With the Super Bowl less than two weeks away, lawmakers in several holdout states have proposed legalizing sports betting. But their plans to tax and regulate sportsbooks face an increasingly tough road.
Bills in states such as Hawaii, Oklahoma, South Carolina and Texas must overcome a range of longstanding challenges, including gambling bans in state constitutions, key lawmakers’ objections and conflicts between gaming operators.
Opponents are now also pointing to studies that show legal online sports betting fuels gambling disorders, harms bettors’ financial health, and worsens violence against domestic partners when a home football team loses in an upset.
A backlash is growing as the market matures, said John Holden, an associate professor at Indiana University’s Kelley School of Business who studies sports betting.
“We’re no longer seeing this — ‘Yay! This is basically free money for the state!’” attitude, he said. “People are seeing that there are consequences.”
Lawmakers in some states with legal sports betting, such as Massachusetts and New Jersey, have proposed bills this session that would add protections for young people and people struggling with gambling addiction.
Still, supporters of legal sports wagering are vowing to keep trying to expand the industry. They say legalization moves bettors away from shady offshore sites and into a safer, regulated market states can tax to raise money for public schools and other priorities.
Thirty-eight states and Washington, D.C., now allow people to bet on sports, according to the American Gaming Association. That does not include Missouri, where voters in November narrowly approved legalization but operators are not yet up and running.
In nine of the states with live markets, bettors must gamble in-person at casinos and other retail sites. But in most of the states they can bet online through apps offered by FanDuel, DraftKings and casinos such as MGM.
Advocates’ best chance to expand legal sports betting this year may be in Minnesota, where lawmakers and gaming operators in the state struck a last-minute legalization deal last session.
Minnesota Sen. Matt Klein (D) has said he plans to introduce a sports wagering bill that would include “the most rigorous protections against problem gambling and underage gambling in the nation,” such as restrictions on advertising to minors, prohibitions on push notifications that promote betting, and a ban on prop bets during college games.
The hurdles are higher in other states. Texas Sen. Carol Alvarado (D) has put forward a resolution that would ask voters to amend the state constitution to allow casino resorts and sports wagering.
A similar bill never made it to a floor vote in the Republican-led House last session. The House passed an online sports betting bill last session, but it died in the Republican-led Senate.
Alvarado, who has been trying to bring casinos to Texas since 2009, said her Senate colleagues don’t seem any more enthusiastic about legalization this session. But she said it is important to keep discussing the issue.
“We have to keep talking about it, and getting more buy-in from Texans,” she said. “And it polls well, so hopefully Texans can lean on their legislators to support this.”
Some lawmakers in states with legal sports betting markets are now seeking to rein in the industry, as more people seek help for problem gambling, college athletes face harassment and abuse, and some studies show mobile sports betting worsens people’s finances.
Sports betting advocates point to other studies that show legalization does not increase overall rates of problem gambling, or lead to higher rates of self-reported mental health struggles or of financial distress.
“Studies consistently show that the vast majority of customers use regulated sports betting platforms responsibly and for entertainment purposes only,” Sports Betting Alliance president Jeremy Kudon said in a statement. The alliance is an advocacy group that represents DraftKings, FanDuel and other sportsbook operators.
Kudon added that regulated platforms work to ensure all customers “have the tools and information to make prudent decisions by embedding responsible gaming tools into every aspect of the customer experience.”
Still, lawmakers in some states want to do more to protect consumers.
Massachusetts Sen. John Keenan (D) has proposed raising the tax rate on online sports betting operators’ gross revenues from 20% to 51%. His bill would also ban live betting and limit the amount bettors can wager on a daily and monthly basis, among other changes.
Keenan last year proposed hiking taxes on sports betting during budget discussions, but the Democrat-led Senate rejected his amendment.
New Jersey Sen. John McKeon (D) has proposed raising the tax rate on online sports betting and online casino gaming operators’ gross revenues from 15% to 30%. He said he wants to raise money for programs that help people manage gambling problems.
“To me, that is about creating revenue streams for the problems that are there,” he said. “Who’s going to pay for it all?”
McKeon has also put forward five other bills this session aimed at protecting young people and those struggling with gambling addiction, such as a bill that would create a public awareness campaign about the risks of gambling.
Proposals to hike taxes on sportsbooks will likely face fierce opposition from the gaming industry. A GOP-backed bill in Louisiana that would have raised taxes on online sports betting was quickly withdrawn in November after pushback from casinos.
Louisiana Speaker Pro Tem Mike Johnson (R) told local television station KALB at the time that the bill could come up again.
“The purpose is to try to offset some of the cost of the injuries to our community and our society by the very addictive online betting,” he said.