A Guide to Sports Betting and Gaming Regulation in North America

The expansion of sports betting in the United States has yet to slow down since the May 2018 U.S. Supreme Court decision which struck down the Professional and Amateur Sports Protection Act (PASPA), a federal law that prohibited sports betting. As of this writing, 33 states (including the District of Columbia and Puerto Rico) have some form of legal sports betting, with 22 of those states offering online wagering.

With an ever-changing landscape, Trustly recognizes the importance of monitoring and analyzing the legal and regulatory process for industries such as gaming. Understanding the licensing regimes and different regulatory models across the U.S. can be complicated. Hence, the Trustly Regulatory Services (TRS) initiative. The purpose of TRS is to shed light on industry developments and create greater engagement with Trustly’s merchants.

In this first edition of the TRS, as the year comes to end, we want to recap some of the major highlights in the sports betting industry from 2021 and share what we will be waiting for in 2022.

Value of Online: 2020 presented many challenges to everyone around the world, including state coffers, that carried into 2021. Lockdowns forced state legislatures during 2021 to evaluate new sources of revenue and many recognized the value online sports betting could bring as additional income for strapped budgets. In fact, the 2021 state legislative session saw eight (including the expected governor signature in Ohio) new online sports betting markets created through enacted legislation, the most since the 2018 Supreme Court decision. Trustly is licensed or is pending approval in each one of these new markets. The American Gaming Association announced that through October, year-to-date total U.S. sports betting handle was $42.19 billion across 25 reporting states. And, according to research by VIXIO GamblingCompliance, the first half of 2021 also saw New Jersey, Michigan and Pennsylvania become listed as part of the top 10 global online gaming markets. In 2022, we expect to see states such as Arkansas, Mississippi, and North Carolina with land-based only options to consider expansion into online sports betting, along with several new states.

Oh, Canada: The neighbor to the north also had its own “PASPA repeal moment” when the federal Parliament amended the Canadian Criminal Code to allow for single-game sports betting in August 2021. Taking things one step further, Ontario is working to become the first province to create an open and competitive market for online sports betting and online casino gaming. Prospective operators are required to register and comply with the Alcohol and Gaming Commission of Ontario’s (AGCO) regulatory standards, and enter a commercial contract with iGaming Ontario, a subsidiary that was established by the AGCO to conduct and manage the market in accordance with federal law. However, the province has already encountered obstacles, causing a delayed launch date from December 2021 to Q1 2022. The Ontario auditor general also issued a report detailing legal concerns regarding the current structure of the regulatory regime. As we enter 2022, we will be watching for how the AGCO addresses these issues and final rules regarding anti-money laundering and responsible gaming that operators will need to abide by as detailed in the commercial contract with iGaming Ontario.

New York: Land-based sports betting has been permitted at select casinos in the Empire State since 2019. In 2021, the legislature amended the law to permit online sports betting via a competitive tender process that would see a minimum of two platform providers with four operators. The law granted the New York Gaming Commission (NYGC) the ability to select additional licensees, and in November, the NYGC awarded 10-year licenses to nine operators and eight platform providers. The cost for a spot in the coveted New York market? A $25m license fee, a 51 percent tax rate, and what is sure to be an expensive customer acquisition process with soaring marketing fees. Operators aim to launch in time for the Super Bowl in February, but how will New Yorkers feel about the slew of advertising that will come with such a competitive market? As European markets begin to implement restrictive advertising laws due to consumer backlash, it is something the U.S. industry should begin to think about.

Florida: There seems to be some overcast in the Sunshine State when it comes to sports betting. After signing a new tribal-state gaming compact that awarded a monopoly to the Seminole Tribe to operate online sports betting, a federal judge ruled the compact illegal and vacated it, essentially halting both land-based and online sports betting in the state. The judge held that the compact violates the Indian Gaming Regulatory Act (IGRA) by allowing online sports betting off tribal lands. The case may have enough traction to create a showdown in the Supreme Court. Meanwhile, a ballot initiative is underway to authorize land-based and online sports betting, but legislation to implement the measure, if passed, will be required. In the U.S. Congress, a bill was introduced in July that would amend IGRA by removing the restrictions that online wagers must be done on Indian lands so long as the applicable state and tribe have reached an agreement via a compact. With the Seminoles and other state tribes with powerful lobbying efforts looking to hold onto their gaming exclusivity, a federal IGRA fix may be up for debate in 2022.

2022 State Lineup:

-   Alabama: Although a conservative state with little gaming currently, last year’s progress on a comprehensive gaming bill is a good indicator that a potential ballot measure could make it over the finish line.

-   California: Voters could see four competing ballot initiatives in November 2022 which will determine who, how, and where sports betting can be offered. A tribal initiative has already qualified for the ballot.

-   Georgia: While state constitutional questions stalled progress in the House of Representatives in 2021, a ballot measure could be agreed upon in time for the November elections.

-   Kansas: Sports betting is widely supported by lawmakers but deciding who will be permitted to operate has driven a potential wedge between the House and Senate. Consensus among stakeholders will be critical for passage.

-   Kentucky: With Ohio having passed a bill to authorize sports betting, Kentucky will be virtually surrounded by legal sports betting states. With a slightly longer legislative session in 2022, the Bluegrass State may be able to muster the required support, particularly after the legislature enacted a historical horse racing bill (wagering on old horse races via slot-like terminals) last year.

-   Maine: Try, try…try again. Maine has come close to legalizing sports betting for the last few years, even sending a bill to the governor only to have it vetoed. Last year’s efforts were outweighed by other priorities, but with legislation being carried over into the 2022 session, hopes are high.

-   Massachusetts: Despite backing from the governor and being incorporated into the state budget bill with overwhelming support from the House, sports betting legislation has not progressed due to the Senate prioritizing other initiatives. To aid the process, the MA Gaming Commission ordered a study to examine the economic benefits of legal sports betting with the hopes of getting it to legislators by June, in time for the discussions during the final half of the year-long legislative session.

-   Missouri: Lawmakers on both sides of the aisle generally support the push for sports betting. However, the state must resolve the issue of regulating video lottery terminals if sports betting is to be enacted. Legislation has already been pre-filed.

Trustly’s License Status and Legislative Tracker

*Trustly is licensed/permitted to operate for iGaming in CT, MI, NJ, NV, PA, WV

**Trustly is pending application/approval in Puerto Rico

If you are interested to learn more about the U.S. gaming market and about what Trustly can do for your business, don’t hesitate to continue the conversation and chat with our team.