Will a constitutional amendment that would send the decision to legalise sports betting to the voters get out of the Georgia house?
Short answer: No.
Long answer: The state doesn’t need the money and lawmakers are nowhere near a consensus.
During a hearing in the House Higher Education Committee on SR 579 late on the afternoon of 18 March, there was fire and brimstone, a reference to heroin and plenty of misinformation. Multiple lawmakers also noted that the state has a $16bn budget surplus and isn’t in a hurry for new revenue streams.
And at least one lawmaker thinks that New York is part of New England. For those in need of a geography lesson, the six New England states are Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont.
Time running short and compromise isn’t happening
The bill is one of several that could legalise sports betting in a state that has been trying to craft a framework for a mobile market for four years, but where lawmakers have been unable to come to a compromise. It seems that legal online wagering will meet the same fate with 10 days left in the legislative session.
So far, the general assembly can’t agree on the best use of wagering tax dollars, never mind what kind of guardrails to put around it or how to regulate it.
Senator Bill Cowsert introduced his bill to the committee by saying, “This constitutional amendment is way simpler than you think. It just allows for another form of gambling by the lottery.”
Would that it were so simple. Cowsert went on to explain that a tax rate would “come later”, as would the framework around legal betting. His proposal does include the creation of a new gambling commission and significant funds for problem and responsible gambling initiatives because, he said, the ones in place now aren’t effective enough.
“This kind of gambling is nothing more than state-sponsored predatory gambling,” – Mike Griffin @GaPublicAffairs
Sports betting gets first airing in Georgia House https://t.co/xEq3FoWzbW— Michael R. Griffin (@mikegriffinsr) March 15, 2024
“It’s like telling the heroin dealer to stop selling me heroin,” Cowsert said of existing PG and RG initiatives. “That’s not going to stop you.”
Several witnesses wholeheartedly agreed and urged the committee to vote “no” on legal betting when the time comes. Mike Griffin on behalf of the Georgia Baptist Mission Board quoted his predecessor, telling the story of the day that a crowd shouted “Crucify him! Crucify him!” when Pontius Pilate said he could find no reason to condemn Jesus Christ and that the crowd should make that call.
Handle does not equal tax revenue
During the course of the hearing, it was clear that committee members didn’t have a good understanding of how sports betting works or, for that matter, where states that offer it are located or what the tax rate is in places where it is on offer.
Early on, Cowsert had to explain that when lawmakers hear that sports betting might bring in $100m to Georgia in a month, that number is likely referring to handle – the amount wagered – not operator revenue or tax revenue. The explanation was part of a conversation during which Cowsert was asked if he would come down off earmarking 15% of tax revenue for problem and responsible gaming programmes.
A committee peer suggested that if the state were getting $100m in revenue per month, then $15m for PG and RG programmes per month – $180m per year – might be overreach. The 15% number is higher than any other state sets aside, but it’s more likely that tax revenue would more in the range of $10m per month, depending on the tax rate, hold percentage and whether or not promos are deductible.
In that scenario the state would set aside $1.5m per month or $18m per year for PG and RG programmes. Those numbers are well above what the average state earmarks.
The lack of education about the subject is an indicator that lawmakers are not engaged enough in the topic to keep it moving forward.
While Cowsert himself said he “believes in the democratic process” and showed a willingness to negotiate, he also exposed his lack of knowledge on several fronts. When asked about how money for problem and responsible gaming would be spent and how much might realistically be needed, he admitted that he did not know what a reasonable number is or how much treatment programmes cost.
New York is not in New England
He went on to say that at least one state, Massachusetts, has a 54% tax rate. No state has a 54% tax rate on sports betting. The highest is 51% in Arkansas (no national operators), New Hampshire (DraftKings has a monopoly), New York (operators are losing money but like the cachet) and Rhode Island (IGT has a monopoly). When prompted that it is not Massachusetts – which has a 20% tax rate – Cowsert said, “It is one of those New England states, maybe New York.”
New York Picks Nine Operators To Launch State’s $1 Billion Sports Betting Market-https://t.co/NREWWerkP5 #SportsBetting
— Laura Anthony, Esq. (@LauraAnthonyEsq) November 10, 2021
Moments later, Representative Marcus Wiedower attempted to correct Cowsert, saying that he empathised on how his peer got “twisted up” on “northern states” while pointing out that New York is not in New England. But Wiedower incorrectly said that New York has “a monopoly, they have one operator, so they can charge that for one operator”. Nine online betting platforms are licensed in the Empire State.
Enabling legislation for the constitutional amendment had a hearing last week, but no vote. SB 386 would allow for up to 16 digital wagering platforms, set licensing fees and a 20% tax rate and earmark nearly all tax revenue to the state’s HOPE scholarships. Cowsert’s bill sends funding to multiple educational programmes and other initiatives. The constitutional amendment and enabling legislation differ in several areas, causing committee chair Chuck Martin last week to say that the senate would have to “marry” them before moving forward.
The Higher Education Committee will meet again Wednesday, but Martin did not commit to continuing the discussion.
