Massachusetts State House.
Boston Bar Journal

Sports Wagering Arrives in Massachusetts: Early Action Is Brisk With More Work Ahead For Regulators

April 26, 2023
| Spring 2023 Vol. 67 #2

By Keith Carroll

Sports betting arrived in Massachusetts to great fanfare and over $590 million dollars wagered in the first three months. There are also early signs that Massachusetts regulators and gambling industry businesses have their work cut out for them to oversee and manage the action.

January 31, 2023, the date in-person wagers were first taken in Massachusetts, and March 10, 2023, the date online mobile betting went live in the Commonwealth, were a long time coming for local sports bettors. Indeed, ever since the Supreme Court’s May 2018 decision in Murphy v. National Collegiate Athletic Association declared the Professional and Amateur Sports Protection Act of 1992 (“PASPA”) unconstitutional, and lifted the statute’s nationwide ban on sports betting outside of Nevada and a few isolated jurisdictional exceptions, legalized sports betting in Massachusetts was inevitable.

Congress enacted PASPA in an era when the harm associated with sports gambling was viewed as a national menace. The lifetime ban given to Pete Rose by Major League Baseball in 1989 for placing wagers on Cincinnati Reds games while he was their manager was a fresh stain on the integrity of sports competition. And any perceived positive business prospects associated with sports gambling were marginalized in the PASPA legislative debate. At the time, even the professional sports leagues and NCAA were unified in their support for PASPA, recognizing that a nationwide ban on sports betting did much to foster the integrity of professional and college sports competition.

But times, or at least the perceived risks posed by gambling to fair competition, have certainly changed. Technology has played a part in the changing landscape, bringing an increased ability to monitor wager patterns and anomalies and thereby guard against corruption. At the same time, the proliferation of online sports betting applications and broadened smartphone accessibility brought the ability to wager on games from Las Vegas sports book windows to your living room couch. The old barriers to placing a sports bet—having to travel to Las Vegas or seek out a local bookie to place an illegal bet—no longer exist. Once PASPA was declared unconstitutional, states were on the clock to authorize and regulate sports betting in their respective jurisdictions. Growing consumer demand for the ability to place sports bets was widespread, and the sports world pivoted to take advantage of the inevitable revenue opportunities nationwide gaming offered to their businesses.

Unlike many states, Massachusetts did not immediately jump on the sports wagering bandwagon. Elected officials took a cautious approach, while neighboring states Rhode Island, New Hampshire, and Connecticut passed sports gambling legislation (including the allowance of online sports betting) in 2018, 2019, and 2021, respectively. The easy ability of Massachusetts residents to cross a state line to place an online bet on their phones, the promise of a burgeoning gaming industry in Massachusetts with the launch of gambling venues like Encore Boston Harbor, MGM Springfield, and Plainridge Park Casino, and the siren song of increased tax revenue for the Commonwealth all added to the growing momentum to allow sports wagering in Massachusetts.

The vote to approve a compromise bill to legalize sports betting, H.5164, finally came about during the legislative equivalent of overtime on August 1, 2022. Nine days later, Former Governor Charlie Baker, now President of the NCAA, signed into law the Massachusetts Sports Wagering Act (“MSWA”), and Massachusetts joined 32 other states and the District of Columbia in authorizing sports betting.

The MSWA delegated to the Massachusetts Gaming Commission the power and duty to implement, administer, and enforce sports wagering rules in Massachusetts. This is and will continue to be a daunting mandate. Before the first wager was even made, the Commission put in place a regulatory framework that, among many other guidelines and restrictions, limits who can place a bet (you must be at least 21 years old), prohibits bets involving in-state college teams unless they are playing in a tournament, and set licensing, technology and advertising standards for the licensees. For example, there are three categories of sports wagering licenses available from the Commission: Category 1 for licensed casinos, Category 2 for racetracks and/or simulcast centers, and Category 3 for online operators. To date, just three Category 1 licenses have been issued to Encore Boston Harbor, MGM Springfield, and Plainridge Park Casino, all of which are now accepting in-person wagers at their casinos. The Commission has also issued two types of Category 3 licenses—“tethered” licenses for online betting associated with one of the casinos, and “untethered” licenses for purely online betting applications. The current tethered licenses are MGM’s BetMGM, Encore’s Caesars Sportsbook and WynnBet, and Plainridge Park’s Fanatics and Penn Sports Interactive/Barstool Sportsbook. The current untethered licensees are BallyBet, Betr, Betway, DraftKings, and FanDuel Sportsbook. Bally Bet, Betr, Betway, and Fanatics are approved but not yet in operation.

Two-plus months into the new normal of sports betting in the Commonwealth has demonstrated that both the Commission and its business licensees are taking their responsibilities to manage the high volume of sports betting seriously. For instance, there were early foot-faults, with four self-reported instances of non-compliance with the betting ban on college sports involving in-state college teams. The Commission has also held or announced several public adjudicatory hearings involving licensees Encore, MGM, Plainridge Park, and Penn Sports/Barstool and announced investigations into a mobile launch promotion offered by Barstool Sportsbook and advertising practices by FanDuel.[1] At the same time, the Commission highlighted its vigilance in attempting to prevent problem gambling and addiction by announcing the MSWA-created Voluntary Self-Exclusion (“VSE”) program for sports wagering. The VSE program allows anyone—but targets people with gambling addiction problems—to add their name to a non-public “self-excluded persons” list that will be shared with the licensees who are required to ban those listed from placing sports bets. The Commission also recently recognized March 2023 as Problem Gambling Awareness Month and reported that it is “broadening [its] research focus and associated policy, strategy, and practice supports” for sports betting. See Commission Press Release, “Massachusetts Gaming Commission Recognizes March 2023 as Problem Gambling Awareness Month” (March 2, 2023).

But there is more work ahead. Attorney General Andrea Campbell is pressing the Commission to raise the bar on what is acceptable promotional advertising. Lawmakers on Beacon Hill have similarly expressed concerns about the advertising practices of licensees in their efforts to attract Massachusetts sports bettors. With any new commercial endeavor, the regulatory framework tends to lag behind the businesses operating in the market, particularly with regard to what is deemed an acceptable business practice. That holds true with the sports-driven non-fungible token (“NFT”) market and crypto assets, a popular venture among sports celebrities. Both of these investment products became very popular over the past several years, and they have since been subjected to increased scrutiny by federal regulators over what is perceived to be excessive promotional activities and sales practices. You can expect the same regulatory pattern to repeat itself with sports wagering in Massachusetts. The high volume of sports betting in the first two months signals that Massachusetts will be a fertile market for the gaming industry, which means the Commission and the industry operators will have plenty of opportunities to further define and refine how sports betting will operate in Massachusetts. Game on.

Keith Carroll is a trial lawyer and co-chair of Holland & Knight LLP’s Sports Law Practice. He advises clients concerning business disputes, investigations, and other sensitive and high-profile matters.

[1] As of the publication date, no disciplinary decisions or sanctions have been issued.