On December 28, 2022

2023 may be the year that Vt legalizes sports betting

By Sarah Mearhoff/VTDigger

Three years after a landmark U.S. Supreme Court decision opened the doors for states to legalize sports betting, Vermonters may soon be able to join their New Hampshire and New York neighbors in their gambling endeavors.

That is, as long as a new proposal makes it through the Legislature.

In a newly released report years in the making, a committee of nine lawmakers and state officials unanimously concluded that Vermont should legalize sports betting and establish a state-controlled betting market, which would be overseen by the state Department of Liquor and Lottery.

Illegal sports betting is already commonplace, committee members wrote, and a state-controlled, legal market could put guardrails around the activity and offer Vermont a new, albeit modest, revenue source.

A sports betting market in Vermont could encompass both retail wagering, which takes place in person at a designated physical location, and mobile wagering, which is conducted online. In recent years, sports betting apps like DraftKings and FanDuel have boomed in popularity. The committee advised that the state begin with an online market and continue to study the question of whether to establish a retail market.

According to the American Gaming Association, sports betting is legal and operational in 31 states, as well as Washington, D.C. The practice has been legalized, but is not yet up and running in an additional five states. Sports betting has been legalized in every state in New England except for Vermont.

The proposal historically has been a touchy one in Montpelier. Republican Gov. Phil Scott has been an early supporter of sports betting, first urging the Legislature to legalize it in his 2020 budget address. On Tuesday, he said that this year, his administration “hope(s) that they will concur in some fashion and we’ll put sports betting into law.”

Asked if he believes Vermont is lagging behind other states, including several in New England, that have already legalized the activity, Scott said, “I don’t know if we’re behind the times, because everyone catches up eventually.”

“It was the same for cannabis. We heard the same argument there,” he continued. “But it all levels out eventually. We just want to make sure that we offer it to Vermonters and those who are coming to visit Vermont so they can do so legally.”

When Scott initially floated his proposal to the Legislature in 2020, the reaction from Democratic leaders was lukewarm — hence the creation of a study committee to further explore the issue.

Incoming Senate President Pro Tempore Phil Baruth, D-Chittenden, appears receptive to passing a sports betting bill this year, according to a statement provided by his chief of staff, Ashley Moore.

“The Senate has a history of supporting the creation of a legal framework for sports betting in Vermont,” Baruth said Thursday. “A regulated market would provide consumer protection in a way the illicit market currently does not. We are encouraged that the committee came to a consensus on recommendations for a path forward and we look forward to continuing discussions in the coming biennium.”

House Speaker Jill Krowinski, D-Burlington, was quick to raise House members’ past concerns with legalizing sports betting, according to a written statement provided by her chief of staff, Conor Kennedy.

“Historically the House has been concerned with the protections and supports for gambling addiction and its mental health impacts,” Krowinski said Thursday. “I have not had the opportunity to read the report yet, but I look forward to the committees of jurisdiction reviewing it and learning more about the recommendations to address those issues.”

The committee recommended utilizing some of the revenues from a legal sports betting market to fund “problem gambling resources.” The report also described measures, such as restricting the use of credit cards and requiring operators to build dollar limits and breaks into their platforms, meant to encourage “responsible gaming.”

Nationally and locally, gambling operators have undertaken significant lobbying to advance the effort to legalize sports betting. DraftKings, FanDuel and BetMGM — three major, nationwide sports betting platforms — have retained lobbyists in Montpelier for years. Recently, the three companies joined forces, alongside sports teams and other interest groups, to form the Alexandria, Virginia-based Sports Betting Alliance, which operates nationwide.

During the most recent legislative biennium, the Sports Betting Alliance retained MMR, a Montpelier-based firm, to represent its interests under the golden dome. According to lobbying disclosures filed with the Vermont Secretary of State’s Office, the alliance spent nearly $29,000 on lobbyists in the state in 2022, while DraftKings, FanDuel and BetMGM individually spent roughly $65,000 apiece over the full biennium.

The state revenue potentially on the table from a Vermont sports betting market isn’t game-changing, but it’s not nothing. The committee reported that even in states with some of the highest per-capita sports betting revenue numbers, the totals were miniscule in comparison to the state’s total operating budget, and by and large not sizable enough to support major programs.

Take neighboring New Hampshire, where sports betting revenues go into the state’s education trust fund. In the 2022 fiscal year, sports betting revenues accounted for roughly 1% of the state’s $1.09 billion education fund, the committee wrote. Sports betting revenues made up less than 10% of the state’s total lottery revenues that same year, the report found.

And in the high-population state of New Jersey, sports gambling revenues amounted to more than $50 million in 2020 — a blip on the radar for a state with a $40 billion general fund and population more than 14 times that of Vermont’s.

“Even in the highest revenue per capita states, the revenues are not suitable to support major programs,” the committee wrote.

The committee declined to propose a tax rate for a program, should it pass, in its report. At a committee meeting on Tuesday, Sen. Kesha Ram Hinsdale, D-Chittenden, said the committee didn’t want to accidentally “lowball” the state in doing so. The committee did write in its report that it found from studying other states with programs in place, “higher tax rates do not result in higher costs for gamblers, as they might with more traditional taxes.”

Without a proposed tax rate, the state’s joint fiscal office was unable to estimate how much revenue sports betting could generate for Vermont.

“JFO’s work for this report focused on creating a model for sports betting that is flexible and can give legislators a range of possible revenue outcomes depending upon the final legal framework,” the report said.

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