Oregon launched its lottery-run sports betting app in October 2019, and it did not perform well. During all fiscal year 2020, the lottery app made $8.6 million in net revenue. That’s what Colorado sportsbooks made in October and November 2020 alone. Handing the Oregon Lottery a monopoly on sports betting has resulted in:
- Worse odds for bettors
- Less revenue for the state
But Governor Kate Brown hopes to revitalize Oregon’s sports betting industry. At her request, the legislature filed House Bill 2127, which would modernize Oregon sports betting. But a bill drafted this early is really a wish list. It still has to go through committees and votes in both chambers of the State Legislature. But the details of this bill signal potential changes to Oregon sports betting that could materialize in the bill’s final version. Here are some of the bill’s early highlights.
Mandating Official League Data–If It’s Available
Section 1 of HB 2127 divides sports wagers into two tiers:
- Tier 1 – a sports wager that is determined solely by the final score or outcome of the sports event and that is placed before the sports event has begun
- Tier 2 – a sports wager that is not a tier 1 sports wager
The first tier would include most game lines, like moneyline, point total, and point spread wagers. Dividing sports wagers into game lines and “everything else” may seem unimportant. But it becomes critical in Section 5.
If sports leagues offer to provide official data, Section 5 requires all Oregon sportsbooks to use it to settle Tier 2 wagers. That means official league data would fuel live betting. It would standardize live betting data across Oregon’s industry. However, if leagues don’t offer official data, sportsbooks are free to use whatever data they have available. Sportsbooks would also be able to avoid using league data if it’s not available on “commercially reasonable terms.”
Governor Brown clearly wants to maintain sports betting integrity without depriving businesses of the ability to make reasonable choices. The Gaming Committee formed by this bill will likely concretize terms like “commercially reasonable.” But it’s a clear indication that the Governor wants all the sportsbooks playing by the same clear rules.
Sports Associations And Sports Institutions Can Lobby To Ban Wagers
Section 2, subsection 4 includes a long list of sports organizations that can submit a request to prohibit wagering that’s:
- Contrary to public policy
- Unfair to consumers
- Affects sport or sports betting integrity
The new Gaming Commission will investigate claims submitted in writing. If the reported wagers turn out to be unfair, the Gaming Commission will ban them. But if the complaint is frivolous, the Gaming Commission can throw that out without disrupting Oregon’s sports betting industry.
Governor Brown seems to want a self-regulation mechanism. Allowing industry experts to weigh in on sports betting flaws would make regulating the industry easier. It would let experts improve the industry and take hands-on regulation off the Governor’s desk. Those both seem like industry features a governor would want.
Creating A Gaming Commission
Like other states, Oregon is planning on creating a Gaming Commission to oversee the sports betting industry. The Gaming Commission would set industry rules, including licensing requirements. HB 2127 proposes fingerprinting license applicants and other high-level sportsbook executives.
It may not make it to the final version of the bill, but it wouldn’t be of the ordinary. Many states require background checks on sportsbook license applicants. Fingerprinting would be one way to conduct criminal background checks.
Oregon currently withholds taxes from large winnings:
- 8% of state taxes from winnings $1,500 or more
- 24% of federal taxes from winnings $5,000 or more
HB 2127 calls for an additional 10% fee on gross gaming revenues. Three-quarters of that fee would go to the state’s general fund. The other quarter would support Oregon’s racing industry.
Although there’s debate on what the 10% fee means, it’s likely the Governor’s proposed tax rate for Oregon’s sportsbooks. Other states tax gross gaming revenues without extra taxes or fees. Later drafts of the bill will clarify the language, but this early peek suggests a 10% tax rate for Oregon sportsbooks.
Lowering The Sports Betting Age
The Governor’s proposed bill would lower the sports betting age from 21 to 18. Most forms of gambling are open to 18-year-olds. However, gambling in facilities with liquor licenses is limited to bettors 21 or older. Oregon’s current sportsbook app is only open to bettors 21 and older, too. Young bettors could be able to wager at mobile sportsbooks if this part of the bill remains intact.
Oregon’s gambling age is 18, so this removes some red tape from the gambling industry. It would widen sportsbooks’ customer bases, but probably not their revenues. 18-20-year-olds aren’t a wealthy demographic. It would add some fairness to Oregon’s gambling industry, but it won’t be a financially significant move.
Allowing College Sports
Currently, Oregon sports bettors cannot wager on college games. The Lottery’s official line on offering college sports is “we’ll think about it.” But this early bill only bans sporting events from kindergarten through twelfth grade. (Presumably, preschool sack-races are also banned.) But this new bill could bring college betting to Oregon.
College sports are popular and would increase sports betting revenue for sportsbooks. Consequently, it’d increase tax revenue for the state. This seems like an attempt to further boost sports betting’s earning potential in Oregon. Based on the Governor’s proposed 2021-2023 budget, it seems critical to Governor Brown’s plans.
What’s The Point Of A Thriving Sports Betting Industry?
Sports betting usually isn’t a giant industry. States shouldn’t expect to make massive differences in their budgets by legalizing or expanding sports betting.
However, a thriving sports betting industry can fund specific projects that can make a difference in the state.
For example, Iowa launched sports betting with online and retail sports betting options. Its last fiscal year realized almost $2.4 million in tax revenue. (However, that figure is expected to increase now that its in-person registration requirement is gone.) Even a small amount like that could make a dent in a few proposed projects:
- $66 million to address housing and homelessness
- $20 million homeowner assistance
- $30 million for “public health modernization”
- $17.9 million for COVID-19 nursing home and assisted living precautions.
This budget is for the next two years, so an annual sports betting industry that generates Iowa’s tax revenue would stretch the budget to cover a portion of these projects. But Colorado’s sports betting industry is set to more than double Iowa’s annual tax revenue. If Oregon’s sports betting industry grows like that, the financial impact on one of these projects would improve.
Even though it won’t be a large addition to the state budget, Governor Brown’s proposed changes could improve the industry. And if she’s making other industries more profitable like she is sports betting, these small changes could add up to public benefits for Oregonians.