Mainers could put down real money on the March Madness tournament or Super Bowl as early as next year.
At least three bills to tax and regulate betting on sports games are pending in the State House, as legalized sports betting takes off nationwide. Almost two dozen states contemplate launching sports betting this year and some lawmakers think Maine needs to get in on the action.
“It is pretty obvious why we are doing it,” said Rep. Jeffrey Evangelos, I-Friendship, a sponsor of one of the proposals. “It is fun and everyone else is doing it. Why shouldn’t we get a piece of it, too?”
But lawmakers disagree on how to organize gambling, how much to tax it and where to spend the money. How much of an economic benefit legalized sports betting will be to the state is an open question. There are no reliable estimates on the size of Maine’s underground gambling market, but the early takes from legal sports betting in other states have disappointed and experts warn not to expect a gold mine.
There are also concerns that gambling will encourage sports corruption and increase risks for Mainers with gambling problems.
“Anytime we expand gambling we have to consider the negative effects. That always becomes part of the equation,” said Sen. Louis Luchini, D-Ellsworth, co-chairman of the Legislature’s Veterans and Legal Affairs Committee. Luchini is drafting his own bill on sports betting.
“Gambling bills are always controversial,” he said. “It is something you have to take the time and meet with all the parties and hash out something responsible.”
So far, only two bills to legalize sports gambling have been presented in full, but up to three more are still being drafted.
Evangelos’ proposal, L.D. 1348, would allow adults over 21 to gamble on professional and amateur sports at casinos, racetracks, off-track betting parlors and online. The bill includes a steep $30,000 license fee and an even steeper tax – 25 percent – with almost all of the revenue directed to primary education.
His proposal is modeled on New Jersey, the first state to legalize sports betting last year, Evangelos said.
“We are not reinventing anything. It is an established model that works,” he said.
Rep. Dustin White, R-Washburn, has a different take. Under his L.D. 1515, people as young as 18 could gamble on sports but only in brick-and-mortar harness racetracks and off-track betting parlors. Licensing would cost a modest $5,000 fee and the 18 percent tax would be split across multiple accounts, including primary education, college scholarships and Maine’s Indian tribes, but the lion’s share would be directed to support Maine’s harness racing industry.
Both bills have rules to prevent manipulation and cheating in sports games.
Limiting gambling to brick-and-mortar betting parlors will help the local economy in a way that online betting won’t, White said. There are four off-track betting parlors in the state, in Sanford, Brunswick, Waterville and Lewiston. You have to be 18 years old to play the lottery and bet on horse racing in Maine, but 21 years old to gamble at a casino.
“We’ve had casinos for many, many years now. Gambling isn’t anything new to the state of Maine,” White said. “I think people are more open to sports betting than they have been in the last year. Looking at the national attention, it is just going to trickle up to Maine. I’d rather be the first in New England” to legalize sports betting, he said.
MIXED RETURNS
Even though sports betting has spread since the U.S. Supreme Court struck down a federal ban last year, tax revenue has not met expectations, according to a recent Associated Press analysis.
New Jersey and Delaware were the only two states to meet or exceed revenue projections from sports betting, while other states, such as Rhode Island, have fallen far short. Rhode Island expected to see revenues of $1 million a month, but the numbers have been closer to $50,000 per month.
“I think it is important to note that revenue numbers in sports betting are incredibly small, about 1 to 2 percent of every property,” said Jeff Morris, vice president of communications for Penn National Gaming. Penn National owns 41 casinos and racetracks, including Hollywood Casino in Bangor.
After paying out to winners, operating expenses and taxes, casinos make about $1 on every $100 sports bet, Morris said.
That means if the state’s tax burden is too high, it might not make financial sense for gaming companies to offer sports gambling. The tax rates proposed in the two Maine bills are far higher than in other states except for Pennsylvania, where sports betting is taxed at 36 percent.
“Once the tax rate creeps over 10 percent, the financial balance gets much more difficult” to compete with illegal gambling and provide a quality gaming experience, he said.
ILLICIT GAMBLING
While the extent of underground sports betting in Maine is unknown, there is obvious demand. Last year, federal agents broke up a high-stakes betting ring run by Stephen Mardigan, a former used car dealer and rental property owner in Portland.
Mardigan took in between $9 million and $25 million in net proceeds from gambling over 25 years, according to federal prosecutors.
There’s no guarantee that authorized sports betting will make illegal gambling go away. It could also create extra problems for people with a gambling addiction.
Scott Gagnon, board president of the Maine Council on Problem Gambling, said he is concerned that the proposed bills do not include aid to counter and treat problem gambling, just as the state considers expanding its suite of gambling options.
“We just want to make sure that as these policy changes are considered, we have the adequate resources for people who do have a a problem with gambling,” Gagnon said.
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