Better safe than sorry
Arkansas sports bettors will no doubt be disappointed this week, as they will now have to wait until at least the second half of February to wager online. On Tuesday, Arkansas Racing Commission (ARC) attorney Byron Freeland withdrew the commission’s proposed mobile betting rules from the state Legislative Council’s Administrative Rules Subcommittee agenda, meaning that online sports betting will not go live before the Super Bowl on February 13. The subcommittee was supposed to consider the rules Wednesday morning.
last-second edit to the proposed rules Tuesday morning, changing the world “revenue” to “receipts”
Finance department spokesman Scott Hardin said that Freeland made the decision because ARC made a last-second edit to the proposed rules Tuesday morning, changing the world “revenue” to “receipts.”
“The Commission understands making a change, although small, to the wording one day prior to legislative review results in new questions,” Hardin said in a written statement, adding that by delaying legislative review until February or March, any concerns can be avoided.
Governor Asa Hutchinson noted that some lawmakers expressed concern about the late wording change, saying: “The change does not appear to be significant, but in fairness it made sense to consider the rules in regular order at the next meeting.”
What’s one word?
The three casinos in Arkansas – Saracen Casino Resort, Oaklawn Racing Casino Resort, and Southland Casino Racing – are permitted to partner with sportsbooks operators like BetMGM and DraftKings to run their mobile sportsbooks. The rules before the wording change read that casinos are not allowed to operate a sportsbook if “a majority of the net gaming revenue, as defined in Amendment 100, from the online sports pool is paid to a third-party vendor assisting in the operating of the sports pool.”
ARC received public comments that expressed confusion about what “revenue” meant
Freeland said that ARC received public comments that expressed confusion about what “revenue” meant, so the change from “revenue” to “receipts” was done simply to stay consistent with Amendment 100. He emphasized that the two words mean the same thing.
Sure enough, Amendment 100 uses the world “receipts” instead of “revenue,” defining “casino gaming receipts” as “gross receipts from casino gaming” and “net casino gaming receipts” as “gross receipts from casino gaming less amounts paid out or reserved as winnings to casino patrons.”
Online gambling operators who have been eager to enter the Arkansas market are upset that the rules stipulate that casinos get 51% of the online betting net revenue when partnering with such an operator. John Burris, a lobbyist that represents several online operators, wanted the sports betting companies to be able to negotiate individual deals with the casinos. Most splits in other states give casinos 5%-15% of net revenue.
Freeland told ARC that if a third-party casino partner receives more than half of the revenue from sports betting, it could violate Amendment 100. In an advisory opinion at the end of 2021, Attorney General Leslie Rutledge said that a majority split for the online gaming company would be fine, writing: “Amendment 100 is silent about such contracts or contractual agreements.”
Because of the potential uncertainty surrounding revenue splits and the wording change, many stakeholders, including legislators, feel that it is appropriate and safer to at the very least delay final rules approval and discuss the matter at a future meeting.