Did legislative leadership really fall for sports-betting rope-a-dope? Geoff Pender

Did the Mississippi Legislature approve what could be the largest expansion of gambling in 25 years either inadvertently or through sleight of hand, without the leadership realizing it?

That remains hard to tell at this point.

As first reported by The Sun Herald last month, state gaming and legal officials say a law change the Legislature passed this year to regulate and tax fantasy sports clears the way for Las Vegas-style sports betting at Mississippi casinos — if the U.S. Supreme Court overturns a federal ban as many expect. It also means horse race betting is now legal here, regardless of federal action, they say.

But apparently there may be some legal debate on whether the bill does clear sports betting on the state level, and the Legislature might revisit the issue.

First, some background.

'Doesn't get us any closer'

In 2016, a state attorney general’s opinion said online fantasy sports games constituted illegal gambling in Mississippi. In fantasy sports, played by an estimated 57 million people last year, contestants pay an entry fee, which funds prize pools. They “draft” players and win or lose based on their performance.

Fan Duel and Draft Kings — two of the largest online fantasy sports companies — halted operations in Mississippi after the AG opinion, drawing an outcry from fantasy sports enthusiasts.

Lawmakers in 2016 passed a bill temporarily legalizing fantasy sports while also creating a commission to come up with rules, regulations and fees.

In March, the Legislature passed House Bill 967, which allows the Gaming Commission to regulate fantasy sports and to charge operators an 8-percent tax on their Mississippi revenue, same as the state tax on casino revenue.

There was scant mention of actual sports betting as the new bill made its way through the Legislature this year. Most of the debate around it centered on an unsuccessful attempt on the House floor to add a state lottery to it.

In late January, when the bill came before the House Gaming Committee, Rep. Scott DeLano, R-Biloxi, fielded a question on whether the measure was a step towards regular sports betting in Mississippi.

“No, that’s a federal issue,” DeLano said at the time. “We’d love that opportunity, but this doesn’t get us any closer.”

Gov. Phil Bryant, Speaker Philip Gunn, R-Clinton, and others have voiced opposition to sports betting. But at the time, it was sort of a moot point. For years it appeared neither Congress nor the high court were interested in considering a removal of the federal sports betting ban, which grandfathered the activity in Nevada and to a limited extent a couple of other places.

But in June, when news broke that the Supreme Court would hear New Jersey’s challenge to the federal ban on sports betting as a states’ rights issue, DeLano told The Sun Herald, “We did make modifications to the Gaming Control Act that would allow for the Gaming Commission to regulate sports betting if it were ever to be overturned at the federal level.”

He further surmised of sports betting that “we feel this could be another 1990s for the state of Mississippi,” referring to the casino economic boom period after casinos opened in 1992.

This made a big splash in the gambling and sports betting industry. Industry insiders expect a mad dash nationwide for states to be first behind New Jersey or first in their region to offer sports book, under the "early bird gets the worm" theory. And they’ve been reporting that Mississippi appears to be among the front of the pack. Legal Sports Report in late June had headlines that read, “Mississippi already acted on sports betting, under the radar,” and “Mississippi is Already Poised to Offer Legal Sports Betting, Thanks to Language in a Fantasy Sports Law.”

'Further clarification may be needed'

But this appeared to fly under the radar of Mississippi leaders. A report last week by Mississippi Today sports columnist Rick Cleveland got more notice. Some leaders and rank-and-file lawmakers are questioning what happened, and what to do next.

“If the U.S. Supreme Court ruling creates the need to address sports gambling in Mississippi, the Gaming Commission will do so,” Bryant, a Republican, said in a statement. “I have serious concerns about the negative consequences of betting on sports.”

The bill didn’t mention sports betting, but it deleted a passage in the Gaming Control Act that prohibited casino wagering on athletic events or any events that don’t take place on a casino’s premises.

Bryant’s office further stated, “We’re not convinced HB 967 opens the door for sports betting in Mississippi. That was not part of the calculation the governor used to arrive at his decision to sign it, and it certainly was not a back-door way of clearing the legal pathway for wagering on sports.”

A spokeswoman for Republican Lt. Gov. Tate Reeves said he has similar concerns.

“Obviously, the original intent of HB 967 was to provide a legal framework for fantasy sports in Mississippi, and the lieutenant governor supported that effort,” said Reeves spokeswoman Laura Hipp. “As is often the case, different lawyers have different interpretations on whether the changes made, whether intentional or not, have any implications on other types of gaming in our state.

“We are monitoring the actions of appropriate regulatory agencies and the attorney general to see if any further clarification may be needed.”

A spokeswoman for Gunn confirmed the House speaker, who voted for the bill, remains opposed to sports betting in Mississippi but had little further comment.

“We’ll have to take a look at this in more detail,” said spokeswoman Meghan Annison. “Since we are not in session at the moment, there’s nothing we can do except study the situation.”

House Gaming Chairman Richard Bennett, R-Long Beach, who authored the bill, could not be reached for comment.

DeLano, who handled the bill’s passage in the House, on Thursday said the measure “is morphing into something more than it was really intended to be” and that there was no rope-a-dope for lawmakers to legalize sports betting unawares. 

DeLano said the goal with the legislation was to regulate and tax fantasy sports and provide consumer protection. He said that in order to cover all the permutations of fantasy sports betting and not provide loopholes, the Gaming Control Act had to be changed in a way that could allow sports book. He said federal law still prohibits sports betting, and he suspects more state legislative action would be required first, but he’s uncertain.

“And if you look at any article about the Supreme Court agreeing to hear the case, you see the word ‘surprise,’” DeLano said, further defending against any rope-a-dope claims.

State Gaming Commission Director Allen Godfrey said the new law does clear the way for sports betting and that lawyers, including the one assigned to the commission by the attorney general, agree.

“Based on my interpretation and the attorneys' (interpretation), … daily fantasy sports is about the same thing as sports betting,” Godfrey said. “It also opened up the door for (sports book), should the federal ban be lifted.”

Godfrey said Mississippi’s laws and regulatory framework are closely based on Nevada’s and that the commission could handle the task of overseeing sports betting at casinos.

“We are in the process of getting prepared,” Godfrey said. “I do believe when the time comes, if it ever becomes viable in Mississippi, the gaming commission will be prepared. This has been regulated and monitored in Las Vegas for many years, and our laws and regulations mirror theirs.”

Shot in the arm for casinos

Proponents of sports betting say it could provide a needed shot in the arm for Mississippi’s 25-year old gambling industry and its 28 casinos, particularly in Tunica and river areas that have seen slumping business and casinos closing.

While the betting itself might not bring huge profits, proponents say it would generate “foot traffic” and help tourism, with people coming to bet on sports then booking hotel rooms, eating meals, playing golf and playing other games. Last year, Super Bowl weekend drew an estimated 300,000 travelers to Las Vegas.

Proponents also note that sports betting is already going on in Mississippi and elsewhere, even if illegally. Estimates of annual sports wagering range from $80 billion to more than $500 billion — hard to tell because illegal bookmakers don’t report their revenue. Legalizing and regulating it would help get rid of a black market and organized crime, therefore providing consumer protection.

And while political support in Mississippi has grown for a lottery, proponents say that a lottery would not generate the tourism benefits of sports book. They also argue that a lottery would spread gambling statewide, while sports betting would be confined to casinos.

Of course, sports betting anywhere outside of Las Vegas hinges on New Jersey winning its long-running legal battle.

How likely is that?

'Get ready, it's coming'

Florida attorney Daniel Wallach, a leading expert on gaming law, says the odds are pretty good, now that the high court has agreed to step in.

“I think you’ll be betting on NFL football games in Mississippi by the beginning of the 2018 season,” Wallach said. He said the court is expected to hear the case in late fall or early next year.

The Supreme Court in 2014 declined to hear New Jersey’s appeal on sports betting. Last year, Mississippi Attorney General Jim Hood — along with attorneys general from West Virginia, Arizona, Louisiana and Wisconsin — signed on to a brief in support of the Garden State’s appeal to the Supreme Court, as did the American Gaming Association. The states are arguing that the federal ban is an overreach and violates states’ 10th Amendment rights — that the federal government cannot dictate how states regulate private behavior of their citizens.

Wallach said that Supreme Court metrics lean toward a favorable ruling for New Jersey. He said the court over the last five years has reversed federal court rulings at a rate of over 70 percent, and last term was 83 percent. He said the court declined the recommendation of the solicitor general, who didn’t want it to take the sports betting case, an unusual move that “points towards a New Jersey victory.”

Wallach said Mississippi is the only other state “that actually has legalization, has sports betting ready to become legal on day one,” although other states are working on such measures.

Wallach said Mississippi, with its casino groupings, beaches and other amenities — not to mention its Vegas-like regulations — is “tailor-made for sports betting” and would see a major increase in tourism, “by virtue of its location.”

“Get ready, it’s coming,” Wallach said.

ContactGeoff Pender at 601-961-7266 orgpender@gannett.com. Follow him onTwitter.