AUGUSTA — A legislative committee voted Friday to legalize sports betting in Maine, one year after a U.S. Supreme Court ruling allowed states to expand into the multibillion- dollar sector of the gambling industry.
The vote is a significant step forward for legislation that aims to rein in illegal gambling on sporting events and, in the process, potentially generate millions of dollars in tax revenue from the newly regulated industry.
But the 6-3 vote in the Veterans and Legal Affairs Committee – with four members yet to cast votes by late afternoon Friday – highlighted the differences over the details of rolling out sports gambling in Maine. The split vote also likely sets the stage for a robust debate on the House and Senate floors on whether Maine should join the sports betting wave across the country.
“I feel like it would be irresponsible to punt it to the next session,” said Rep. John Andrews, R-Paris. “I think we should do what we have to do while we’re still here, especially since the Supreme Court, what, a year ago?”
Roughly a dozen states have already legalized gambling on athletic events since last May’s ruling striking down a federal prohibition. Maine is among more than 20 others also considering it – and the proposal has encountered little opposition so far.
The bill that picked up the most support from committee members Friday would allow bets to be placed both online and at licensed “bricks and mortar” facilities in Maine; require gamblers to be at least 21 years old; and establish a 10 percent tax rate for the operators of betting facilities in Maine and a 16 percent tax rate for online or mobile platform operators.
It also would earmark 98 percent of tax revenue to Maine’s General Fund, with 2 percent split between the Department of Public Safety’s Gambling Control Unit and problem-gambling programs. The bill would not require online operators to be connected to a licensed, physical facility in Maine.
Sports betting generated $429 million in revenue among the seven states where it was legal last year, according to statistics from the University of Nevada Las Vegas Center for Gaming Research. But as more states legalize sports gambling, the revenue pool is expected to disperse.
Milton Champion, executive director of the Gambling Control Unit that enforces Maine’s laws regulating casinos and fantasy sports, estimated that sports betting would generate between $3.8 million and $6.9 million in tax revenue for the state.
But Champion said those estimates were based on a 10 percent tax rate, not the 16 percent rate lawmakers are envisioning for the online platforms or mobile apps that account for roughly 85 percent of betting nationwide.
During a public hearing last month, Champion pointed to other states’ deflated experiences with sports betting. Rhode Island, for instance, expected to see revenues of $1 million a month, but the numbers have been closer to $50,000 per month.
“There is only so much discretionary funds available,” Champion said at the time. “This, in my view, indicates that New England has or is very close to reaching its saturation point. It is essential, however, that we have the ability to offer what the competition offers. And by competition, I am referring to other states.”
Committee members settled on the two-tiered tax system Friday after discussing different options and examining other states’ tax policies on athletics gambling. The tax rates in other states vary widely, from a low of 6.75 percent of operator revenues – after winnings have been paid out – in Nevada to 51 percent in Rhode Island.
All nine committee members who voted Friday supported a version of a bill to legalize sports betting. The major difference between the two camps was over the question of whether to require online operators – such as the mobile platform DraftKings – to be connected or “tethered” to another licensee with a physical facility in Maine.
Maine’s off-track betting parlors and casinos had been advocating for tethering because as much as 85 percent of legal sports betting nationwide occurs online.
“The casinos, the OTBs, we all have substantial investment in the state,” said Don Barberino, owner of Favorites off-track betting facility in Sanford. “We pay property taxes, sales taxes, payroll taxes. We are part of the community. It is important to keep us … because we’ll get cannibalized by the (online) people.”
But opponents of tethering pointed out that other web-based companies, including online giant Amazon, are not required to be connected to a brick-and-mortar business in Maine.
“This industry only would be singled out,” said Rep. Scott Strom, R-Pittsfield. “To me, that just doesn’t make sense to pick one industry and have one set of rules for that but all of these other industries … we do not require them to tether whatsoever.”
The current proposal would allow 11 entities to apply for on-premise sports betting licenses: Hollywood Casino in Bangor and Oxford Casino; Scarborough Downs racetrack; the four off-track betting locations in Brunswick, Sanford, Lewiston and Waterville; and the state’s four Native American tribes.
The committee members who were absent have until Tuesday at noon to vote on the bill. The measure will then go to the full House and Senate for consideration.
Send questions/comments to the editors.
