Ohio professional sports teams are pushing for changes to a bill that would legalize sports betting in the Buckeye State, including tweaks that would tighten limits on the number of online operators and add at least a little bit more of a home-field advantage for them.
Legislation recently introduced in the Ohio Senate would allow as many as 20 licenses for online sportsbooks (“Type A”) and 20 licenses for brick-and-mortar betting facilities (“Type B”).
A mobile licensee would be able to obtain one for a physical sportsbook as well under Senate Bill 176, in addition to partnering with as many other online operators as they want.
Officials from pro-sports organizations in the state were among those who testified Wednesday at a meeting of the Senate’s select gaming committee, and they argued that the model proposed by S.B. 176 could use amendments.
Doug Healy, the chief financial officer of the Cincinnati Reds, suggested that the set-up for mobile betting could confuse consumers, dilute the market, and invite shady operators.
“Frankly, the current legislation enhances the out-of-state gaming interests’ ability to procure market access in Ohio without rewarding stakeholders who have invested billions of dollars and employed tens of thousands of Buckeyes,” Healy told the gaming committee, which began its work earlier this year.
Priority access?
Healy recommended that the Type A licenses should be limited to just one “skin” apiece, which would mean that there would be 20 online sports-betting brands in total that could operate in the state.
“Twenty licenses are more than adequate to address the initial demand in the marketplace, evidenced by our friends in Arizona, which recently passed very similar legislation,” Healy said. “As I stated during my March testimony, it is not our intent to run this operation, rather we would delegate the operation under this license to a qualified mobile sportsbook operator.”
Healy also suggested that “some sort of priority” be provided to the state’s casinos and race-track casinos (or racinos), as well as to its professional sports teams, for the Type B brick-and-mortar sportsbook licenses. Additionally, the Reds CFO asked that official league data be used for betting and that the legislation be passed in a timely fashion.
Healy was joined by representatives from professional football and golf organizations in the state, who made similar requests.
Ted Tywang, general counsel for Cleveland Browns-owned Haslam Sports Group, said the current structure of S.B. 176 does not allow for “fair market access” for the state’s sports teams. He specifically pointed to the requirement for license holders to be able to "bank" bets and the open-ended model for mobile sports betting.
“These provisions would flat-out prevent our participation based on our business structure and league rules and also create an unhealthy monopoly,” Tywang told the committee, adding later that "we feel strongly that there must be limits on the number of sports-betting platforms so as to avoid market saturation, consumer confusion, and an overburdened regulatory structure."
Tywang told the committee that they believe the language around the Type A licenses in the bill should be amended to give the major-league teams and the PGA control of one mobile license each. He added that the pro-sports organizations and the state's casinos and racinos should receive "priority" for the Type B licenses.
A potentially major market
S.B. 176 would bring legal sports betting to the seventh-biggest state in the United States in terms of population, but it would not do so until after Jan. 1, 2022. It must also be passed by Ohio's GOP-controlled legislature and signed into law by Republican Governor Mike DeWine.
The signals coming from Republican lawmakers in the Senate thus far are that they are not looking to play favorites, and that they are aiming for a fairly free market that can drive economic growth in the state. Whether or not they will be willing to accommodate any additional amendments remains to be seen.
Those requests, however, are being made.
Dan Sullivan, executive director of the Memorial Tournament, an Ohio-based PGA Tour event, recommended that S.B. 176 be amended to not only allow the state’s pro-sports organizations to control one mobile license apiece, but also one retail sports-betting license.
“For integrity reasons, the language must require the teams to designate a betting provider that would handle all operations and be licensed and regulated by the Casino Control Commission,” Sullivan told the committee on Wednesday. “The separation between the pro-sports organizations and the betting operator is crucial to maintain fan and betting consumer confidence in our games and the state’s regulatory oversight.”
Anybody else?
Among those also testifying Wednesday were representatives from the Ohio Grocers Association, the Mid-Ohio Sports Car Course, and DraftKings Inc.
DraftKings' senior government affairs manager Kevin Cochran said the Boston-based digital sports entertainment and gaming company supports S.B. 176's sports-betting provisions, but suggested some "minor changes" could be in order, such as to the language around licensing workers.
"For example," Cochran said, "the language in the bill currently specifies occupational licensing for those people that physically handle money. That just isn't a role that exists in mobile sports betting."
The Senate gaming committee adjourned on Wednesday after hearing about two hours of testimony. The backers of S.B. 176 are aiming to get it passed by before the end of June.
