Bay State regulators have encountered some early pushback as they have begun digging into the state’s spending requirements for sports betting sites at horse-racing tracks and simulcast-wagering facilities.
The Massachusetts sports betting law requires a so-called Category 2 licensee — racetracks or simulcast locations — to make a capital investment of $7.5 million or more within three years of getting their permit. A Category 2 license allows a track or OTB to open a retail sportsbook and to offer mobile wagering through an online sportsbook.
Only two entities are currently eligible to apply for Category 2 licenses in Massachusetts: Raynham Park and Suffolk Downs. Raynham Park has announced a partnership with Caesars Sportsbook for in-person wagering, while Suffolk Downs has several horse-racing partnerships, including with FanDuel.
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Legal sports betting began on January 31 in Massachusetts at three casinos. Mobile sports betting started in the state in March.
There is eventually supposed to be event wagering available at Raynham Park and Suffolk Downs. However, under a proposed regulation it is currently considering, the Massachusetts Gaming Commission (MGC) is supposed to approve a project plan for spending on a Category 2 sportsbook and its related infrastructure, and that plan must include an affirmative action program. The proposed rule also establishes that a Category 2 operator that fails to hit its $7.5-million spending goal or follow the plan could have its license suspended or revoked.
The MGC is facing pushback already about its spending rules, as the commission and staffers said during the meeting that Raynham Park wrote to the regulatory body with concerns it might be overreaching.
“[The letter] contains a general objection to promulgating these regulations, but the specific objections seem to focus on the requirements dealing with equal opportunity and diversity, equity and inclusion,” Commissioner Nakisha Skinner said during Thursday’s meeting. “And I'm a little dismayed by that.”
The Massachusetts Gaming Commission spent time today on a regulation regarding a requirement for a racetrack or OTB seeking a sports-betting license to spend $7.5M+ on its facility within 3 years of getting a permit. Qs asked, but no action taken yet.https://t.co/4uwWak65G0 pic.twitter.com/TbPqxF9uwp
— Geoff Zochodne (@GeoffZochodne) April 13, 2023
Those concerns will have to be addressed at a later date, as there was ultimately no action taken by the MGC on Thursday. The decision to postpone any decision followed a request by Suffolk Downs for more time to digest the proposed regulation.
The MGC will return to the potential rules later this month or in early May. The commission has yet to issue any Category 2 licenses, although it could begin deliberations in the next few weeks.
Still, members of the Massachusetts Gaming Commission heard Thursday that the cost of designing, preparing, and constructing the site would all count against the minimum $7.5-million investment by a Category 2 licensee. However, land-purchase costs, legal fees, and marketing expenses would not.
The regulators have also been asked if Category 2 operators can count design and construction costs they’ve already incurred as part of their minimum $7.5 million spend, according to the MGC documents. It looks unlikely they will, as the state’s sports-betting law specifically says the money must be spent after the issuance of a license.
“If we're going to move forward, I think I'd like to have a more detailed discussion,” MGC Chair Cathy Judd-Stein said during Thursday’s meeting.
