Oregon Lottery Preparing Ground for Legal Sports Betting

Following the May Supreme Court decision in Murphy v. NCAA, several states, including New Jersey, Delaware, West Virginia and Mississippi, have implemented fully legal sports betting within their borders. It appears that Oregon is set to become one of the next entrants into this field with new sports wagering options to be offered shortly by the Oregon Lottery.

New Mobile App Released

On Sept. 11, a new app from the Oregon Lottery was unveiled in the Apple app store. It is through this platform that lottery leaders intend to provide sports betting services, perhaps as soon as November. The focus on mobile is an attempt to appeal to a younger crowd as recent surveys suggest that while lottery sales in the state are strong in the above-65 segment of the market, younger people have little interest in the Lottery’s products. Matt Shelby, the information manager for the Oregon Lottery, gave an interview with LegalSportsReport.com in late September in which he said:

“Overall we see sports betting as an opportunity to increase our player base and sustainably grow our revenue… The app coincides with the development of a sports betting strategy — we see opportunity for these two efforts to intersect.”

Governor Kate Brown appears to be on the same page as Shelby. Way back in June, a spokesperson for the governor explained:

“Governor Brown is open to exploring sports betting as part of the Oregon State Lottery portfolio…The future of commerce is through mobile platforms, and the lottery needs to stay relevant in that world.”

Oregon Already Has Sports Betting Experience

In 1987, the Oregon Lottery debuted a new game called “Sports Action.” It allowed participants to predict the results of NFL and NBA matches. Customers who won their parlays were able to collect winnings on their tickets.

Because this product was already in existence at the time of the passage of the anti-sports betting PASPA bill in 1992, Oregon was grandfathered in and allowed to continue offering Sports Action. Nevertheless, the state ceased selling Sports Action tickets in 2007 due to pressure from the NCAA, which threatened to stop holding post-season games in Oregon unless this type of gambling was ended.

The Murphy Decision and Its Effects on Oregon

It’s important to note that the PASPA exemption won by Oregon in 1992 applied only to those forms of sports wagering that it already possessed at the time of passage of the legislation, i.e., solely Sports Action tickets. Oregon was allowed to modify and regulate Sports Action but could not introduce new forms of betting on sports.

If this sounds like a very vague guideline, it is. Indeed, the fact that certain states were exempted to various degrees from the full force of the PASPA prohibition, combined with the uncertain extent of these dispensations, was one of the reasons that Justice Alito, writing for the majority, found PASPA to be unconstitutional in Murphy v. NCAA. Murphy ended the federal ban on state-regulated sports betting. However, in states that had previously proscribed sports betting on their own, these rules remained in place. The Supreme Court’s writ only voided PASPA, not any other relevant statutes that were in force separately.

Quite a few sports betting bills were moved through the legislative process in various state capitals in the months thereafter. Salem was not one of these capitals; however, the Oregon Lottery contends that it doesn’t require any authorizing legislation to begin experimenting with sports betting. The permission that it received to sell Sports Action tickets back a decade ago was never rescinded, and so the organization feels that it can begin accepting bets on the outcomes of single games any time that it wants.

Revenue Forecasts

The Oregon Lottery has conducted an analysis of the possible revenues that it could see from sports betting. By the third year of operation, online sportsbooks are expected to contribute $61.4 million per year. Retail sportsbooks, which basically means authorized lottery distributors who will also handle sports betting, will bring in $46.1 million per annum. And Sports Action, assuming it’s reintroduced, is projected to realize anywhere from $6.9 million to $15.2 million annually.

Adding these numbers together, we find that the Oregon Lottery believes that sports betting could be worth more than $120 million a year.

Other Stakeholders Present

Despite the Lottery’s contention that it can proceed suo motu with its own plans for sports gambling, there are other parties whose cooperation will be essential. The two most important are the lottery retail outlets and the state’s gaming tribes:

– There are nine tribal casinos in Oregon, and their legal status is governed by compacts signed by the state and the tribes. Any move to introduce sportsbook wagering without the agreement of the tribes could cause the state to be in violation of its obligations under these compacts – with unknown, but possibly expensive, legal repercussions.

– Retail partnerships are the lifeblood of the Oregon Lottery. Anything that retailers view as too risky or disruptive may lead to their abandoning the Lottery, possibly negating any revenue gains from sports betting.

The Oregon Lottery will thus have to tread carefully. Perhaps it would be best served by attempting to cobble together some kind of consensus enshrined in law before stepping into the tempting arena of sports betting.

No Framework in Place

According to Farshad Allahdadi, the Lottery’s director of gaming, his organization does not require further state legislative action as it is all authorized federally after SCOTUS struck down PASPA earlier this year. Unfortunately for the Oregon State Lottery, it is likely to still find its operation challenged moving forward unless it first receives approval from the legislature. At the moment, however, there is no legal framework in place for sports wagering regulation and taxation, either online or at the state’s casinos.

As mentioned, without support from American Indian tribe casino owners, retailers, as well as horse racing tracks and other interested parties, any legislation is unlikely to succeed. Furthermore, political enthusiasm for sports betting regulation in Oregon looks rather weak at the moment. In other words, while the Oregon Lottery may believe it does not requires any additional authority before launching sports betting, it will at least feel more comfortable securing some legislative back-up before attempting to move ahead. In the meantime, no progress on the matter is expected before the mid-term elections due to take place on Nov. 6.