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Execs gamble on sports betting

August 30, 2018

Connecticut’s failure to mount a special legislative session this summer to approve sports betting isn’t a huge blow to the state’s hopes for a robust gambling market in ballgames, auto racing and other athletics.

The failure, of course, is the subject of bickering between Gov. Dannel P. Malloy and Republicans in the General Assembly.

But political jabberwocky aside, what we really need is to get onboard in 2019 if we want to gain the economic advantages of legalized sports bookmaking. The states all around us are moving ahead.

That view — we’re OK missing 2018 but we’d better get off the dime next year — is the opinion of top gaming and sports wagering executives. I polled several over the last few days, after Malloy announced that support among lawmakers was too weak to warrant a special session in 2018.

“It would have been great to get it done as part of a special session,” said Andrew Gaughan, CEO of Sportech PLC, which owns and operates Connecticut’s 16 off-track betting locations. “Nineteen is fine,” he added, meaning 2019, “but it will need to be a law that gets put together and the Department of Consumer Protection brought in.”

Top execs at Mohegan Sun, MGM Resorts International and Sportradar, a large sports data provider that works with most of the big leagues, all had similar views. They would, naturally, since their businesses would benefit from it.

They’re optimistic — so upbeat that Laila Mintas, deputy president of Sportradar US, has Connecticut pegged as one of ten states that will not just approve sports betting in 2019, but actually launch it live. Knowing how the Connecticut General Assembly is designed to not get things done, I’d bet against that happening.

They’re self-interested, yes, but these executives are also right. The U.S. sports betting industry totals about $200 billion now, according Sportradar and others. All but about 5 percent of it is illegal, mostly offshore, online operators that give consumers no protection at all.

Even if the legal market were that size and no larger, gross revenues — operating profits before expenses, basically — would total more than $6 billion. That means about $60 million to $80 million a year in Connecticut, and the state would get perhaps 25 percent of that — even without much growth.

More important than the $20 million or so a year in state revenues, Connecticut needs to charge up its economy any way it can with activity, not to mention supporting the in-state gaming industry.

That’s true for the tribal casinos and its true for Toronto-based Sportech, with 400 Connecticut employees and its U.S. base in New Haven. The company makes and runs the machines used for pari-mutuel betting at tracks and OTB locations in 37 states, so it could benefit from a show of support in its home state.

Discussions between the governor’s office and industry people had the Mohegan and Mashantucket Pequot tribes running sports wagering books, along with Sportech at its Winners and Bobby V’s OTB locations. Other operators, including MGM, which wants in, were not part of the tentative plan for sports betting in Connecticut, several sources said.

Jim Murren, the MGM CEO, sees a chance to join the fray in 2019 if and when the General Assembly and the new governor take up sports wagering.

“It would be foolish to rush into a decision but it would be almost worse to drag your feet,” said Murren, who grew up in Fairfield. “The public has spoken, this is something that has been well researched ... Connecticut should solicit all of my competitors to understand the process.”

And by competitors, he means MGM itself as well. “There should not be a monopoly. I’m opposed to any artificial barriers,” he said.

Chuck Bunnell, chief of staff for the Mohegan Tribe, shot back, “That would certainly be good for that Las Vegas company, which doesn’t currently have a licesne here....That would serve their interests, not Connecticut’s.”

No one said this was easy.

By the end of 2019, according to Sportradar, 15 states will have passed laws allowing and regulating sports gambling. That’s in addition to Nevada, which already had it before the U.S. Supreme Court ruled in May that states can sanction wagers on games.

Those states include New Jersey, Delaware and Mississippi, which are already taking bets; and Pennsylvania and Rhode Island, which passed laws and could open for betting as soon as 2018.

On the Sportradar list for likely launches in 2019 are, among others, New York, Massachusetts, Illinois, Ohio and, drumroll please ... Connecticut.

“You’re losing a lot of revenues, right? I would think Connecticut should try to get it done as soon as they can,” said Leila Mintas, deputy president of Sportradar, official data partner for NBA basketball, NHL hockey, NFL football and NASCAR racing.

Bunnell, at the Mohegan tribe, is so optimistic he still holds out hope for a special session this year — either before the election, or with a lame-duck governor and a General Assembly with many lame-duck members.

“I think that people will say, ‘You know what, do we really want to wait until we come back?’ ... Do we want to find ourselves a year and two years behind the other states in New England?’ ”

Well, if gaming industry executives don’t show optimism, no one will. But history says Connecticut will dally in the legislature and again in the rulemaking, maybe even missing 2019 in the name of acting carefully with full information. Then the rulemaking will take a full year.

The election could shape the debate. Democrat Ned Lamont has said he favors allowing sports betting, while Republican Bob Stefanowski hasn’t issued a statement.

A long delay would be a shame. Sports betting isn’t Connecticut’s salvation but you don’t have to like it to realize it’s one small part of the state’s recovery.

dhaar@hearstmediact.com

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