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A Vermont sports betting bill advanced to the state Senate on Wednesday. It would bring up to six mobile apps to The Green Mountain State as early as Dec. 2023.
H.127 sponsored by Rep. Matt Birong, D-Vergennes, was voted out of the Senate Committee on Economic Development, Housing, and General Affairs by a vote of 4-1 today. It had cleared the House by a nearly unanimous vote on March 24.
The legislation is the first sports betting bill to ever advance to the floor of both houses of the Vermont General Assembly.
Vermont is expected to follow a New York revenue model with operators taxed up to 50 percent of the adjusted gross revenue. The bill itself allows a minimum allowable tax rate of 20 percent.
Birong estimates that his legislation would generate a minimum $10.6 million starting in FY 2025 based on a tax rate of 50 percent. State revenue would total around $2 million in FY 2024.
“I think the product we have in front of us is a solid piece,” Birong told the committee during its first hearing on the bill on April 7.
Betting under H.127 would be allowed on professional and collegiate sports, but would exclude betting on Vermont teams outside of tournament play. Betting on amateur sports with participants primarily under age 18 would also be prohibited. There is no mention of esports in the bill as of yet.
Operators Selected by Competitive Bid Process Through Lottery
All Vermont sports betting licensees would be selected through a competitive bidding process regulated by the state Department of Liquor and Lottery (DLL). State revenues will depend on licensing fees (between $125,000 and $550,000), the tax rate, and the number of licensed operators.
“The fewer the operators, the more likely they’ll accept the higher (tax) rate,” legislative fiscal analyst Patrick Titterton told the committee on April 7. “What it actually lands on finally is the result of the bidding process,” said Titterton.
Lottery regulation is reminiscent of neighboring New Hampshire, which has one online and retail sportsbook licensee: DraftKings.
But DraftKings Government Affairs and Senior Corporate Counsel Kevin Cochran told the committee at its April 7 meeting that more competition is welcome. Actual growth will depend on how the market is “fleshed out,” Cochran said.
“I think if there’s only one operator, the lack of competition and the lack of a drive to acquire players might ramp the market up slower than if there were more operators,” he said.
Some of the leading sportsbook operators that could come to Vermont include Caesars and the bet365 app.
Promo Play Allowed with Guardrails
Part of the market is driven by promotional play, which Cochran said will help transition players from the illegal market. “The best way to do that is to offer them promotions, make sure that there’s advertising from different (operators),” he said.
Vermont’s bill would allow promotional play but with the same guardrails added by regulators in newly-launched states like Ohio and Massachusetts — namely, no use of “free bets” language if a player must risk their own money to wager.
“Whatever you advertise essentially has to be true,” legislative staff attorney Tucker Anderson told the committee before its approval vote on the bill on Wednesday. “If you’re going to advertise it as a free bet, it has to be free. You can’t prohibit players from withdrawing their own funds that they’ve contributed along with promo play.”
RG Includes Elevated Funding for Problem Gambling Program
Responsible gambling provisions in the bill will dedicate five percent of all state sports betting revenue after FY 2025 for a problem gambling program run by the state’s Department of Mental Health.
The Senate Committee on Economic Development, Housing, and General Affairs amended the bill to elevate RG funding to the five-percent appropriation from a floor of $250,000 in FY 2024 and $500,000 in FY 2025 approved by the House in March. The change — which will take effect in FY 2026 — was requested by both the Department of Mental Health and DLL Commissioner Wendy Knight, who will oversee sports betting regulation.
Five percent of the estimated $10.6 million the state would receive at a 50 percent tax rate would be $530,000 year to year. Startup funding for DLL regulation in the bill will be $550,000 in FY 2024.
Knight told the committee at its hearing on the bill last week that the five-percent appropriation will sustain the problem gambling program year over year. She called the floor of $250,000 and $500,000 respectively “an artificial funding mechanism” that would halt funding after FY 2025.
“You need to add the five percent. You need a way to grow the revenue for the problem gaming funds. My preference is that you would just put the five percent in and eliminate the floor,” Knight said on April 7.
Right now, Vermont’s investment in problem gambling is 23 cents on the dollar or about half the national average, according to April 7 testimony before the committee by National Council on Problem Gambling representative Brianne Doura-Schawohl.
Advertising Plans Requirement Included in Bill
Advertising is also addressed by H.127. The bill would require all operators to submit an advertising plan to DLL that includes strategies to limit advertising to those of betting age.
No one under age 21 would be allowed to bet on sports in Vermont under the proposal. Knight told the committee on Wednesday that her department will decide what is appropriate when it comes to advertising, including promotions — keeping in mind the state’s need to maximize revenue as required by the legislation itself.
“We will make sure that we are following your intent which is to maximize revenue and reduce harm,” Knight said.“The less you put in the bill the better you are because this is a new, evolving market.”
H.127 now goes to the floor of the Senate. It is expected to come to a vote before the current session ends on May 19.
