Mississippi task force issues online sports betting report

Jackson Mississippi Capitol
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The Mississippi Mobile-Online Sports Betting Task Force has submitted its final report to the state legislature regarding the idea of expanding sports betting in the state from retail to online.

Most of the 99-page report gives a comprehensive lay of the land when it comes to US sports betting, offering up just about every variant of model states have come up with so far.

Mississippi task force looked at a range of online sportsbook tax rates

When tasked with projecting the revenue impact of online sportsbook expansion, the task force took a look at a few different options. The report looked at taxing online betting at rates of 8%, 12%, and 15%, noting that sports betting tax revenue would increase tax revenue across five years by $12.6 million, $15.9 million, and $18.6 million respectively. These numbers do not factor in the potential reduction in the size of the retail market.

The group also looked at adopting the Tennessee model of taxing handle rather than revenue, suggesting a 1% tax would generate $13.5 million in tax revenue while 2% would generate $27.1 million annually.

Retail sportsbook and casino cannibalization argued by both sides

Concerns about cannibalizing the retail market are expressed throughout the report. It is true that, in most states, over 90% of wagers are placed online as opposed to in-person, most states rolled out online and retail wagering nearly concurrently, making it difficult to judge the impact on retail’s potential.

In letters from members of the task force included in the report, individuals made a range of arguments on just how dire the impact on the retail sector would be.

Harrah’s Gulf Coast SVP and General Manager Jonathan Jones submitted data from Iowa and Maryland to show that the delayed launches of online betting had minimal impact on retail wagering volume.

“In states that launched retail before online the retail books’ handle remained relatively stable,” he wrote.

Island View Casino Resort’s Michael Bruffey argued that out-of-state operators would be the overwhelming beneficiaries of online casino expansion.

“If statewide online sports betting is passed in Mississippi, Island View will lose its retail sports betting business and the ancillary revenue and jobs that go along with it,” he stated. He also argued strongly against major outside operators like FanDuel and DraftKings coming in the state given they will likely comprise 70% of the market. He went so far as to note in a footnote that the state’s DFS industry is allowing companies like these to establish large databases and contribute negligible tax revenue, so regulated fantasy sports should be eliminated.

Casino jobs front of mind for the task force

Currently, retail sportsbooks in the state operate 110 full-time employees and another 36 part-time workers. The report did note that online betting expansion would likely not add to this total and, if anything, could shrink the number of employees.

Foundation Gaming & Entertainment CFO Donn Mitchell offered three arguments why online betting would not benefit the state, including that it will create no new jobs. He also suggested it wouldn’t spur additional capital investment in the state casino industry, nor would it grow Mississippi tourism.

DraftKings Director of Legal and Government Affairs Kevin Cochran focused some of his argument on the fact that current Mississippi residents are traveling to neighboring states like Tennessee and Louisiana to wager already and this is lost revenue the state should recapture.

What also looms over this discussion is the same concern expressed at an October task force meeting that this is merely the first step in rolling out online casino across the state. However, there could be some legal issues with that kind of expansion, as gambling is currently handled on a county-by-county basis in the state.

Now that the report is delivered, it is up to the Mississippi legislature to act. The 2024 session begins on Tuesday, Jan. 2.