National Sportsbooks Balk At Revenue-Sharing Rule Proposed For Arkansas Sports Betting

Mobile sports betting could be live in Arkansas by March Madness if given final legislative approval next week. But Arkansans may have limited choice on which statewide mobile apps to choose from under proposed sports betting rules. 

Third-party apps like FanDuel and DraftKings would have to agree to give their casino partners at least 50 percent of net online sports betting receipts, something lobbyists for these national brands have said could keep them out of the Arkansas market.

The so-called proposed “51 percent rule” (although it would keep nationally-branded sportsbook operators from collecting more than 50 percent of a casino’s net online sportsbook receipts) and four other mobile sports betting rules were initially approved by the Joint Budget Committee (JBC) Administrative Rules Subcommittee over the past two days.

All five proposed rules are expected to go to a vote before the full Joint Budget Committee next Tuesday, Feb. 22.

Once approved, the rules can be filed immediately with the Arkansas Secretary of State and take effect in 10 days.

That would make an Arkansas mobile sports betting launch possible by the time March Madness tips off.

But not everyone is rooting for the proposed rules, as they stand now. 

Mandated Revenue-Sharing Rule Would Be A First 

The mandated net revenue-sharing rule would reportedly be the first in the nation. Casinos and third-party sportsbooks usually handle revenue sharing through contracts, not state regulation. 

Still, the state’s three licensed casinos seem to claim they are constitutionally bound by the proposed mandate. 

Those three casinos are Saracen Casino Resort in Pine Bluff, Southland Casino Racing in West Memphis, and Oaklawn Racing Casino Resort in Hot Springs. All three of those casinos, plus a fourth proposed for Pope County, were authorized by Arkansas voters by constitutional amendment in 2018. 

Because sports betting falls under Arkansas’ constitutional definition of casino gaming, the casinos say that gives them control over mobile sports betting as well. 

“The people outlined a competitive marketplace of no more than four vendors and I think they did a good job in doing that,” Saracen official Carlton Saffa told the subcommittee during its hearings on the issue over the past two days. 

Saffa insisted to the subcommittee that the mobile sports betting rules proposed on Dec. 30 by the Arkansas Racing Commission (ARC) are “consistent with the law.” 

And Saffa seems to be in good company. Arkansas Attorney General Chief of State Brian Bowen testified to the subcommittee Thursday that his office thinks the “51 percent rule” rule would stand up to the federal Commerce Clause, specifically. 

“If challenged, we can defend this rule,” Bowen told the subcommittee today.

Pushback From Big-Name Sportsbooks?

It’s a situation that stumps former Arkansas state lawmaker and current sports betting industry lobbyist John Burris, who testified before the Joint Budget Committee (JBC) rules subcommittee on the proposed “51 percent rule.”  Burris, who represents DraftKings and FanDuel, says the mandate would violate the federal Commerce Clause by creating an uneven playing field for out-of-state businesses to compete.

He made his position clear to the ARC, too, when it voted out the proposed rules in late December. 

“If they say no to what we offer, we can’t do business here,” Burris told the ARC, as reported by Gaming Today. “We just feel like the 50 percent revenue cap requirement keeps us from negotiating in a traditional way that the sports betting companies engage in other states in what is a win-win.” 

Burris did not challenge another proposed rule that allows each casino up to two mobile sportsbooks. Saffa said his casino really wants only one mobile sportsbook. He said the two-skins option was an ARC concession to the national brands. 

It remains uncertain if any casino will need a second skin should the “51 percent rule” be adopted next week. National sportsbooks will ultimately have a say in what they will accept, or not accept, from casinos. 

The four technical rules proposed along with the proposed “51 percent rule” are also expected to go before the JBC next Tuesday. They would allow statewide sports wagering from bettors not on the premises of a licensed casino, among other proposed changes. 

About the Author
Rebecca Hanchett

Rebecca Hanchett

Legislative Writer
Based in Kentucky's Bluegrass region, Rebecca Hanchett is a political writer who covers legislative developments at Gaming Today. She worked as a public affairs specialist for 23 years at the Kentucky State Capitol. A University of Kentucky grad, Hanchett has been known to watch UK. basketball from time to time.

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