The head of the Massachusetts Gaming Commission warns of a potential “significant impact” that could result from the granting of an unlimited number of temporary mobile sports betting licenses, saying the majority of these operators will be forced to shut down within a year.
Under the new state law, the number of mobile/online operator licenses not affiliated with a casino or simulcast is capped at seven, but no limits have been placed on temporary licenses.
“It’s possible that as many as 30 companies will compete for up to seven ultimate tier 3 unbound licenses,” said Karen Wells, executive director of the Gaming Commission.
Allowing temporary sportsbooks before a final decision on their full licenses poses financial complications for regulators, operators and customers, and also raises consumer protection concerns for the public, she said.
“Of those companies that enter the temporary licensee pool as mobile/digital operators but fail to advance through the competitive selection process, up to 76% will have to close their Massachusetts operations once the commission makes its final decisions,” she said.
If the Commission decides to issue temporary licences, it will have to set up a regulatory process for the closure of unselected operators, but this is still expected to cause a number of problems.
For example, temporary operators who are not selected for a full license have no option to recover their $1 million fee.
Customers placing bets on future events like the Super Bowl or March Madness could be at risk if sportsbooks close ahead of those events, Wells said.
Commissioner Nakisha Skinner said talk of temporary licenses was premature as sports betting regulations and house rules, which must be in place before they can be issued, are ongoing.
No vote was taken. Commissioners chose to seek legal guidance on whether the number of temporary licenses could be capped and whether there could be a more competitive selection process to avoid wholesale closures when final decisions are made.
“The idea of having to issue notices to honestly operating companies that just so happened not to have made our last cut is simply untenable to me,” said Commission Chair Cathy Judd-Stein.