Arkansas regulators have kicked off a process that could lead to the lawful launch of online sports betting in the southern state.
Legal sports betting has been happening on the premises of Arkansas casinos since 2019, but online wagering has yet to be authorized.
That could change in the not-too-distant future after the Arkansas Racing Commission voted last week to publish notice that they are considering the adoption of new rules allowing for mobile sports betting anywhere in the state.
There is now about a month for the public to chime in with their comments about online wagering, which chairman Alex Lieblong said they’ve already been doing with him.
The move towards mobile wagering in Arkansas comes as legal sports betting continues to spread across the United States, including in neighboring Louisiana, where online sportsbooks could start legally operating in early 2022. It also comes as Arkansas residents are apparently already betting with offshore or illegal sportsbooks.
“They’re doing it anyway, and it’s about time that we bring it in so that … Arkansas gets their share of the revenues,” Lieblong said.
Share(d) concerns
The Saracen Casino Resort in Pine Bluff, Southland Casino Racing in West Memphis, and Oaklawn Racing Casino Resort in Hot Springs are the three casinos that are already legally taking sports bets in Arkansas. Another casino was also authorized by the racing commission recently for Pope County, according to the Arkansas Democrat-Gazette.
The rules now being proposed would allow the Arkansas casinos to partner with up to two sportsbook operators to take online bets on their behalf from anywhere in the state, the commissioners were told.
But one sticking point has already emerged over potential revenue sharing between a casino and any operator with which they may contract. John Burris, a lobbyist whose firm counts DraftKings and FanDuel as clients, took aim at a unique rule being proposed that says the majority of revenue generated from mobile sports betting must go to the casino.
Burris told the commissioners that they don’t believe the state should be dictating business-to-business arrangements for any revenue sharing, warning it could reduce competition, consumer choice, and tax receipts for the state.
“We think it should be something that's negotiated between businesses and then approved with you on the back end,” he said.
Burris was joined by Sean Ostrow, a lobbyist for BetMGM and other sportsbook operators, who said the terms of market-access agreements can depend on the contract. However, he added that “generally speaking,” the average arrangement can see between five and 15 percent of sports-betting revenue paid to market-access partners, which would be the casinos in Arkansas.
Casinos don’t have to partner with online operators if they don’t want to, either.
“It can't be emphasized enough that absolutely nothing in this rule, nor nothing we want, requires them to contract with the national brand,” Burris said. “We're going to raise the point through the public comment period and through outreach that the state dictating some sort of revenue share just ties one hand behind our back when trying to negotiate a deal.”
'Into the light'
Whether the revenue-sharing rule is ultimately adopted remains to be seen. The Arkansas Racing Commission will meet again on December 30 and could approve new online sports betting rules at that time. A legislative committee would have to approve any new rules as well.
Yet there was a legal question raised by commission staff about whether allowing a third party to receive more than 50 percent of sports-betting proceeds would mean the party was operating as an unauthorized casino gaming entity in the state.
Arkansas voters approved an amendment in 2018 to the state constitution that allows for casino gaming at four casinos in four specific spots. The definition of casino gaming in the state included sports betting, which online operators could offer under the proposed rules.
Burris said they don't think revenue-sharing dictates operational control. Lieblong, meanwhile, said the commission wants to ensure Arkansas has a “first-class” product for bettors without finding out later that they’re getting shortchanged.
“I'd like to see this done as quickly as possible … and bring it out into the light so to speak,” he added.
