Nebraska committee hears pros, cons of digital betting expansion

Nebraska’s Digital Betting Debate Intensifies: Lawmakers Hear Diverse Perspectives

On March 10, 2024, Nebraska’s legislature convened for its inaugural hearing focused on the legality of digital sports betting, a session marked by over three hours of passionate testimony without any conclusive vote. The general affairs committee welcomed voices from all corners of the debate, underlining the complexity of the issue at hand.

The widespread consensus among both proponents and opponents was the acknowledgment of an already flourishing black market for online wagering in Nebraska. Advocates for legalization argue that formalizing digital betting would equip law enforcement with the necessary tools to combat illegal activities effectively. Conversely, critics contend that legalization would merely exacerbate the existing gambling culture, leading to a surge in participation.

Retail sports betting has been operational in specific locations in Nebraska since 2023, yet efforts to incorporate digital betting have faced hurdles, including a failure to advance during a recent legislative session. The recent committee hearing primarily revolved around LR20CA, a proposed constitutional amendment aimed at putting the digital betting legalization decision to voters. This amendment is crucial, as its passage is a prerequisite for any proposed regulatory framework to be enacted into law.

During the committee session, evidence revealed a significant divide in opinion: only three proponents, including representatives from leading companies such as BetMGM and DraftKings, stood against 51 opponents. It’s noteworthy that not all opponents were present in person, but their numbers echoed the broader sentiment surrounding digital betting regulations.

Nebraska’s Historical Landscape: A Look at Gambling Progression

The journey toward legal sports betting in Nebraska commenced with a voter-approved gambling referendum in 2020, though the inclusion of sports betting was initially ambiguous. Ultimately, lawmakers clarified that in-person sports betting would be permissible. The first bets were accepted at the WarHorse Casino Lincoln in June 2023, marking a significant milestone in the state’s gambling landscape. This casino, along with others in the region, is operated by Ho-Chunk Inc, the commercial arm of the Winnebago tribe.

The latest expansion initiative seeks to permit six digital betting platforms, contingent on their connection to established land-based casinos, with a stipulation allowing only one platform per location. However, several industry stakeholders have advocated for an increased number of platforms, arguing that a competitive market would benefit consumers. A representative from Underdog passionately asserted that permitting three platforms per location could elevate market dynamics.

The discussion consistently returned to border states where sports betting has been legalized. Iowa, in particular, was a focal point, with geolocation services like GeoComply identifying a cornfield just across the Nebraska border as a burgeoning betting hotspot. GeoComply’s senior VP for compliance, Lindsay Slader, highlighted a staggering 63% spike in geolocation checks in Nebraska in early 2024, with nearly 4 million attempts during the NFL season.

Ho-Chunk’s Perspective: Integrating Local Interests

Lance Morgan, CEO and president of Ho-Chunk, voiced his support for further gambling expansion, emphasizing the dominance of a few major operators within the national market, which he referred to as an “oligarchy.” He articulated the necessity for local entities to engage proactively in the evolving digital betting sphere rather than remain sidelined. Morgan insisted that should digital sports betting be legalized, his organization is poised to partner with a major betting entity to strengthen Nebraska’s stake in this lucrative market.

Contrasting arguments have emerged about the anticipated economic benefits. Morgan projected that Nebraska could generate approximately $32 million annually in tax revenue from digital betting, based on a proposed tax rate of 20%. However, a fiscal analysis of LB421, the enabling legislation, estimated a more conservative annual revenue of $19 million beginning in FY 2027.

For context, West Virginia, which shares similar demographics and lacks prominent professional sports teams, has reported $25.9 million in tax revenue from digital betting since its inception in September 2019, leveraging a 10% tax rate. In Kansas, where digital wagering went live in September 2023, the state collected $26.5 million with a comparable tax rate, underscoring the potential revenue implications that arise from the proposed legislation in Nebraska.

Concerns of Gambling Addiction: A Critical Perspective

Opponents of digital betting raise significant concerns regarding the potential for increased gambling addiction. Les Bernal, representing Stop Predatory Gambling, characterized legal betting as an “epic policy failure,” arguing that states that have legalized gambling often see a surge in addiction rates and social issues that overshadow the economic advantages. Local residents echoed these sentiments, noting insufficient property tax relief linked to gambling revenue despite the existence of legal betting options.

In 2024, Nebraska generated $29 million from land-based gambling, with only $942,000 attributed to sports wagering. While $20 million was allocated for property tax relief, the anticipated impact on tax bills has yet to materialize, leading to public skepticism regarding the promised benefits of legalized betting.

The Case for Betting on College Sports: A New Legislation Proposal

Another topic of discussion was LB 63, legislation aiming to lift the ongoing retail ban on betting on Nebraska college teams at home games—a distinction that makes Nebraska the only state with NCAA Power 5 teams to maintain such restrictions. Lynn McNally, CEO of Nebraska Horsemen and director of government relations for WarHorse Casinos, argued that changes in NCAA regulations allow athletes to benefit financially through name, image, and likeness (NIL), reducing the likelihood of compromised integrity in college sports.

Critics of this legislation warn that permitting betting on home games poses a risk to athletes and may contribute to increased addiction rates. However, bill sponsor Tom Brandt asserted that allowing this type of betting could enhance state tax revenue by an estimated 25%, further complicating the already multifaceted debate surrounding gambling laws in Nebraska.