The Arkansas Racing Commission on Thursday unanimously approved changes to the state's gambling rules that will allow mobile sports betting through local casinos, including granting established casinos 51% of the proceeds when partnering with online bookmakers.
The rule changes must now be approved by the Arkansas Legislative Council, which is to meet Jan. 28.
"Whether this item makes the January agenda is yet to be determined," Racing Commission spokesman Scott Hardin said after the meeting. "If ALC approves, the rule changes allowing mobile sports betting would be effective immediately."
The commission meeting, which included a public hearing on the subject, lasted more than two hours. Eight people, including representatives of casinos in the state as well as from a sports gambling company, spoke to the commission.
The Racing Commission received about 800 letters and emails from the public, with most opposing sports betting as a whole, Racing Commission attorney Byron Freeland told commissioners.
The 51% split with established and licensed casinos sets Arkansas apart from the rest of the nation, where the average share is 5-15% with local casinos.
John Burris with the Capitol Advisors Group -- who represents online sports betting operators DraftKings Inc., FanDuel Inc., BetMGM, Fanatics and Bally's -- said they were excited when it was announced that sports betting would be allowed in Arkansas.
"We think it's a great opportunity. I think if I had one point, it would be that it's not us versus them. Us being sports betting and them being the three in-state casinos," Burris said. "I think that perception has developed, but it's really not the case. We view it as an opportunity to bring to a marketplace through the casinos revenue and a player who is generally being unregulated and utilized now."
Still, Burris asked commissioners to amend the rule to allow for the sports betting companies to negotiate the split directly with the casinos, with the casinos having complete control to "accept or reject" that offer.
"We're asking the rule and government not to put restrictions that prevent this from being an open and competitive marketplace," Burris said.
In a Dec. 21 letter to the Racing Commission, Oaklawn Racing and Casino Resort General Manager Wayne Smith said the out-of-state sports wagering vendors generally require them to receive 85% to 95% of net revenue, leaving only 5% to 15% of the net revenue to the local casinos.
"We question whether under such circumstances this is really consistent with the intent of Amendment 100 limiting casino gaming and accepting sports wagers to the four (4) licensed casinos, who are under the more direct regulation of the Arkansas Racing Commission," Smith said. "If the third-party subcontractor-vendor retains 85% to 95% of the net revenues themselves, who is really conducting the sports wagering?"
Smith added in the letter the belief that the ultimate goal of many out-of-state sports wagering vendors is to gather a confidential customer database for sports betting as well as other types of wagering.
"And in some instances to promote those customers to visit casino properties in other states where the tax revenue and other economic benefits would be driven by other states, not Arkansas," Smith said.
Andrew Winchell, director of governmental affairs for online bookmaker FanDuel, said requiring a 51% split would hamper the ability to bring "first-class offerings" to Arkansas gamblers, with most top brand operators eliminated.
Saracen Casino Chief Market Officer Carlton Saffa told the commission that fee structures are built into several gambling laws around the state and that existing Arkansas casinos already have profit-sharing agreements with other games, like slot machines, that give about 80% of the profit to the casino.
The commission didn't budge on another rule that sports betting vendors also took issue with: limiting each casino licensee to provide no more than two individually branded online sports platforms -- or "skins" -- and accompanying mobile applications with the approval of the Racing Commission.
Any individually branded online sports pool platform/mobile application provided by an online sports pool operator intermediary must, on its website, conspicuously bear the name of the casino license with which it is affiliated, under the rule changes.
The casinos in the state -- Saracen Casino Resort in Pine Bluff, Southland Casino Racing in West Memphis, Oaklawn Racing Casino Resort in Hot Springs, and the recently licensed Legends Resort and Casino in Pope County -- were given the green light in 2019 to offer sports betting on premises.
The new rule allows mobile betting anywhere in the state as long as it's physically within state lines and is done in partnership with a current gambling license holder.
Online sports betting is defined in the rules as an operation in which wagers on sports events are made over the internet on websites or mobile applications through computers, mobile devices or other approved interactive devices accepted through a gambling system approved by the Racing Commission.
Since July 2019, sports gamblers have wagered about $96 million at the three casinos, resulting in more than $83 million in payouts and about $1.74 million in state revenue, according to the state Department of Finance and Administration.