the geolocation security firm GeoComply on the product’s effectiveness. The spokesman gave the committee a live demonstration showing someone in West Memphis trying and failing to place a bet through a Tennessee sportsbook, where mobile betting is legal.
Rare instances where someone circumvents the system could be prosecuted as wire fraud or as violations of federal laws on unlawful gambling and state sovereignty.
The committee approved a rule on the technology.