What would it look like to legalize sports betting in Vermont?

Lawmakers this session are taking a serious look at a bill that would legalize sports betting in Vermont. Why are they doing this and what would the system look like?

Vermont Public’s Mitch Wertlieb spoke with senior political correspondent Bob Kinzel to find out what legalized sports betting in Vermont would look like. Their conversation below has been edited and condensed for clarity.

Mitch Wertlieb: In the last five years, 36 states have authorized sports betting. What precipitated this and why is Vermont seriously considering joining this group?

Bob Kinzel: The floodgates to legalize sports betting really opened up in 2018 when the U.S. Supreme Court struck down a law that prohibited this activity. And since then, dozens of states have legalized sports betting. Vermont is the only state in the Northeast that still bans it.

St. Albans Rep. Mike McCarthy is the chair of the House Government Operations Committee, and that's the panel that's initially looking at this bill.

“I think that most of us acknowledge that there are many Vermonters — we heard testimony, there are thousands of Vermonters — that are currently going just over the border or at least digitally going just over the border to place bets, and that that's a loss of potential revenue for the state,” McCarthy said.

This fall a special commission studied this issue and concluded that it's not if Vermont should legalize sports betting, but when.

What are some of the major decisions that need to be made before sports betting could be legalized in Vermont?

I think the biggest decision is how sports betting is controlled and regulated. Now, some states license the betting companies and charge them a fee to operate. Others have a state regulatory system in place. Wendy Knight is the commissioner of the Department of Liquor and Lottery in Vermont. She also served as the chair of the special commission this fall. She says the commission strongly recommends the state control model.

“We’re a control state for liquor,” Knight said. “We felt that we were better served in terms of creating that better consumer experience, the player experience, as well as those consumer protections by being a control model.”

There are a couple of other key points. The bill would put sports betting under the authorization of the Liquor and Lottery Department. It would also limit the number of operators to between two and six to create a competitive marketplace.

And there's a provision in the bill to have the businesses pay a rather large share of their net profit to the state — that's after all the winnings have been paid out and some of those expenses have been deducted from the overall gross betting amount. It's likely that the businesses could pay a revenue sharing percentage on their net profit of around 40% to 50%. And under that scenario, the state could receive anywhere from $3 million to $12 million in new revenue in the first year.

Okay, Bob, but here's something I don't get. Since all of these sports betting companies are operating on a national basis, why can't Vermonters just pull out their smartphone and place their bets on a smartphone right now, for example?

Mitch, I had exactly the same question. The answer led me to a term that I'd never come across before and I love it when that happens. The term is geofencing. Have you ever heard of that?

I have not. Please explain.

Well, as Commissioner Knight explains, there's technology available that only allows a person to place a sports bet in a state that has already legalized it.

“You can go to another state that's legalized and download the app and set it up in an account. It will not work in Vermont,” Knight said. “And then if you come to Vermont, and you attempt to access that app and bet it won't allow you to do that.”

Right now Vermonters can travel to New Hampshire, download a sports betting app and place bets while they're in New Hampshire. But it won't work when they cross the border back into Vermont. And if someone from New Hampshire has the sports betting app, it'll work fine in New Hampshire, but it won't work if they visit Vermont.

In the old days, sports betting meant, you know, picking which team was going to win a game. Maybe you'd make an extra wager on the spread, meaning by how many points you think one team will win by — fairly simple concept. But how have the betting options expanded over the years?

It is unbelievable how these options have changed. You can still bet on the outcome of the game. But you can also bet on many of the events that take place during the game. It's something known as proposition betting: For instance, how many foul balls will be hit during the third inning of a Red Sox game? How many penalties will the Bruins receive in the first period? Heck, you can even place a bet on the outcome of the coin toss at the Super Bowl.

Tails, always take tails.

Tucker Anderson at the Legislative Council described it this way: “Consumer protection in this area faces some challenges because of what the product is,” Anderson said. “You're selling an agreement that if a contingency happens, you win or you lose. You're selling an opportunity.”

I'm wondering if folks are concerned that legalizing sports betting in Vermont might lead to many more people experiencing gambling problems and addictions that come with them?

There definitely are those concerns. That's why the legislation will target a certain amount of the new revenue to problem gambling programs. Rep. McCarthy says this is an important part of the bill and will provide critical funds that are not available now.

“We know that there are people who suffer from addiction and that gambling is one of those areas where we need to make sure that we at least have a good portion of the revenue going to do prevention of problem gambling and that addiction, and also, you know, treatment and support for folks who are already experiencing that kind of harm,” McCarthy said.

Mitch, I think the new cannabis retail marketplace law is a model for this approach. About a third of the new state excise tax on cannabis products is targeted to youth prevention programs.

What’s the outlook for this bill?

I think backers of the bill would like to see it get through the House this year and then the Senate could consider it next year, because it could be tough to make it all the way through the legislative process in one year. I should also mention that it does have the strong support of Gov. Phil Scott.

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