Last week, Gov. Baker floated a proposal that would legalize sports betting in Massachusetts. WGBH Morning Edition Host Joe Mathieu discussed this proposal — along with the legality of sports betting more broadly — with WGBH Legal Analyst and Northeastern Law Professor Daniel Medwed. The transcript below has been edited for clarity.
Joe Mathieu: First of all, give us a sense — what is the legal status of sports betting in the United States?
Daniel Medwed: Sure. Well, for more than a quarter century, there was a federal law that essentially limited, or restricted, single game sports betting to the state of Nevada. That all changed last May when the U.S. Supreme Court struck down that statute in a 6-3 decision, basically on 10th Amendment grounds. That's the constitutional provision that says that unless powers are explicitly allocated to the federal government, they belong to the states. In other words, it's not up to Congress, it's up to each state to decide whether they want sports betting. Now two key takeaways from that decision: First, it did not explicitly legalize sports betting, it just said it's up to the states. And second, what that means as a practical matter, is that each state legislature is now scrambling to figure out, hey, do we want sports betting? And if so, what should it look like?
Mathieu: What have the states been doing with that decision?
Medwed: Well, it's been a race as you can imagine to tap into this lucrative market. And Massachusetts frankly is a bit behind at least from a financial perspective. I believe nine states now have authorized single game sports betting, including Rhode Island, our neighbor, which has sports books at its two existing casinos. Now, all of these states have basically restricted sports betting to casinos, effectively consolidating power in the hands of the gaming industry. For the most part these states authorize in-person physical betting — you have to go down to the casino to place the bet. But New Jersey is at least contemplating some online sports betting where a casino is working in partnership with another business to get that up and running.
Mathieu: I'm talking about sports betting with WGBH News Legal Analyst and Northeastern Law Professor Daniel Medwed and the possibility that it will soon become legal right here in Massachusetts. What is it the governor wants to do?
Medwed: Well, if enacted, this proposal by Governor Baker last week has several key features. First and foremost it would suggest that businesses other than casinos can get licenses to do sports betting. This would be a big shift — a ground-breaking development across the nation. Second, it contains a very robust tax plan. It would tax all in-person physical betting at a 10 percent clip, and then any online sports betting at 12.5 percent. And finally, it contains a number of attributes that, again, if enacted, I think are designed to thwart potential arguments by opponents. For instance, the Massachusetts Gaming Commission would be empowered to keep a close tab on this industry. You'd have to be over the age of 21 to place a bet. You couldn't bet on amateur and college sports, and some of the proceeds would be earmarked for programs that are designed to counteract compulsive gambling, gambling addiction and things like that.
Mathieu: So, Daniel, what would this mean for Draft Kings, for instance? [They're] a major player in fantasy sports betting, it's actually been very controversial, it was a big deal just a couple of years ago embroiled in a number of regulatory fights. Is this the same thing?
Medwed: Well, that's an important question. On the one hand, this proposal would seem to benefit Draft Kings, because as I noted, it's not just casinos that could get licenses. Other businesses could get sports betting licenses, and Draft Kings would seem to be very well positioned to do this, because it already has a sophisticated online fantasy sports betting platform. It could hit the ground running. But on the other hand, as I also mentioned, there's a robust tax plan that's part of this proposal. And in addition to the 12.5 percent tax on online sports betting, Gov. Baker suggested a 12.5 percent tax to online fantasy sports betting. And up to now Draft Kings has enjoyed a sort of nebulous tax status in Massachusetts that's been a little unclear. So, on the whole, I think this is probably pretty beneficial to Draft Kings, but to borrow a sports phrase, it's not a slam dunk.