Place your wager: sports betting finally arrives in Massachusetts

Jenny Holaday got the news at 5 a.m. in a text from her casino’s lawyer: State lawmakers had a deal to legalize sports gambling.

But it wasn’t until later in the morning, when the Legislature formally approved the long-awaited sports betting bill, that the president of Encore Boston Harbor allowed herself to have her “little happy dance.”

“All of that sports betting money going over state lines to bet on our teams, just knowing that it’s now all going to stay home is wonderful,” said Holaday. “I cannot be more grateful to the Legislature, and this is not a sound bite.”

While Governor Charlie Baker is expected to sign the bill soon, there will be a gap of several months before betting on college and professional sports goes live in the state.

Holaday said Encore Boston, in Everett, and the other two in-state casinos that can open sports books have been told that in-person sports betting will begin before online sports betting does.

“We’ll hopefully be live by the Super Bowl, I think that’s the deadline everybody has in their mind,” said Holaday, who described the final version of the bill as “incredibly thoughtful, and really the best outcome for the Commonwealth.”

That outcome allows Massachusetts to join the majority of the country in allowing sports betting more than four years after the US Supreme Court declared states have the authority to legalize sports wagering.

Other states in the Northeast took advantage of the opportunity relatively quickly and began collecting tax revenue from bets otherwise headed to offshore operations or local bookmaking operations.

Baker was an early supporter, filing his own bill in January 2019, but lawmakers took a methodical approach before a six-member House-Senate group hammered out the final details in the waning moments of the legislative session.

The compromise came after “four years of painstaking work and research,” said joint conference committee member State Senator Eric Lesser in a statement.

“This new law will open a new industry for our Commonwealth, creating jobs and economic growth,” said Lesser. “It will also safeguard consumers and athletes with some of the strongest protections in the country while maintaining the integrity of sports.”

College sports was one sticking point between the Senate and House. The Senate wanted to prohibit betting on college games, a restriction to protect the integrity of student athletics that was lobbied for by college presidents in the state. The House was OK with college wagering, in part because of the increased revenue that comes with the popular March Madness basketball tournament.

The compromise allows college sports betting with restrictions: Bets on in-state teams are not allowed, unless the team is participating in a tournament. But bets made while a college game is underway are prohibited.

The new law includes safeguards designed to curb problem gambling and address gambling addiction.

Dave Friedman, Red Sox senior vice president, legal and government affairs, described the bill as “a model in terms of all those integrity measures, plus it really covers the full gamut of consumer protection,” pointing to sharing of data on an anonymous basis among operators to look for disturbing or suspicious trends on betting and use of official data for in-game bets to also protect nefarious actors in the stands from getting an illegal head start on proposition bets.

The Red Sox joined the Bruins, Patriots, Revolution, Celtics, and the PGA Tour in lobbying the State House for the bill, as did the three casinos and two of the online powerhouses, FanDuel and Boston-based DraftKings.

Estimates on the tax revenues the state will realize vary. But with the inclusion of college sports betting, the annual total is expected, conservatively, to exceed $35 million.

More than $141 billion has been wagered on sports nationwide since 2018, with state coffers collecting a total of $1.5 billion, according to Legal Sports Report.

Tax proceeds will be divvied up this way: 45 percent to the state’s General Fund; 17.5 percent to Workforce Investment Trust Fund; 27.5 percent to Gaming Local Aid Fund; 9 percent to Public Health Trust Fund; and 1 percent to Youth Development and Achievement Fund.

“We are thrilled that our home state has acted to protect consumers, create jobs and grow revenue in the Commonwealth,” said DraftKings CEO and chairman Jason Robins in a statement. “We are hopeful that the legislature will move to quickly pass this bill and Governor Baker will sign it into law.”

Also “thrilled” was MGM Springfield casino’s Chris Kelley, president and COO of MGM Resorts International’s Northeast Group.

“This new industry will allow Massachusetts to repatriate the revenue and jobs currently being lost to neighboring states and the illegal betting market,” said Kelley in an e-mail.

Except for Vermont, every neighboring state of Massachusetts — New Hampshire, Rhode Island, Connecticut, and New York — has an up-and-running sports betting operation.

Massachusetts will become the 36th state to legalize sports betting. A total of 30 states plus Washington, D.C., have operational sports betting.

Maine has legalized sports betting, but it’s not yet operational.

Until Massachusetts sports betting goes live, sports bettors determined to wager legally can still place their bets over their phones by driving over the state border and using a mobile app.

“It’s great to see Massachusetts getting in the sports betting game with the proper regulation on this growing industry,” said Charlie Jacobs, CEO of the Bruins, via e-mail. “We’ve been in support of sports betting, and believe there will be great benefits to state revenue and for fans to engage with their favorite teams.”

The conference committee created to hammer out a compromise also addressed significant disagreements between the chambers on tax rates and advertising bans.

Middle ground was reached on tax rates, with the Senate’s language to ban both college betting and advertising by betting operators not surviving.

The tax rate on gross sports wagering receipts from brick-and-mortar and fantasy sports operators was set at 15 percent, with online operators taxed at 20 percent.

Holaday, of Encore Boston, said the different rates were fair.

Encore Boston Harbor “is obviously a significant investment, it’s a $2.6 billion dollar facility and it’s just a lot cheaper to set up a mobile-only platform, so having a more favorable tax rate for those of us who have made the capital infrastructure investment, I think is fantastic,” she said.

Safeguards in the legislation to address gambling addiction include prominent placement of problem-gambling hotlines when opening a gambling app. Regulators will keep an eye out for deceptive, misleading, and untrue advertising; ads must be targeted to adults over the age of 21; and there will be no pop-up ads or text messages from operators.

Amid all the gushing from the state and private entities, disappointment could be heard in the statement from Marlene Warner, executive director of the Massachusetts Council on Gaming and Health, that the guard-rails are not strong enough.

“Legalizing sports betting brings an urgent need for additional protections,” said Warner. “If signed into law, more Bay Staters, many of them new players, will start gambling online. Innovative approaches to responsible gambling remain critical for encouraging safe play and offering support to those who need it.”

Horse and greyhound racing sites, including simulcast-only, are also eligible to accept sports bets.

For now, there will be no sports-betting kiosks in restaurants, bars, small businesses, and convenience stores, but a study will be commissioned to explore the pros and cons of expansion.

Up to seven licenses, or “skins,” will be granted for online operators. That list is expected to include at least DraftKings, FanDuel, BetMGM, WynnBet and Caesars. Online operators do not have to be associated with, or “tethered” to, a Massachusetts property in order to apply for a license.

Applicants for a temporary license will be charged $1 million, with a $5 million fee due for those granted five-year licenses.

Owners of teams or skins, athletes, referees, coaches, and employees of teams, especially those with knowledge of confidential information, are banned from placing bets on their sports.

For online and mobile betting, funds for bets cannot be linked to credit cards — a measure implemented to ensure that consumers are wagering with funds on hand and not borrowing.

Background checks will be conducted on current and future employees of operators.

Betting on high school and youth sports will not be allowed.

In-game betting — as well as parlays, money line, over-under, proposition, and straight bets — will be legal.