While there has been a ton of momentum in regulating sports betting in the United States since the PASPA repeal in May, especially on the east coast, one state has fallen back in the race to legalize the industry. This week, Connecticut Governor Daniel Malloy announced that he was suspending the negotiations with the tribal groups in his state as there did not appear to be enough support for a special session to vote on regulated sports betting.
What is a Special Session?
Most state legislatures do not sit for the entire year, and for some states like Connecticut, they only sit for a few months. This timing could not have been worse in 2018 as the government session ended days after the repeal of PASPA by the Supreme Court. Had the session been going on a little longer, there might have been some hope of getting one fo the two proposed bills passed in time.
However, all states have the option of calling a special session, which in essence calls everyone back in to take a vote on a bill. To call the special session, the governor’s office has to feel after informal polling that bill would pass in both the House and Senate, as there is no debate time during a Special Session. This was on the table in Connecticut until this week, but talks have stalled between the State and the Tribes regarding a new compact, and there ended up not being conclusive support for launching the session.
What’s the issue here?
The main issue stems from the two casinos in the state, Foxwoods and Mohegan Sun, claiming sports betting under their current arrangement with the state. The two properties have the rights to all casino distribution, but it has been argued that sports betting doesn’t fall under the same category. The state disagrees, with State Attorney George Jepsen writing this opinion back in April:
“In the event PASPA is struck down, and state law continues to prohibit sports wagering (as it presently does), because sports wagering is a Class III game under federal law and is not an authorized game under either of the respective Compacts, the Tribes would still be prohibited from conducting sports wagering on their reservations.
Moreover, it is our opinion that if sports betting were to become lawful in Connecticut, the Tribes would not have an exclusive right under the existing Compacts and MOUs to offer it … Sports betting is not listed as an authorized game.”
Truthfully, the casinos want to tack online casino to any sports betting bill as that is their main focus right now, but blocking any other potential licensees like Sportech (who have the pari-mutuel license and 16 wagering locations in the state) would also be of value to the two tribes.
The negotiations on a new compact have been ongoing, but the casinos are threatening not to hand over the tax revenue from their land-based games (estimated at $270m for 2018), and this is a large sum of money for the Connecticut coffers to walk away from. So, for the time being, the negotiations are off.
The issue for the Connecticut government when it comes to sports betting in the state is the bleed to other states. Everyone has a vested interest in what is going on inside the borders of the state. With new casinos being built in both New York and Massachusetts, there will be increased competition for both Foxwoods and Mohegan Sun. The horse racing industry has been in steady decline for years, and Sportech’s land-based betting shops in the state could certainly use the boost from regulated sports betting. Finally, the fact that states all around Connecticut will soon have legal sports betting means that players from the small state could simply drive into another state to make their bets.
So, where does it all go from here? Well, as far as we can tell, it goes nowhere fast. Unless there is a Hail Mary play to get a special session started in the next couple of weeks, it is a dead issue for the rest of this year. Not only are there mid-term elections in the U.S. in November, but there will for sure be a new Governor of Connecticut as Malloy is done serving after his two terms. While we don’t know what the new government will look like come November, we do know that they won’t sit again until January 9th, and at that time you can imagine how important it will be to get some sports betting regulations passed.
With the biggest sports betting day of the U.S. calendar approaching in early February, all the interested parties will no doubt want to be able to offer Superbowl bets to the fine folks of the state of Connecticut. The tribes need to get out of their own way in order to pave the way for this potential revenue source in a very competitive environment.