Vermont senators are mulling over exactly what they should charge operators of sports betting sites to set up shop in the Green Mountain State.
The Vermont Senate’s finance committee met again on Wednesday and considered House Bill 127, legislation that would bring legal sports betting to the state via mobile apps and sites.
H.127 proposes a state-controlled model of authorized event wagering, with the Vermont Department of Liquor and Lottery conducting a competitive bidding process to select two to six operators of mobile sportsbooks to take wagers in the state. If there are not two worthy candidates, the department could go with a single operator as well, or none, once Vermont sports betting is legalized.
Under the current version of H.127, bookmakers would have to turn over a share of the revenue from sports betting, and that cut could not be less than 20% of adjusted receipts. Operators would, however, also have to fork over an annual fee that would be based on the number of approved bookmakers.
Finding the Goldilocks fee
For instance, the latest edition of H.127 sets out that a single operator would have to pay $550,000 a year, while two operators would prompt payments of $412,500, three would require $366,666, four $343,750, five $330,000, and six $320,833.
Those fees have been structured to pay the cost of regulating the legal sports betting industry in Vermont. But the requirement for a six-figure annual payment in a state with just a six-figure population gave some senators on the committee pause. The committee also heard other, more populous states have lower fees, such as the $100,000 online sportsbook operators are charged annually in Connecticut.
Sen. Thomas Chittenden instead proposed a new operator fee for Vermont, which would charge bookmakers $150,000 to enter the market, but then a lesser annual fee, such as $400,000 annually for a single operator and $170,833 for six operators. This, the senator suggested, would bring in more money and entice more operators.
“I'm just worried that the fee model as proposed here with the escalation is going to discourage competition,” Chittenden said during Wednesday’s meeting. “If you're the sixth operator, you're going to be in a crowded field, and that's going to cost you $320,000.”
Small state, big issues
The discussion about fees is no small thing for Vermont, a relatively tiny state in terms of population and one of a shrinking number without legal sports betting. Indeed, Vermont is the only state in the New England region that has not passed legislation to legalize event wagering. Setting an attractive fee structure could be key to ensuring interest from operators.
No action was taken on H.127 on Thursday, and the Senate’s finance committee is scheduled to resume its consideration of the bill on Thursday, when it will potentially vote on the legislation.
Under its other provisions, H.127 would require bettors to be 21 or older and physically located in the state to wager. Sportsbooks will also be able to offer a wide variety of betting markets with a few exceptions, such as a ban on taking action on Vermont colleges unless they are playing in a tournament like March Madness. Credit cards will not be allowed to deposit or make bets.
