BetMGM's Comments (Part 1)
Dear Members of the Virginia Lottery Board:
On behalf of BetMGM, we submit the following comments on the proposed sports betting regulations. BetMGM is a U.S. sports betting and online gaming joint venture, created by MGM Resorts International (“MGM”) and GVC Holdings Plc (“GVC”). MGM is a publicly held hospitality and entertainment company and one of the oldest and largest retail and mobile sports betting operators in the country. GVC is one of the world's largest sports betting and gaming groups, operating both online and in the retail sector. Using our U.S.-licensed, state-of-the-art proprietary platform, BetMGM currently offers sports betting in Nevada, New Jersey, Colorado, Indiana, Michigan, Mississippi, Oregon, and West Virginia.
BetMGM appreciates the opportunity to provide the following comments and commends the Board’s continued efforts to foster a successful sports wagering industry in the Commonwealth. As a major sports betting operator in the country, BetMGM stands ready to be a resource to the Board. We believe that industry input is crucial to ensure the successful implementation of the Commonwealth’s sports betting law. Please feel free to reach out to us with any questions or if you would like to discuss any of the topics presented below in further detail.
Regulatory Provision: The sports betting law and the draft rules allow certain deductions to gross revenues for calculating adjusted gross revenue, including winnings, bonuses or promotions, uncollectible gaming receivables up to a certain limit, and federal excise taxes paid. (§ 58.1-4030) The sports betting law also allows deduction of losses from a previous month to the next month’s tax liability. The draft rules require submission of reports necessary to record all the components of the adjusted gross revenue calculation. (11VAC5-70-160 (F) and (I) and 11VAC5-70-250.)
Comment: We respectfully request the Department to develop standard monthly reporting requirements for each permit holder and each operator conducting sports betting on behalf of a permit holder. We recommend a reporting form that, at minimum, discloses the following metrics for Internet as well as on-site sports betting: all wagers collected by the permit holder or sports betting operator and each permissible deduction to get to adjusted gross revenues, including winnings paid out, bonuses or promotions (free play) provided to players, federal excise taxes, and any loss carryforward from a previous month. We believe such a standardized form that applies to all permit holders and operators will satisfy the statutory and regulatory provisions. It will also provide each regulated entity a uniform and consistent standard for reporting revenues and performance. Colorado’s current monthly sports betting tax return form would be a good starting point in our view. Finally, we suggest allowing permit holders and operators to use the accrual method of accounting for sports betting revenues.
Regulation: Section 58.1-4034(G)(2) of the Virginia Lottery Law prohibits a permit holder from cooperatively marketing its sports betting platform with any business issued a license under Title 4.1. The law exempts from this prohibition any motor sports facility, major league sports franchise, or casino gaming operator, provided that such facility, franchise, or operator shall be authorized to cooperatively market only on the premises of its stadium or casino gaming establishment.
Comment: We respectfully request the Department to further outline the applicability of the general prohibition and the exemption, including a definition for the term “cooperative marketing.” We also request further clarification on the manner in which a permit holder’s sports betting platform may be cooperatively marketed.
Definition of “Managerial Capacity”
Regulation: The draft rules define “principal” to include “an individual who is employed in a managerial capacity for a sports betting platform on behalf of a permit holder.” (11VAC5-70-10)
Comment: We request defining the term “managerial capacity” in the regulations. We recommend defining managerial employees subject to licensure as those who perform the function of principal executive officer or principal operations officer.
Official League Data
Regulation: Use of official league data is not required if a permit holder demonstrates that a sports governing body has not provided official league data on commercially reasonable terms, by providing the Director with sufficient information to show the availability of such data from more than one authorized source. (p. 40, 11VAC5-70-190(F)(2)(a))
Comment: We request the Department to clarify that “availability of a sports governing body’s official league data for Tier 2 bets from more than one authorized source” is a factor that shows commercial reasonableness.
Regulation: The draft rule requires membership in the Global Lottery Monitoring System (GLMS) “or other integrity monitoring association” or contract with an integrity monitoring system provider approved by the Department. (p. 41 11VAC5-70-220(A))
Comment: We request confirmation from the Department that the Sports Wagering Integrity Monitoring Association (SWIMA) qualifies as a Department-approved integrity monitoring association. SWIMA facilitates sharing among regulated U.S. sports betting operators of information related to unusual or suspicious betting activity. This information is in turn shared with gaming regulators and, where appropriate, state and federal law enforcement, as well as sports leagues.
Breach of League Rules
Regulation: The operator is required to immediately report to the Director any potential or actual breach of a sports league’s internal rules and codes of conduct pertaining to sports betting. (p. 45, 11VAC5-70-230(I)(3))
Comment: We recommend limiting the reporting requirement to actual breaches of rules or codes that are known to the regulated entity.
Sharing information regarding suspicious conduct
Regulation: A regulated entity shall promptly report to the leagues certain information relating to suspicious or prohibited conduct. (p. 46, 11VAC5-70-230(K))
Comment: We suggest changing the language to the following, to better reflect the statutory provision: “A regulated entity shall, as soon as is commercially practicable, report information relating to conduct described in subdivision I. 2. - 4. above…”