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Legal Developments

Rhode Island Mobile Sports Betting Takes Overdue Step Forward

Rhode Island’s in-person sports betting requirement will likely end as soon as this month, curtailing a policy industry stakeholders decry as a handicap to legal betting and a boon to unregulated bookmakers.

Rhode Island was one of the first states to legalize sports betting, but the physical registration requirement for online betting has hindered the market since its 2019 mobile launch. As of last December, the state revenue department reported less than half of all mobile registrants had visited one of the state’s two casinos to complete registration.

In February, the last full month before the COVID-19 pandemic shuttered the two casinos, 17.5% of the state’s betting revenue came online. Before the outbreak, more than 80% of betting revenue came online in other mature markets such as New Jersey and Pennsylvania.

With most sports leagues postponed – and Rhode Island customers unable to open new accounts- the state made only $28,202 in online revenue in April.

Those paltry numbers, which further exacerbate state budget woes, compelled legislation this week to revoke the in-person requirement, much to the relief of the gaming industry.

“Some things are obvious, others are no-brainers. Mobile registration is an obvious no-brainer,” said John Pappas of iDEA Growth, an online gaming advocacy group. “This was true when Rhode Island launched sports betting and given today’s environment it is an essential correction for the legislature to make.”

Potential Impact

Rhode Island is one of four states with in-person registration, along with Nevada, Illinois and Iowa. Nevada has more casinos per capita than any other state, Illinois has temporarily removed its in-person requirement and Iowa’s sunsets in six months.

In-person registration was intended to boost casino foot traffic from would-be internet bettors. Instead, many bettors remained with unregulated, offshore sites or unlicensed bookmakers.

Industry stakeholders argue states end up losing tax dollars from black-market bettors who would have used the legal option if they could sign up remotely.

Sports betting taxes make up a tiny fraction of Rhode Island’s roughly $10 billion annual budget, but every dollar can help as elected officials consider adding nearly $2 billion more to overcome shortfalls and extra spending to respond to the coronavirus.

In the last fiscal year, Rhode Island’s two brick-and-mortar sportsbooks and its lone, government-run mobile app brought in roughly $18 million in revenues, adding $9 million in taxes to state coffers. Should the in-person registration requirement removal spark similar online to in-person ratios as seen in other states, that could mean more than $12 million in additional mobile betting revenue annually.

A jump that size assumes, among other factors, retail betting doesn’t drop as online betting increases, but assuming accelerated online participation leads to a substantial increase is not a stretch. In December, Rhode Island officials reported 17,199 registrants, but just 7,834 completed the in-person activation mandate. It is safe to assume most of them would have finished the registration process if they could have done so from their mobile phones.

The lingering pandemic and its impact on sports will undoubtedly alter Rhode Island’s sports betting trajectory, but if Rhode Island’s online participation is anywhere near that of other mobile states, a significant revenue boost seems inevitable if and when lawmakers strike down in-person sign-ups.

Next Steps

There is no sure bet in sports betting policy, especially in Rhode Island, where exorbitant tax rates, a government monopoly on legal betting and superfluous restrictions have delayed and hindered the market. But the registration requirement removal bill has as good of odds as any piece of legislation.

Democratic House Speaker Nicholas Mattiello and Democratic Senate president Dominick Ruggerio both support the bill, giving it instant weight in the statehouse. House Finance Committee Chair Marvin Abney is another co-sponsor and, not coincidently, will have first pass at the bill in his committee.

Democrats also hold supermajorities in both chambers, fellow Democratic Gov. Gina Raimondo largely supports gaming measures and a massive budget crunch looms, all of which benefit the bill’s prospects.

“Especially during these times of social distancing, enabling people to register online for sports gaming provides an added convenience that will also enhance revenue for the people of our state,” Mattiello and Ruggerio said in a joint statement. “With many team sports ready to resume play shortly, this will provide a safe entertainment option for Rhode Islanders to participate in sports gaming from their homes.”

The passage and implementation timelines would be undetermined, but most sports wagering policymakers look to finalize everything ahead of football season, traditionally the most lucrative time of the year for sportsbooks. Twin Rivers Tiverton and Twin Rivers Lincoln re-opened earlier this month, but the threat of further virus spread (and another shutdown) could further motivate stakeholders to quickly finalize mobile registration sans in-person visits.

Removing this policy in Rhode Island could speed the death of a detrimental policy to sportsbooks’ and governments’ bottom lines, a policy that’s all the more pointless in the midst of a pandemic.

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