Bipartisan Sports Betting Bill Speeding Through Wisconsin Legislature

Mobile phone. (CC0).

A bipartisan bill to legalize online sports betting in Wisconsin is speeding through the state Legislature.

After being introduced in late October, the Assembly and Senate versions of the legislation received public hearings this week, and on Thursday the Senate Committee on Agriculture and Revenue voted 5-3 in favor of advancing the bill to the Senate floor.

Under the Wisconsin Constitution, any gambling must be managed by the state’s federally recognized Native American tribes. Sports betting was first allowed in the state in 2021, but all of those bets had to be made in person at tribal casinos. The proposed new legislation would allow online sports betting using a “hub and spoke” model in which the servers running the betting websites and apps are housed on tribal land.

The structure is similar to the state of Florida’s agreement with the Seminole tribe, which owns and operates the Hard Rock Casino brand.

Proponents of the bill, including a bipartisan mix of legislators, representatives of the tribes and the state’s professional sports teams, say that hundreds of millions of dollars in unregulated online sports bets are already being made in Wisconsin, so legalizing the practice will kill the black market while providing tax revenue and consumer protections.

But critics say the Legislature is rushing through a bill that could face legal hurdles and ignoring the ways in which online sports betting can be especially harmful for people with gambling addictions.

Wisconsin’s legalization move comes seven years after the U.S. Supreme Court legalized sports betting in 2018. So far, 39 states have legalized sports betting and 32 of them have allowed online or mobile sports bets.

Wisconsin would be the first state to legalize online sports gambling since North Carolina and Vermont did so in June 2023. Only now, Wisconsin’s legislators are doing so amid a national reassessment of the country’s relationship with sports gambling. Ads for apps such as FanDuel and DraftKings are ubiquitous. Both the National Basketball Association and Major League Baseball are dealing with the fallout of player gambling scandals. Questions have arisen about the healthiness of frictionless sports gambling for the predominately young, male users of these apps.

“American culture, and American sporting culture is trying to adjust to this new widely legalized moment,” Dr. Jason Lopez, a professor at UW-Madison who studies sports media and gambling, told the Wisconsin Examiner.

If the bill is passed and signed into law, sports betting wouldn’t be immediately legalized. The state and tribes would need to renegotiate their existing gaming compacts and then those new agreements would need approval from the U.S. Bureau of Indian Affairs.

But, Rep. Tyler August (R-Walworth), said at Tuesday’s Senate hearing, the state should get moving before the illegal betting market grows too large.

“I don’t gamble, but I think it’s the right thing to do, based on some of the data that we’ve seen,” said August, whose district is right on the Illinois border, which residents can easily cross to place online bets. “This is an activity that’s not declining, it’s increasing. And I think that it’s appropriate for us to deal with this now before it gets even bigger.”

Jim Crawford, attorney general of the Potawatomi tribe, said an estimated $1 billion in illegal online sports bets were made by Wisconsinites last year. At the hearing, tribal representatives highlighted the services tribal governments could improve with the increased sports betting revenue.

“While online gaming is currently the wild west in Wisconsin with no regulations or protections for consumers,” Crawford said. “It does not have to be. This bill is a first step in ensuring that consumers will be able to have a legal, regulated and protected way of participating in this extremely popular technology.”

Sen. Howard Marklein (R-Spring Green), one of the bill’s co-authors, said he doesn’t believe the bill will put gambling addicts at further risk. But Sens. Andre Jacque (R-New Franken), Rachael Cabral-Guevara (R-Appleton) and Sarah Keyeski (D-Lodi) voted against moving the bill out of committee. Jacque said at the hearing he was worried about the recent gambling scandals in professional sports and the risk of gambling addiction.

“This would allow them to place bets by their device anywhere in the state, as opposed to going on site at a casino, at a reservation,” Jacque said. “I would say, from an opportunity standpoint, that potentially could feed more into addictive behavior.”

Noah Henderson, the director of the sport management program at Loyola University Chicago, said the frictionless nature of online sports betting is one of its challenges.

“Brick and mortar sports books provide a cooling-off period, when people are trying to chase losses, if they have to get in their car again and go to the sports book, they might realize halfway there that they’re acting impulsively,” Henderson said. “It’s easier for families to see the signs of gambling disorder or problem gambling when individuals have to leave the home, right? It’s a lot easier to hide problem gambling or a gambling disorder when it’s only on a mobile device, where there’s no absences, they’re not leaving the house more than they normally do.”

Henderson said there’s not much Wisconsin’s Legislature can do about the societal acceptance of legalized sports betting and a culture that has fully absorbed the promotion of gambling.

“It is incredibly common to see on the pre-game show, the halftime show, the best bets, the best live bets, the best parlay combinations. So I think that there’s only so much Wisconsin can do to stop that, to stop sports gambling from being the culture of young men — predominantly young men — watching sports,” he told the Examiner.

So, according to Henderson, the state is faced with a choice between legalizing and facing the broader cultural changes head-on while getting the tax revenue or hoping that prohibition disincentivizes sports betting.

“I think that there might be a bit of harm reduction in this public policy where, if we keep mobile sports wagering outlawed in this state, it’s not going to curtail the sweeping normalization of sports gambling that we’ve seen,” Henderson said. “That’s at a national level. So Wisconsin has two options, which is to not allow it, and hope that the lack of resources for legal sports gambling incentivizes young men and women not to partake in this. But at the end of the day, there’s still a market and a need … they would rather regulate and tax it for consumer protection and to grow a tax base off of it and not have sports gambling happening without being able to derive some tax benefit from it that can go towards gambling education, public schools, or whatever else Wisconsin’s government deems important.”

One organization that is against the bill is the Sports Betting Alliance, which represents the major online sportsbooks.

The bill uses the federal Indian Gaming Regulation Act as a mechanism to allow online bets in Wisconsin. That law allows tribes to license their gaming operations out to third parties so long as the tribe gets 60% of the net revenue.

Damon Stewart, an attorney for the alliance, said at the hearing that the revenue sharing requirement would make it too expensive for the most popular apps to partner with the tribes and provide their already existing apps and infrastructure. He also said he believes the law as currently written runs afoul of federal law.

“We support the goal of legal online sports betting in Wisconsin. We want to work with the tribes. We want to partner with them,” Stewart said. “But this bill will only result in limited choices for customers. There’s no national brands, no chance for all the tribes to actually participate in the market, no ability to make an effective dent in the illegal market that already exists and years of litigation that will hold up the implementation of the law.”

Stewart argued in his testimony that without the name recognition of the most popular apps, the legalization effort may not effectively kill the black market. Henderson said it’s possible for the tribes to develop their own infrastructure, but it’s easier to let the bigger companies manage the administration if the revenue sharing deal can be worked out.

“This is probably a losing endeavor for those big sports books to enter a mid-sized sports gambling market with already pretty challenging margins,” Henderson said. “Especially when sports books enter a new market for sports gambling, there’s a lot of upfront costs that come with advertising that usually these businesses and markets take several years to even become profitable with more favorable regulations in place.”

“Legislation can be amended. It doesn’t seem like this is the only formulation of it, but I think revenue sharing can definitely happen,” he continued. “I just don’t know if the 60-40 model makes sense for retailers to want to come in. Otherwise it would just be much like Florida, where tribal governments would have to build the infrastructure on their own or purchase white light label sports gambling software and pass it off as their own.”

In his testimony, Stewart called for the Legislature to slow down the process and get it right the first time.

“I want to be respectful. It’s just my perception that with a bill dropped last week, two hearings this week, it does seem to be, compared to a lot of legislation, a bit of a rush,” Stewart said. “And on the topic of this complexity, a topic of this importance that affects a lot of citizens of the state, I would hope it would be seen as reasonable as asking to let us have the chance to work with the tribes.”

The tribal representatives testifying said they were prepared to move forward without the big name apps.

“We certainly appreciate the Sports Betting Alliance’s support of the goal of this legislation,” Crawford said. “But it’s also something that is a little bit concerning to us, that they are sort of implying that we don’t have the capability of operating statewide mobile sports, which, if you’ve ever been to our facility and to our retail sports betting, you know that we do a pretty good job, and the customers are happy. And so we look forward to doing that on a statewide basis, on a regulated basis, where the consumers are protected and they are generating revenues for the state of Wisconsin that stay in the state of Wisconsin.”

Bipartisan online sports betting bill is speeding through the Wisconsin Legislature was originally published by the Wisconsin Examiner.