Mobile sports betting in Arkansas gets OK from Joint Budget Committee

A mobile sports betting app for football games is displayed at a Buffalo Wild Wings in Las Vegas in this Sept. 5, 2019, file photo. (AP/John Locher)
A mobile sports betting app for football games is displayed at a Buffalo Wild Wings in Las Vegas in this Sept. 5, 2019, file photo. (AP/John Locher)

The Arkansas Racing Commission's proposed rule that would allow the state's casinos to begin accepting mobile sports bets from gamblers inside Arkansas zipped through the Legislature's Joint Budget Committee on Tuesday.

In a voice vote with no audible dissenters, the Joint Budget Committee approved its Administrative Rule Review Subcommittee's recommendation to approve the proposed rule. The subcommittee Thursday recommended approval of the proposed rule after considering the proposal for two days.

The proposed rule would allow mobile sports betting in Arkansas and would become effective March 4, state Department of Finance and Administration spokesman Scott Hardin said afterward.

"Casinos with sports betting apps ready may launch at that time," he said in a written statement. "We anticipate at least one of the state's three casinos will have an app launched prior to March 13, the first day of March Madness [when the selection of the teams in the tournament are announced]."

The NCAA men's's basketball tournament starts with the first four games on March 15-16 in Dayton, Ohio, according to the NCAA website.

Three casinos operate in Arkansas: Saracen Casino Resort in Pine Bluff; Southland Casino Racing in West Memphis; and Oaklawn Racing Casino Resort in Hot Springs. In November, a divided Racing Commission voted to award a license that would allow a new gambling facility, Legends Resort and Casino in Pope County.

Carlton Saffa, chief market officer for Saracen Casino Resort, said afterward that "We've been working on BetSaracen for a year, so today's vote is exciting for us and for Arkansas.

"We will launch BetSaracen, a first class, Arkansas born and bred mobile wagering app before March Madness," he said in a written statement.

When Saracen Casino Resort begins accepting mobile sports bets from inside Arkansas "is dependent on things like payment processors and App Store compliance," Saffa said. "If it's not the 4th, it will be soon after. We will make sure Arkansas knows when we launch."

Natalie Carlson, a spokeswoman for Southland Casino Racing, said Southland officials are pleased that the Legislature's Joint Budget Committee approved the Arkansas Racing Commission's proposed sports betting rules, which will ensure a majority of proceeds benefits the state.

"This will allow Southland to build on our significant economic and community investments in West Memphis and the state, including our $250 million expansion opening this year," she said in a written statement.

"We are looking forward to beginning to offer mobile sports wagering across Arkansas in the coming weeks through our Betly app, which will make it even easier for Southland patrons and others in the state to begin wagering on their favorite teams," Carlson said.

"Many patrons are already using the Betly sportsbook kiosks at Southland," she said. "The downloadable app will be a familiar extension of our sports betting experience and allow them to continue to play easily at home and elsewhere in the state.

Wayne Smith, general manager of Oaklawn Racing Casino Resort, said Oaklawn officials believe the addition of mobile sports wagering is exciting for Arkansas.

"Oaklawn will work diligently to have our mobile platform to the public within the next quarter or so," he said in a written statement. "We took a more conservative approach and waited for the Racing commission and the Legislature to give their approval before we started working with our vendor GAN to get our mobile platform ready."

"Our mobile platform will mirror the same wagering menu Oaklawn offers its guests on property which rivals any national brands menu out today. Oaklawn Sports will be the brand Arkansans trust just like we are today with Oaklawn Anywhere," Smith said.

Afterward, Joint Budget Committee co-chairman Sen. Jonathan Dismang, R-Searcy, said he believes the Arkansas Racing Commission's proposed rule to allow casinos to accept mobile sports bets from people in Arkansas comports with state law.

"There were some questions about federal law," he said.

"At this point, I feel like we didn't have grounds to not approve the rule," Dismang said.

He said he generally thinks the Arkansas Racing Commission's proposed rule complies with the federal law, though he can understand the argument that it doesn't comport with the federal law.

The proposed Racing Commission rule would define an online sports pool 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 gaming system approved by the commission.

The proposed rule would grant the state's casinos more than half of the mobile sports betting proceeds when partnering with online bookmakers. The majority split would set Arkansas apart from the rest of the nation, where the average share is 5%-15% with local casinos.

The proposed rule is backed by officials representing the state's three operating casinos.

It's opposed by officials representing online sports betting operators Draft Kings Inc., FanDuel Inc., BetMGM, Fanatics and Bally's.

Lobbyist John Burris, who represents Draft Kings Inc., FanDuel Inc. BetMGM, Fanatics and Bally's, told lawmakers last week that the proposed rule is inconsistent with the federal commerce clause because the state can't discriminate against an out-of-state company for the benefit of an in-state company.

But officials of the state's three operating casinos said last week the proposed rule is consistent with state and federal law and doesn't discriminate against companies based on where they are located.

Brian Bowen, chief of staff for the attorney general's office, told lawmakers on Thursday that "there was several comments ... made on the legality of the rule and opinions as to whether or not it violated the dormant commerce clause. Our position is, if challenged, we can defend this rule."

The dormant commerce clause refers to the prohibition -- implicit in the Commerce Clause in Article 1, Section 8, Clause 3 of the U.S. Constitution -- against states passing legislation that discriminates against or excessively burdens interstate commerce, according to the Cornell Law School website.

In an advisory opinion dated Dec. 30, requested by Dismang, Attorney General Leslie Rutledge said it wouldn't be a violation of Amendment 100 to the Arkansas Constitution for a casino licensee to contract with a third party vendor to assist in the certain function of casino gambling, such as an online sports pool, under which the third party vendor retains a majority of the revenue generated from assisting in the operation of casino gambling.

Burris said Tuesday that consumers deserve a competitive marketplace.

"Government putting its finger on the scale by mandating a profit percentage be paid to in-state casinos limits the Arkansas marketplace and hurts the consumer," he said in a written statement. "We'll continue to advocate for better policy."

Amendment 100 to the Arkansas Constitution, approved by voters in November 2018, authorizes the casinos to offer sports betting.

Mobile sports betting is currently allowed in Louisiana and Tennessee among Arkansas' surrounding states, according to Hardin.

More than $120 million has been legally wagered on sports since the state's first sports wager was placed in July 2019, he said Tuesday. Oaklawn accepted the state's first legal sports wager in July of 2019.

State tax revenue from sports wagers totaled $583,000 in 2020 and $1.2 million in 2021, Hardin said.

Asked what the state Department of Finance and Administration expects regarding increased sports betting in the state and state tax revenues from mobile sports betting in Arkansas, Hardin said Tuesday that "We have not produced a formal revenue impact.

"A very conservative estimate would assume we double the amount currently wagered on sports across the state's three casinos, which was $67.7 million in 2021," he said in a written statement. "However, it is more likely that we see an increase of three to four times that amount."

Finance department officials anticipate $2.7 million in annual state tax collections on the low end up to $4.8 million annually when multiple apps are implemented and available to the public, he said.