Gov. Kate Brown Offers Bill To Expand Online Sports Betting, But At What Cost?

Since the Oregon Lottery introduced its Scoreboard online sports betting service in October 2019, the results have been underwhelming.

Gov. Kate Brown may have a solution for that, as she’s pushing for mobile wagering expansion with a new bill.

If the bill becomes law as is, it could change the landscape of legal online sports betting in Oregon greatly. In many ways, it could be a marked improvement.

There are some questions to answer about the potential future as well.

What’s in Gov. Brown’s online sports betting bill?

HB 2127 would immediately change state law in several ways.

First, it would hand regulatory duties to the Oregon Racing Commission. That wouldn’t mean Scoreboard, overseen by the Oregon Lottery, would cease operations. But it could have new competition.

The racing commission could give licenses to accept wagers on sporting events to any number of companies and set the standards for licensure. While it does not put a cap on the number of licenses, it does limit license fees to no more than $50,000 annually.

The bill also calls for a repeal of the state’s ban on betting on collegiate events. In addition, it compels future licensees to purchase official league data to set in-game wagers.

The bill doesn’t specify a tax rate for aggregate revenue. It also does not contain any language pertaining to advertising standards or ineligible persons who have tangible connections to sporting events. This bill would leave that to the commission to decide, should the measure become law.

This bill puts the Oregon Racing Commission in a position to interpret an unusual block of text. There is little precedent for commission members to draw on in this situation.

An additional fee, other than a tax on revenue?

One part of the bill is peculiar. Depending on how the commission interprets the language, it could further harm the ability of sportsbook operators in Oregon to compete with illegal wagering channels.

The section reads:

“An additional fee not to exceed 10 percent of gross sports wagering receipts shall be assessed upon each sports wagering licensee. Seventy-five percent of the additional fee assessed under this paragraph shall be paid to the General Fund in the State Treasury to the credit of the Oregon Racing Commission Account. The remaining 25 percent of the additional fee assessed under this paragraph shall be allocated by the commission to support the racing industry.”

If not for the “additional fee” phrase, this could read as a direction on how to delve out tax funds. However, those two words change everything. That phrase seems to suggest that this extra 10% fee would be levied upon revenue on top of whatever general revenue tax the commission decides to impose.

How could this language affect Oregon sports betting?

On its face, that could guarantee more revenue for the state. However, that plan could actually backfire. That could handcuff sportsbook operators by what may amount to a national-high tax rate. That could limit the ability of operators to offer competitive odds and promotions to customers.

That, in turn, could motivate some bettors in the state to continue to use illegal bookies or offshore websites. As a result, the revenue that legal books would produce, and ultimately get taxed, would be paltry.

While a single-operator system isn’t doing much for the state right now, as it actually lost $2 million over the first six months of Scoreboard’s operation, the state has to balance its interest in taxation with allowing new operators to build a customer base for themselves in the state.

Expansion, if done right, could accomplish that goal.