Missouri draft wagering regs: Fees, fights and more

iGB has acquired the draft regulations for sports betting in Missouri, recently submitted to industry stakeholders for review. Here is an in-depth analysis of the proposed framework.

The draft regulations released in Missouri predominantly reflect industry standards. Notably, they specify licensing fees that vary significantly, ranging from $10,000 for official league data providers to $500,000 (£401,000/€479,000) for independent mobile platforms. While essential definitions are provided, some terminology remains vague, leaving room for diverse interpretations.

As of January 27, an updated version of the draft was presented to Governor Mike Kehoe for his endorsement. The Missouri Gaming Commission (MGC) has indicated that they aim for a June launch date for sports wagering. However, the specific draft regulations provided to the governor have not been made publicly accessible.

Once the governor signs off on the draft regulations, a 30-day public comment period will commence. Following this phase, the MGC may make amendments based on the feedback received. The application process for prospective operators will initiate upon final approval of the regulations.

Availability of Stand-Alone Licenses

The new regulations permit the issuance of two stand-alone mobile licenses, which will attract higher fees than tethered licenses. These licenses are expected to be sought after by wagering companies without physical locations or market-access partnerships in Missouri.

Interestingly, the draft does not clarify the potential number of skins (i.e., individual betting platforms) that each casino company may be allotted. The legislation suggests that companies will receive one skin per entity rather than per location. Currently, six casino companies operate Missouri’s 13 riverboat casinos, with notable ownership stakes from Caesars and Penn Entertainment (three each), as well as Affinity Interactive, Boyd Gaming, and Century Casinos (two each) and Bally’s (one).

Prevailing interpretations have indicated that the phrasing in the legislation grants land-based casino entities one digital license each, consolidating the rights to operate mobile platforms accordingly. Before the November election, the MGC clarified to iGB that their interpretation allowed for a separate mobile license for each excursion gambling boat within the state.

Timeline Uncertainties

The draft regulations do not specify the opening date for the application window or a solid timeline for the wagering launch. Furthermore, direct mobile licenses might operate on a different schedule altogether. The regulations stipulate that when direct mobile licenses become available, appropriate notifications and applications will be published by the MGC.

Evaluation criteria for bids concerning direct mobile licenses will include factors such as their potential to generate and maximize state revenues, as well as the capacity to enhance platform customer bases. This evaluative language aligns with practices observed in states governed by lottery commissions, reminiscent of New York’s similar approach in their bid evaluations.

Moreover, the proposed competitive bidding process for license renewals is set to occur every five years, suggesting that current license holders will need to reapply rather than merely renew their licenses.

Breakdown of Licensing Fees

The proposed regulatory framework establishes the following licensing fees:

• Retail license: $250,000 application fee and $250,000 renewal fee (valid for five years);
• Mobile license: $500,000 application fee and $500,000 renewal fee (valid for five years);
• Sports wagering supplier license: $50,000 application fee and $10,000 renewal fee (valid for two years);
• Official league data provider license: $10,000 application fee.

The MGC has outlined an innovative fee structure for official league data providers, akin to regulations in Illinois. This includes a sliding fee scale where providers with sales up to $500,000 would pay $10,000 annually, while those exceeding $2 million would owe $150,000 annually.

Stakeholders have described this approach as effectively functioning as a “tax” on official league data. Notably, other licensing fees—excluding retail or mobile licenses—will be non-refundable as per the draft.

Additionally, an unusual requirement mandates that operators acquire and install all necessary hardware and software enabling remote monitoring of sports betting activity by the MGC. Although not unique to Missouri, this stipulation may face scrutiny during the public comment phase.

Removal of Online Conduct Regulations

In response to stakeholder feedback, the draft regulations initially included requirements for operators to interrupt or report “obscene activity” or “violent” acts among online bettors. 

The draft stipulated that licensees must “prevent or suppress” and “immediately report” unlawful behavior during digital platform usage, inclusive of any fights or obscene activities. However, the MGC confirmed on February 17 that this section has been excluded from the draft sent to Governor Kehoe for approval.

While managing such behaviors is relatively straightforward in physical sportsbooks, similar enforcement within a digital environment presents significant challenges. Many online betting platforms lack chat functionalities, making it difficult for operators to monitor customer interactions or actions comprehensively.

Clarification Needed in Regulations

Several aspects of the draft regulations contain vague language that may benefit from refinement. Here are a few areas that raise questions:

Section CSR 45-20.040, Suitability for Licensure: Section 3(D) permits the MGC to revoke licenses if an applicant or any of its “key persons” has ties to individuals who have faced gaming-related license revocations. However, the term “affiliate” remains undefined.

Section CSR 45-20.040, Suitability for Licensure: Section 4(A) allows the MGC to deny licenses based on criminal convictions, but the criteria for what constitutes a disqualifying offense may be overstretched. Could minor infractions, such as traffic violations or nonviolent misdemeanors, potentially lead to license denial?

Ambiguities in Regulation Language

Section CSR 45-20.040, Suitability for Licensure: Section 4(L) references “moral character,” “notorious,” and “unsavory reputation” as possible grounds for denying a license. Lacking specific definitions, this leans heavily on subjective interpretation. For example, public perception of individuals such as Barstool Sportsbook’s founder Dave Portnoy could vary widely, complicating regulatory decisions.

The section further articulates that applicants connected socially or professionally with individuals of “notorious or unsavory reputation” may be denied licenses, raising further questions about the criteria and definitions in practice.

Section CSR 45-20.040, Suitability for Licensure: Section 4(M) provides the MGC authority to deny applications for individuals who furnish “false or misleading information.” To enhance precision, stakeholders recommend adding the term “knowingly” before “false.”