Arkansas Pitches Unique Revenue Rule on Interactive Sportsbooks

Posted on: November 19, 2021, 12:36h. 

Last updated on: November 19, 2021, 01:12h.

The Arkansas Racing Commission (ARC) oversees all gaming in the Razorback State. But since commercial gambling was only legalized in 2018, the agency continues to undergo a learning curve.

This week, ARC floated a bizarre governing rule for mobile sports betting that would be a first in the nation. It gained a quick rebuttal.

Arkansas sports betting casino gambling
The Arkansas Racing Commission is in the early stages of determining the governing rules that will oversee mobile sports betting in the state. The agency’s first draft met stern feedback from mobile gaming interests. (Image: ARC)

The Supreme Court gave states the right to decide the legality of sports betting within their jurisdictions. Since then, 31 states plus DC have passed statutes to allow such gambling. Arkansans in 2018 legalized sports betting through a constitutional ballot referendum that also brought commercial casino gambling with slot machines and table games to the state.

Sports betting is currently confined to the state’s three up and running land-based casinos: Oaklawn Racing Casino Resort, Southland Casino Racing, and Saracen Casino Resort.

ARC has the freedom to expand sports betting to online outlets, and this week the panel began deliberating that component. But one item in the commission’s interactive sports betting draft quickly garnered backlash from industry stakeholders.

Razor-Thin Majority Mandate

The Arkansas Racing Commission’s first draft of its mobile sports betting conditions mandates that the land-based casinos keep at least 51 percent of the associated gross gaming revenue (GGR) a mobile sportsbook generates.

Similar to many other states with sports betting, Arkansas requires online sportsbooks to be tethered with one of the land-based casinos. While three casinos are in operation, a fourth will, at some point, come to Pope County. After years of delay, ARC issued the fourth and final casino license to an entity jointly controlled by the Cherokee Nation Businesses and Legends Hospitality this week.

ARC’s regulatory outline for mobile sports betting allows each casino to partner with up to two online operators to conduct sports wagering over the internet. John Burris, a former Arkansas state lawmaker who now works on behalf of several US online gaming interests, quickly rejected the 51/49 minimum revenue split. He told ARC that no other state has determined how online GGR from sports betting should be divvied up between partners.

We don’t believe it’s the state’s role to dictate business-to-business arrangements,” Burris told the commission. “That’s something that should be negotiated between the parties.”

“We don’t want you (ARC) to take a position on that. We don’t think it should be in the rules,” Burris continued. “We think that should be negotiated between the businesses, with your approval on the back end.”

Revenue Agreements Largely Unknown

As Burris stated, no sports betting state currently mandates how GGR from mobile wagering is shared between the interactive firm and its land-based casino.

For instance, Valley Forge Casino Resort in Pennsylvania is partnered with FanDuel for its online sports betting. The internet platform is the online sportsbook leader in the commonwealth. Unlike what Arkansas is trying to do, the Pennsylvania Gaming Control Board has no mandate on how FanDuel and Valley Forge split their online sports betting income.

ARC Commissioner Alex Lieblong expressed his concern that allowing the third-party online sportsbook to control the majority of the online sports revenue could allow that entity to have unjust control over the actual casino itself.

Who is actually running the casino? The one we gave the license to, or their sub-contractor?” Lieblong asked.

Burris answered by saying Arkansas’ commercial gaming laws require that the casinos are in charge of all gambling they or their third parties operate.   

ARC did not immediately act on Burris’ recommendations that revenue sharing requirements be stripped from the state’s mobile sports betting rules.