Massachusetts: The Next Frontier for Legal Online Casinos? 

Massachusetts sports betting is in legal territory, with a bill to allow both retail and online sportsbooks expected to be signed into law in the coming days. Casinos, racing simulcast facilities, and independent sportsbooks are all expected to benefit when sports betting launches in the Bay State. That launch may happen as early as this fall.

It’s a triumph for a state that has historically taken a conservative approach to any form of gambling. A maximum of three retail commercial casinos were legalized in the commonwealth 11 years ago, with only two full-service casinos and a slots facility now in operation. The third casino has yet to be approved by state regulators.

Where this gradual expansion of casino and online gambling in the commonwealth will end up is uncertain. Although legal online casinos are a possibility. Five of the six states that currently have legal online casinos also have legal online sports betting, with half of those states in the northeastern US.

That puts Massachusetts in a good position for continued growth when sports betting in the commonwealth goes live.

Massachusetts Sports Betting: A Big Step Forward

It took more than a year to pass the sports betting bill that cleared the Massachusetts legislature on Aug. 1. Disagreements over whether or not to allow collegiate sports betting were the most obvious wrinkle. However, state lawmakers got them ironed out. Sports betting on in-state and out-of-state college teams (with betting on in-state teams during tournament play only) made it into the final bill.

Gov. Charlie Baker was expected to sign the bill as early as today.

Licensing will be pretty straightforward, both for retail and online sportsbooks. Eighteen to 20 sportsbooks are possible under the legislation once it becomes law. Here’s a quick rundown of the licensing process:

Massachusetts Sports Betting: Licensing and Taxes

  • Each casino (including the slots facility at Plainridge Park Casino and the two full-service casinos, MGM Springfield and Encore Boston Harbor) will be eligible for one retail license and two online sports betting apps. The casino must have a retail license to qualify for the mobile apps, to be licensed separately.
  • Each of the state’s two simulcast facilities (Suffolk Down and Raynham Park) will be eligible for a retail license and one online sports betting app. Like the casinos, the facilities must have a retail license to qualify for a separately-licensed mobile app.
  • Seven online sportsbooks not tied to the casinos or simulcast facilities are also authorized under the legislation.
  • A permanent five-year license will cost $5 million, renewable for five years.
  • A temporary license will cost $1 million and will allow any retail or stand-alone sportsbooks to launch immediately with state regulatory approval.
  • Retail sportsbooks will be taxed on 15% of their adjusted gross revenues. Online sportsbooks will be taxed on 20% of their revenue.

Could Online Casinos Be In the Commonwealth’s Future?

Retail casinos are often the first step toward sports betting in the US, with mobile-only sports betting limited to two states (Tennessee and Wyoming). Legal retail and online sports betting – as expected in Massachusetts – puts states on the road to legal online casinos.

How long it takes Massachusetts to travel that road depends on how much pressure there is to legalize online casinos in the commonwealth, and how much resistance there is to legalization.

Economic Pressure

How quickly states surrounding Massachusetts legalize online casinos could predict when, and if, the Bay State decides to go legal. It’s been a slow rollout so far. Connecticut is the only state bordering the commonwealth that now has legal online casinos. Regionally, online casino is legal in Pennsylvania, New Jersey, and farther south in Delaware.

Nationally, online casino is only legal in six states:

  • Connecticut
  • Delaware
  • Michigan
  • New Jersey
  • Pennsylvania
  • West Virginia

As a result, the commonwealth might not feel pushed to move on legal online casinos unless it feels it is losing out to its neighbors, or even bigger states farther east.

Legislative Hurdles

Massachusetts has taken its time when it comes to expanded gambling. It took state lawmakers in the commonwealth several years of negotiation before they authorized commercial casinos and the state’s only licensed slots facility in 2011. The slots facility (Plainridge Park Casino) opened four years later in 2015, with the first casino (MGM Springfield) opening in 2018. It would take another year to open the second casino (Encore Boston Harbor).

Sports betting – retail and online – has also taken years to legalize in the Bay State. It’s a history that likely puts online casinos on a slow path to legalization in the commonwealth.

Opposition From Massachusetts Casinos

Retail casinos could also determine whether or not legal online casinos will be the next jewel in the crown of the Massachusetts gaming industry. The commonwealth now has two retail casinos and a large slots facility that could have considerable influence in any debate involving online casino legalization. Also, state regulators have yet to assign the third casino license authorized under the commonwealth’s 2011 expanded gaming law.

Opposition from existing gaming facilities and any future third casino could impact the future of legal online casino in Massachusetts.

Market Data Points Toward a Bright Future

Strong growth is predicted in the online gaming market – including markets in the US. That could bode well for legal online gaming states. Legal sports betting in Massachusetts might help the Bay State ride that growth and broaden into authorizing legal online casinos sometime in the future.

According to the Global Online Gambling Market Report for 2021 to 2030 from Research and Markets:

The global online gambling market (was) expected to grow from $64.13 billion in 2020 to $72.02 billion in 2021 at a compound annual growth rate (CAGR) of 12.3% … The market is expected to reach $112.09 billion in 2025 at a CAGR of 12%.

Any state interested in capturing revenue from that potential growth – including Massachusetts – may need to consider all its options moving forward. That includes legal online casinos.

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