Care to Wager?
On May 14, 2018, the Supreme Court decided a case that changed the sports betting landscape in the United States. In Murphy v. NCAA, the Supreme Court held that the Professional Amateur Sports Protection Act, a federal law which restricted sports betting to just four states, was unconstitutional. The entire law was struck down, and state governments were given the power to regulate sports betting in their respective states. Since the decision, states have chosen various ways to regulate sports betting within their borders.
Mississippi was very proactive in legalizing sports betting. In 2017, Mississippi House Bill 967 removed language from the Mississippi Gaming Control Act that prohibited sports betting. After the favorable Supreme Court decision in 2018, sports betting in Mississippi was legal. The Mississippi Gaming Control Act currently allows sports betting to occur on casino property. Many casinos in Mississippi have the option to place a bet at the sports betting counter, kiosk, or even from a mobile phone, but patrons must remain on the property to bet from their mobile phones. Other states have gone with a less restrictive approach by allowing mobile betting from anywhere inside the state.
In Louisiana, Kansas, and Tennessee a person can bet from anywhere in the state using their phone or any device that can access the internet, and North Carolina is currently in the process of allowing this mobile sports betting. With patrons being allowed to bet from the comfort of their own homes, these states have had significantly more money bet than Mississippi. In September of 2023, over 280 million dollars was bet on sports in Louisiana, and over 418 million dollars was bet on sports in Tennessee. Even Kansas, which has a similar population to Mississippi, bet over 219 million dollars on sports in September 2023. Mississippi had a total of just over 51 million dollars wagered on sports. Mississippi’s more restrictive approach to sports betting has led to less bets, and therefore less tax revenue generated from wagering for the state. In Mississippi, sports betting revenue is taxed at the same rate as other casino gaming revenue, 11-12 percent, with 8 percent going to the state and 3-4 percent in local taxes. Mississippi is now looking to change its approach and allow people to bet from anywhere within the state’s borders.
In March of 2023, Mississippi passed House Bill 606 which created a task force for the purpose of studying mobile sports betting. The act took effect on July 1, 2023, and gave the task force until December 15, 2023, to prepare a report to be made available to the public. House Bill 271 was proposed at on January 17, 2024, to legalize mobile sports betting. While proposed legislation is promising, there is no guarantee the bill will pass. House Bill 606, which created the task force, was originally written to legalize mobile sports betting in Mississippi, and in 2022, four bills that legalized mobile betting in Mississippi died in committee. House Bill 271 attempts to simply amend a current section of the Mississippi Code. Because bills have failed before, Mississippi may need to pass an entirely new sports betting act that attempts to address concerns. There is concern from brick-and-mortar casinos that legalizing mobile sports betting will undermine their business models. In addition, if patrons do not have to visit casinos to bet, they will not be buying hotel rooms, meals from local restaurants, or participating in tourism activities around the casinos. Many are also concerned about a growing addiction to sports betting. The ability to pull out your phone anywhere and anytime could lead to an increase in gambling addictions. While the negatives might seem obvious, there are also positive effects to allowing mobile sports betting. Allowing mobile sports betting would almost certainly raise the amount of state tax revenue generated from sports betting. So, how does Mississippi create a sports betting act that addresses the concerns of Mississippians while also allowing mobile sports betting?
States with legal mobile sports betting have attempted to structure their legislation to receive the full benefit of mobile sports betting while limiting the negative impacts. In House Bill 347, North Carolina lays out what an application to obtain a sports wagering license must contain. One of items the application must contain is a documented history of working to prevent compulsive gambling, including training programs for its employees. In addition, the application must set forth a documented history of job creation in North Carolina, a plan for continued job creation in the state, a documented history of capital investment in North Carolina, and a plan for continued capital investment in the state. The application must also be accompanied by the licensing fee of one million dollars. House Bill 347 also limited the amount of interactive sports wagering licenses to twelve. If there are more qualified applicants than the number of interactive sports wagering licenses available, then the North Carolina Lottery Commission will select the most qualified applicants by looking at factors such as the extent of capital investments in the state and the extent to which the applicant will create jobs in conjunction with sports betting in the state. In addition, the bill contains a provision that gives two million dollars of the tax revenue generated from sports betting to the Department of Health and Human Services for gambling addiction education and treatment programs. Mississippi should use a similar structure. By creating a limited number of mobile sports wagering licenses, North Carolina forces companies to be proactive in the prevention of sports wagering addiction. Limiting the number of licenses also encourages companies who want licenses to create jobs and invest money into Mississippi. Charging high application fees generates important revenue for the state, and using tax revenue to prevent and treat gambling addiction might ease the mind of legislators who are opposed to mobile sports betting.
North Carolina is not the only state Mississippi should use as a guide when drafting a sports betting act. Tennessee legislation includes a privilege tax of 1.85% of all sports bets accepted in the state, which would equal over $7,700,000 of just privilege tax in September alone. A privilege tax, in addition to the revenue tax, would create additional tax revenue for Mississippi. Louisiana levies a state tax of 10% upon the net gaming proceeds from onsite sports wagering, but a state tax of 15% is levied upon the net gaming proceeds of mobile sports wagering. If Mississippi adopts a similar tax structure, casinos would be incentivized to get bettors onsite to lessen their tax burden. Casinos could give better odds, bonus bets, and other incentives for patrons who bet onsite. If Casinos were incentivized to get people onsite, patrons would still be buying hotel rooms, meals from local restaurants, and participating in tourism activities around the casinos.
Mississippi still has an uphill battle to legalize mobile sports betting within the state. The study published by the task force could ultimately determine how legislators view the possible legislation. To be the most effective, a sports betting act should encourage mobile sports betting licensees to create jobs in the state, invest money into the state, and create proactive plans to prevent and combat gambling addictions. The best way to accomplish these goals is to limit the amount of mobile sports betting licenses approved by the state. Limiting the number of mobile licenses is an effective way to encourage companies to accomplish these goals because the companies with the best plans of action to accomplish the goals will receive the licenses. In addition, the sports betting act should attempt to create a significant amount of revenue for the state from mobile wagering without increasing onsite sportsbooks tax burden. Mississippi’s current and future legislative sessions may be one to watch as it could change the way patrons in the Magnolia State place their wagers.
