Arkansas introduces a unique revenue rule for interactive sports betting


Posted on: Nov 19, 2021 at 12:36 pm

Last updated: November 19, 2021, 1:12 am.

The Arkansas Racing Commission (ARC) oversees all games in Razorback State. However, since commercial gambling wasn’t legalized until 2018, the agency continues to go through a learning curve.

This week, ARC launched a bizarre mobile sports betting rule that would mark a first in the nation. It received a quick rebuttal.

Arkansas Sports Betting Casino Gambling
The Arkansas Racing Commission is in the early stages of establishing the rules that will oversee mobile sports betting in the state. The agency’s first draft received strong feedback from mobile gaming interests. (Image: ARC)

The Supreme Court gave states the right to rule on the legality of sports betting within their jurisdiction. Since then, 31 states plus DC have passed laws that allow such gambling. Arkansans legalized sports betting in 2018 through a constitutional referendum that also brought commercial casino gambling with slot machines and table games to the state.

Sports betting is currently limited to the state’s three operating land-based casinos: Oaklawn Racing Casino Resort, Southland Casino Racing, and Saracen Casino Resort.

ARC has the freedom to extend sports betting to online outlets and this week the panel began advising that component. But one point in the Commission’s interactive sports betting draft quickly sparked backlash from industry stakeholders.

Wafer-thin majority mandate

The Arkansas Racing Commission’s first draft of its terms and conditions for mobile sports betting requires that land-based casinos retain at least 51 percent of the associated gross gaming revenue (GGR) generated by mobile sports betting.

Much like many other states with sports betting, Arkansas requires that online sports betting be affiliated with one of the land based casinos. While three casinos are up and running, a fourth will come to Pope County at some point. After years of delay, ARC this week awarded the fourth and final casino license to a company jointly controlled by Cherokee Nation Businesses and Legends Hospitality.

ARC’s regulatory framework for mobile sports betting allows any casino to work with up to two online operators to conduct sports betting over the internet. John Burris, a former Arkansas state lawmaker who now works on behalf of several US online gaming interests, was quick to disapprove of the 51/49 minimum revenue split. He told ARC that no other state has stipulated how online GGR from sports betting should be shared between partners.

We don’t believe that it is the role of the state to dictate business-to-business agreements. “ Burris told the commission. “That should be negotiated between the parties.”

“We don’t want you (ARC) to comment on this. We don’t think the rules should say it, ”Burris continued. “We think that should be negotiated between the companies, with your approval in the backend.”

Sales agreements largely unknown

As Burris noted, no sports betting state is currently dictating how GGR from mobile betting is shared between the interactive company and its land-based casino.

For example, Valley Forge Casino Resort in Pennsylvania has partnered with FanDuel for its online sports betting. The internet platform is the leading online sports betting operator in the Commonwealth. Contrary to what Arkansas is trying to do, the Pennsylvania Gaming Control Board has no mandate over how FanDuel and Valley Forge share their online sports betting income.

ARC Commissioner Alex Lieblong expressed concern that if it allowed the third-party online sports betting company to control the majority of online sports revenue, it could allow this company to exercise undue control over the actual casino itself.

Who actually runs the casino? The one we licensed or his subcontractor? “ asked Lieblong.

Burris responded by saying that Arkansas’ commercial gambling laws require that casinos be responsible for all gambling that they or their third parties operate.

ARC did not immediately respond to Burris’ recommendations to remove revenue-sharing requirements from state regulations for mobile sports betting.

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