Today's public meeting of the Massachusetts Gaming Commission (MGC) produced plenty of light — but little heat — regarding the thorny issue of temporary licenses and the no less problematic matter of a staggered vs. universal launch date for sports betting in Massachusetts.
As was revealed at the previous (September 15) sitting of the MGC, there was an error in the legislation passed on August 1 that legalized sports betting in Massachusetts. This involved the failure to place a cap on the number of temporary online sports betting licenses that the commission could issue to untethered operators.
This means that those sportsbooks which launch in the Bay State under temporary licensure could subsequently be forced to shut down, should their permits be revoked within a year or less, according to whether they make the final seven cutdown after the MGC completes its vetting process.
This naturally gave pause to the commissioners as to what would be the fate of bettors still holding account balances and who may well have wagers pending on future sporting events on the day their sportsbook apps are deactivated. How would the books compensate or otherwise make whole their customers left in limbo?
This was the first of two main questions that MGC Chair Cathy Judd-Stein laid out for discussion at the beginning of the meeting. The second was the critical issue of a staggered vs. universal (i.e. single) launch date for the rollout of both online and retail legal sports betting in the Commonwealth
Majority of license applicants prefer universal launch
The commission saw prospective license applicants make presentations that focused more on the start date question, although some operators did offer limited insight into the consequences of license revocation.
The launch timeline is important to the respective sportsbook rollout strategies, with eight tethered mobile licenses (those partnered with the state’s three casinos and two simulcast facilities) available, and seven untethered/standalone licenses available for online operators.
Accordingly, the MGC gave each of the license applicants five minutes to make their case heard.
Cory Fox, Vice-President of Product and New Market Compliance for FanDuel, the leading U.S. operator by market share, offered a mixed view of temporary licenses.
He stated that he didn't believe it was an "effective use of resources" to offer more temporary licenses than what will be the final result, given the financial investment that will be made (by both the operator and the MGC) in launching these temporary books, but he did acknowledge that it would let the state hit the ground running.
"We view the ability of the commission to issue temporary licenses as a way to expedite the launch of the operators that have already been selected through a competitive process," said Fox. "The temporary licenses allow the commission to launch sports wagering while the commission is finalizing its suitability review of the operator in preparation of issuing a full license."
Danny Miller, the Director of Compliance at the MGM Springfield Casino, expressed BetMGM's concern that there should be a "transparent timeline and set launch date communicated to the public" and that operators should be provided with a timeline of all "critical milestones" that they would be obliged to meet. BetMGM also took a hardline stance against the idea that operators granted temporary license approval could be subject to having them "dismantle" their operations — which Miller noted would be "unprecedented."
The Legal Counsel for Bally's Corporation, Justin Smith, stated that his Bally Bet was opposed to the "implementation of a temporary license scheme," arguing that any potential shutdown would be difficult to manage given that many customers make wagers "months in advance." His implication was that no sportsbook could anticipate when its license might be terminated by the MGC — and be expected to adjust its operations accordingly.
Smith further opined that Bally's believes operators should be allowed to introduce their apps when "they are ready," as opposed to waiting for a future start date, and suggested that the commission should set a "specific launch date which will place the onus on operates" to meet that date.
The representative for DraftKings initially played to the home crowd in his remarks, reminding the commissioners that the operator is headquartered in Boston and has approximately 1,500 employees in the state.
Chris Cipolla, Senior Director, Legal and Government Affairs for DraftKings, argued in favor of temporary licenses.
"All operators, tethered online or untethered mobile, must be provided the opportunity to launch on Day 1 so that no one obtains an unfair competitive advantage," said Cipolla. "We do feel that giving everybody a fair shot to launch involves giving operators a set launch date."
DraftKings, FanDuel double down after presentations
During the Q&A period that followed applicant presentations, Cipolla reiterated the sportsbook's position that a universal start date is the best solution.
"Putting mobile operators on same footing is important... the overwhelming amount of sports betting is on mobile," said Cipolla. "We think there are roadmaps for Massachusetts to go live at the same time in all categories."
He added that DraftKings believes the Commonwealth can launch retail and mobile simultaneously, mirroring the recent Kansas launch, and concluded his remarks by again alluding to DraftKings' favorite son status.
"We stay true to our roots in Massachusetts and we look at this from a unique perspective as compared to other prospective applicants," Cipolla added.
The Q&A portion of the public meeting came to an interesting close when FanDuel's Fox made what was arguably the most persuasive case against the issuance of temporary licenses — certainly with respect to the possibility of allocating licenses that exceed the maximum number that can ultimately be granted on a long-term basis.
"Candidly, for FanDuel, the investment that we make in a state in year one is designed to pay out over a number of years, so from a business model perspective it's really challenging for us to invest in a state not knowing if we will be able to continue to operate there past one year or even shorter."
