Temporary Licenses Could Create Problems for Massachusetts Online Sports Betting

• Temporary Massachusetts sports betting licenses could be a headache for the Commonwealth
• If operators are granted a temporary license, but not a permanent license, they will have to shut down operations within a year
• The Massachusetts Gaming Commission is weighing its options for the temporary licenses

Massachusetts online sports betting may have just found itself in a good old fashioned legislative quagmire.

During a Massachusetts Gaming Commission meeting, regulators struggled with the realization that operators awarded temporary online sports betting licenses would be forced to shut down within a year if not awarded a permanent online sports betting license.

Temporary vs. Permanent Massachusetts Licenses

Under an interpretation of the Massachusetts sports betting law discussed Thursday morning, Gaming Commissioners realized that the state may have to award temporary online sports betting licenses to qualified operators that apply for a permanent online sports betting license.

The Massachusetts sports betting bill caps the number of available online sports betting licenses at 15 in the state, but offers an uncapped number of temporary licenses.

Under this interpretation of the law, any qualified operator applying for a temporary license would have to be awarded one and could begin offering online sports betting to its customers. However, if the temporary license holder is not awarded a permanent license, it would have to shut down its operations in the state within a year.

Temporary licenses would cost operators $1 million. The fee would not be reimbursed if they are not awarded a permanent license.

More than 30 sports betting operators have submitted notices of intent to the state that they plan to apply for an online sports betting license. This could mean upwards of 20 operators would have to shut down if not granted one of the 15 permanent online licenses.

The Gaming Commissioners questioned how these shuttered operators would pay out future bets, how customers could withdraw funds if they cease Massachusetts operations, and if customers would even be aware that they face the risk of giving their business to an operator that could be shutdown.

The situation is “untenable,” Massachusetts Gaming Commission Chair Cathy Judd-Stein said Thursday morning.

Sports betting is still likely to be launched in late 2022 or early 2023.

Log Jam of Online Sports Betting Licenses

Fifteen permanent licenses will be available in the state, with two each for state casinos MGM Springfield, Encore Boston Harbor, Plainridge Park Casino, and one each for Suffolk Downs, and Raynham Park. The remaining seven online licenses will be “untethered” and awarded to qualified applicants by the Massachusetts Gaming Commission.

While there are technically 15 permanent online sports betting licenses available, three are likely earmarked for already existing partnerships between state casinos and sportsbook operators. MGM Springfield has a partnership with BetMGM, Encore Boston Harbor has a partnership with WynnBET, and Plainridge Park Casino has a partnership with Barstool Sportsbook Massachusetts.

Most sportsbook operators looking to gain entry into the state will likely attempt to do so through one of the seven “untethered” licenses. They could also do so through arranged partnerships with Suffolk Down or Raynham Park, but would have to work out a revenue sharing program.

More Answers Monday on Launch

The Massachusetts Gaming Commission asked its legal counsel to further clarify the temporary sports betting license law, but that could lead to sports betting launch delays.

Meanwhile, the commission will meet with online operators for a roundtable meeting on Monday. Judd-Stein said they would likely have a better idea of when a launch could happen after hearing from operators.