In October 2018, I wrote an article for the Oklahoma Bar Journal examining the possibility that Oklahoma could legalize sports betting. A little under four years later, here we are asking the same question. May 2022 marked four years since the Supreme Court overturned the Professional and Amateur Sports Protection Act (PASPA), thawing a 25-year freeze on legal sports gambling that kept the activity principally confined to Nevada.1 In rapid succession, more than 35 states and Washington, D.C., have legalized sports betting since the Supreme Court struck PASPA down.2 Oklahoma is not among the states on that list. Despite what you might think if you have recently watched a sporting event on television, which now seems to have betting content built in, Oklahoma does not have legal sports betting yet.

It has not been for lack of trying that sports betting is not yet permitted at casinos throughout the state; in fact, there have been several bills introduced that would allow sports betting. Most recently, District 37 Rep. Ken Luttrell introduced legislation in 2022, but the bill gained little traction, much like previous efforts.3 Prior to Rep. Luttrell’s bill being introduced, several Oklahoma tribes agreed to new compacts that would have permitted sports wagering. These compacts were ultimately rejected by the Supreme Court when Senate President Pro Tempore Greg Treat and House Speaker Charles McCall filed suit over the governor’s authority to enter into them.4

Despite Oklahoma’s inability to authorize sports betting, many neighbors have been able to cross the proverbial goal line, with New Mexico, Colorado, Arkansas and Kansas all having legalized sports betting over the last four years.5 New York’s launch has been the most prominent so far, with a whopping 51% tax rate generating more tax revenue in under half a year than any other state regardless of the launch date.6 Even with New York’s success in generating revenue, not all states have chosen to tax sports betting operators at such high rates. Kansas, for instance, recently passed a law that taxes sports betting revenue at 10% and projects to bring the state between $1 million and $5 million in annual revenue.7The different approaches taken by Kansas and New York highlight a unique aspect of sports betting expansion around the country. While there have been some similarities, each state has chosen its own path despite the ubiquity of uniform laws on virtually every subject under the sun. For better or worse, each state has largely charted its own path forward on sports wagering regulation.

DIFFERENT PATHS FORWARD

Each state has chosen its own path forward, resulting in vastly different rules, tax rates and even means with which people can wager. Most of the disparities regarding the types of wagers that are permitted center around the permissibility of wagering on college sports.8 College sports have long been viewed as especially vulnerable to bad actors looking to fix games because of the lack of direct compensation that college athletes receive.9 As a result of what is likely most charitably described as a misunderstanding, a number of states have elected to ban wagering on in-state college teams or games held within the state, believing this will prevent fixing from happening. This belief is largely aspirational, as the vast majority of betting-related match-fixing takes place in unregulated markets as opposed to legal markets, where authorities keep an eye on betting activity.10

States have also taken divergent paths when establishing their regulatory goals. Some states, at least initially, launched with the objective of recapturing bettors who had been wagering in the untaxed, offshore markets for years, hoping that by bringing those bettors back into the regulated market, even at low tax rates, the state would ultimately benefit.11 While some states are continuing forward with this philosophy explicitly or implicitly, other states have chosen an approach that seeks to maximize revenue for the state.12 A Georgia bill, which did not pass, called for the allocation of licenses in a manner that maximizes state revenue.13 New York has successfully introduced a regulatory scheme with nine licensees who each paid a $25 million licensing fee and in return, provide the state with 51% of revenue without an allowance for the deduction of promotions, which has been permitted in other high-tax jurisdictions.14 From a revenue-generation perspective, it is difficult to deny the success of higher tax rates, though it is not easy to decipher whether those jurisdictions have been less successful in recapturing untaxed dollars than those states with more operator-friendly licensing schemes.15

By far the biggest predictor of revenue is whether states have allowed online, more commonly known as mobile wagering, or if they require bettors to present themselves in person at a casino or kiosk to place wagers.16 While most states that have chosen to regulate sports betting have allowed bettors the ability to wager from the comfort of their own homes or anywhere else, a handful of states like New Mexico, Montana, North Dakota and South Dakota have restricted betting to wagering at physical casino properties.17 Mississippi has a slightly more permissive system, referred to colloquially as “Mississippi mobile,” where bettors can bet from their phones as long as they are actually on casino property, limited by geofencing.18 The decision to confine wagering to on the premises is sometimes driven by a belief that bettors will be required to enter a property and thus will increase their spending at other aspects of the facility, and sometimes the decision is dictated by the nature of tribal gaming compacts.19 Even in states that allow mobile wagering, some like Nevada require that patrons present themselves in person at a casino or designated location and show proof of identification before they are able to set up a mobile sports betting account.20 During the COVID-19 pandemic, states like Illinois moved away from requiring in-person registration and eventually permanently abolished the process in favor of online identity verification.21

MODELS OF REGULATION

Sports gambling regulation around the country has taken a few different approaches. These have been largely dictated by existing gaming infrastructure and local politics. The model that has become most prominent is a largely open model, where state law authorizes or delegates to a regulatory agency the ability to issue a number of licenses for qualified applicants. Those applicants pay a licensing fee and complete the necessary background checks and clearances before they are issued a license. Once a license is issued, companies pay a percentage of their revenue to the state.22 This model relies on a gaming control board or commission to oversee the operators in the state.23

Other states have chosen to delegate regulatory authority to their lottery regulators. This is the case in states like Oregon and Rhode Island.24 In a number of states where the lottery is regulated, states have chosen to contract with a single provider; however, states like West Virginia and Tennessee have a competitive market with numerous operators overseen by the states’ respective lotteries.25 A third regulatory model, and the one that seems most likely for Oklahoma, involves regulation via tribal gaming compact. However, tribal gaming regulation comes in several varieties as well. States like Michigan have entered into compacts with the state’s tribes to offer on-property sports betting, but as a result of uncertainty surrounding the Indian Gaming Regulatory Act (IGRA), tribes in Michigan agreed to be regulated as commercial operators to offer mobile wagering.26 Florida has attempted to authorize mobile wagering via compact with the Seminole Tribe of Florida; however, the matter is currently on appeal at the District of Columbia Court of Appeals after the U.S. District Court for the District of Columbia held that IGRA did not permit mobile wagering.27 Local politics have driven the specifics of many of the regulatory models and may serve as a predictor for how sports betting might be regulated in states that have yet to authorize the activity, like Oklahoma.

SPORTS BETTING IN OKLAHOMA’S FUTURE

Sports betting’s arrival in Oklahoma is likely inevitable. In fact, even states like Tennessee, which had no regulated gaming beyond the lottery, legalized sports betting, a sign of how attitudes about sports betting have changed over the years.28Oklahoma’s path, however, like other states with significant gaming infrastructure, is complicated by existing stakeholder relationships. There has been a significant amount of tension in Oklahoma surrounding existing gaming compacts and the governor’s failed challenge to their automatic renewal on Jan. 1, 2020.29 After efforts to move forward fell apart, the Comanche and Otoe-Missouria tribes entered into new 15-year gaming compacts with the governor.30 The compacts would have permitted each tribe to construct three new facilities and offer in-person sports betting.31 In June 2020, those compacts were approved by the Department of the Interior after a 45-day window to reject the compacts lapsed.32Ultimately, however, the Oklahoma Supreme Court held that the new compacts approved games that were not permitted under Oklahoma law before, concluding:

The tribal gaming compacts Governor Stitt entered into with the Comanche Nation and Otoe-Missouria Tribes are invalid under Oklahoma law. The State of Oklahoma is not and cannot be legally bound by those compacts until such time as the Legislature enacts laws to allow the specific Class III gaming at issue, and in turn, allowing the Governor to negotiate additional revenue.33

With the Oklahoma Supreme Court’s decision, Oklahoma was back to square one with respect to the prospect of sports betting. While it appears the cool relationship between the governor and the members of the Oklahoma tribal gaming community may make a compact amendment allowing sports betting a distant hope, it is possible, given what we know about Oklahoma, to guess what sports betting might look like at a yet to be determined point in the future.

Oklahoma has 38 federally recognized tribes, of which 35 have entered into gaming compacts.34 Oklahoma’s tribes operate more than 130 gaming facilities across the state.35 Those gaming facilities would most likely serve as the base for sports betting in the state. While there had been some academic debate about whether IGRA permitted tribes to offer mobile wagering if a state agreed to such an offering, a recently signed compact between the Seminole Tribe of Florida and Florida Gov. Ron DeSantis was overturned after a federal judge held that IGRA does not allow for mobile wagering.36The Seminole Tribe of Florida compact had attempted to overcome IGRA’s requirement that authorized gaming only take place on tribal land by placing servers that would process sports bets on tribal land and designating that those bets would be deemed to occur on tribal land.37 This may sound like a clever ploy, but federal Judge Dabney Friedrich rejected the suggestion that all of the Sunshine State could be brought within IGRA by the location of gaming servers, and at the same time, the compact openly acknowledged that players located within the state would not be on tribal property.38 An appeal at the District of Columbia Court of Appeals is pending.

A favorable appeal could open the gate for Oklahoma to offer mobile wagering, as would an act of Congress modernizing IGRA. A bill was actually introduced in 2019 by one-term New York Rep. Anthony Brindisi that would have modified IGRA to allow for mobile sports betting under the statute, but the legislation did not gain traction.39 Despite the failed efforts in 2019, there have been rumors of efforts to reintroduce a similar piece of legislation, though that is yet to happen. A negative ruling at the District of Columbia Court of Appeals and subsequent cert. denial, however, could spur Florida’s congressional delegation to push for federal action. Without federal action or a reversal at the District of Columbia Court of Appeals, or ultimately the Supreme Court, another option would be to license mobile wagering on a commercial basis outside of the IGRA framework. This is an approach taken in numerous states, where there is both a tribal gaming presence and a commercial gaming presence. In Oklahoma, however, this could mean opening Pandora’s box by allowing in commercial operators, which might not be desirable given that sports betting is a low-revenue product, with sportsbooks historically holding only about 5% of the amount gambled.40

Even though many states with dollar signs in their eyes have viewed mobile sports betting as the best approach, Oklahoma might be an anomaly in that respect as the interests of the state and the tribes within the state may be better served by an in-person model. With gaming properties across the state and 35 compacted tribes potentially competing in a mobile environment, it may mean the biggest tribes win out either through their own name recognition or through partnering with national brands. In an in-person model, each tribe would have its own properties, and patrons would be required to enter the facility to place a wager. In many ways, sports betting in Oklahoma could look like a fancy new amenity formany properties, a new way of bringing customers through the doors.

While sports betting coming to Oklahoma is likely inevitable, the timeline for its arrival is questionable. Sports betting is not a panacea for revenue woes. The low margin on sports betting as a gaming product has given the Oklahoma tribes the ability to choose when the time is right to negotiate for expanded gaming that includes sports betting. With brick-and-mortar sports betting being the most likely model as opposed to mobile betting, the product is likely to be a bonus to gaming properties as opposed to a high-margin product like slot machines. While the exact arrival date of sports betting has an unknown timeline in Oklahoma, it seems certain that sports betting will be here in the next few years.

ABOUT THE AUTHOR

John T. Holden is an associate professor in the Spears School of Business at OSU. He earned his Ph.D. from Florida State University and his J.D. from the Michigan State University College of Law. Mr. Holden’s research is focused on gaming policy and sports corruption. He can be contacted atjohn.holden@okstate.edu.

1. Murphy v. NCAA, 584 U.S. _ (2018); 138 S. Ct. 1461, 1484–85 (2018) (holding that while Congress is free to regulate sports betting directly, it cannot commandeer state legislatures to maintain laws prohibiting the practice. “PASPA regulates state governments’ regulation of their citizens. The Constitution gives Congress no such power.” (Internal citations omitted)).
2. “Interactive Map: Sports Betting in the U.S.,”Am. Gaming Ass’n(May 23, 2022),
   https://bit.ly/3AykdnP.
3. Janelle Stecklein, “Oklahoma Sports Betting Bill Fails,” Tahlequah Daily Press (May 13, 2022), https://bit.ly/3AYe6uC.
4. Pat Evans, “With House Deadline Near, Oklahoma Sports Betting Bill Advances,”Legal Sports Rep.(Mar. 4, 2022), https://bit.ly/3AAeyOi.
5. See Am. Gaming Ass’n, supra note 3.
6. John Holden, “Opinion: Sportsbooks Might Hate It, But NY Winning Sports Betting Game,” Legal Sports Rep. (May 26, 2022), https://bit.ly/3KwFL98.
7. John Holden, “Opinion: Welcome to Kansas, The New Las Vegas of Sports Betting,” Legal Sports Rep. (May 20, 2022), https://bit.ly/3cyR8AJ.
8. See Becky Harris and John T. Holden, “Reshaping College Athlete Sports Betting Education,” 47 BYU L. Rev. 389, 420–25 (2022) (discussing different approaches to regulating betting on collegiate sports).
9. Id.at 418-19.
10. John Holden, “Analysis: New Sportradar Report Chronicles Match-Fixing In 2021,” Legal Sports Rep. (May 3, 2022), https://bit.ly/3R886Fk.
11. John T. Holden and Kathryn Kisska-Schulze, “Taxing Sports,” 71 Am. U. L. Rev. 845, 896 (2022).
12. Holden, supra note 7.
13. H.B. 570, 156th Gen. Assemb., Reg. Sess. (Ga. 2021).
14. “The Mobile Sports Wagering Platform Provider and Commercial Casino Relationship: Appendix C: Mobile Sports Wagering Questions and Answers,” N.Y. State Gaming Comm’n (July 1, 2021), available at: https://on.ny.gov/3ctzJJX.
15. See generally, Holden and Kisska-Schulze,supra note 12, at 896–900 (discussing state tax rates and corresponding revenue).
16. “US Sports Betting Revenue and Handle,” Legal Sports Rep., https://bit.ly/3edvUss (last visited June 7, 2022).
17. Sam McQuillan, “Where is Sports Betting Legal? Projections for All 50 States,”Action Network(May 25, 2022), https://bit.ly/3RqVKb5.
18. “Mississippi Sports Betting,” Betting USA, www.bettingusa.com/states/ms (last visited June 7, 2022).
19. John Holden, “So How Exactly Is New Mexico Sports Betting Legal, And What Does It Mean In Other States?”Legal Sports Rep. (Oct. 17,
    2018), https://bit.ly/3TnwyDY.
20. See “Nevada Sports Betting,” Legal Sports Rep., www.legalsportsreport.com/nevada (last visited June 7, 2022) (describing the process for signing up for a sports betting account in Nevada).
21. Robert Channick, “Illinois Ends In-person Registration Requirement for Sports Betting, Opening Floodgates for Online Sportsbooks Ahead of March Madness,” Chi. Tribune (Mar. 5, 2022), https://bit.ly/3wI2bOK.
22. John T. Holden, “Regulating Sports Wagering,”105 Iowa L. Rev. 575, 597 (2020).
23. Id.at 597–600 (describing the gaming control board model).
24. Id.at 600.
25. The preference for a monopoly versus a competitive market is often dictated by a state’s existing stakeholders. For instance, if a state has a number of existing casinos, it is unlikely that local politics would allow a bill to pass that awarded a monopoly to an out-of-state entity overseen by the state lottery.
26. Jill R. Dorson, “Why ‘Commercial Gaming’ Works For Michigan’s Tribes,” MI Bets (Oct. 28, 2020), https://bit.ly/3KG8d8v.
27. Emily McCain, “Federal Judge Throws Out Florida, Seminole Tribe Gaming Compact,” ABC Action News (Nov. 23, 2021),
    https://bit.ly/3RkEnIM.
28. Jill R. Dorson, “Tennessee Legal Sports Betting Bill Passes, Governor Will Let It
    Become Law” Sports Handle (Apr. 30, 2019), https://bit.ly/3edz4wJ.
29. Ken Miller, “Federal Judge: Oklahoma Tribal Gaming Accords Renewed Jan. 1,” Associated Press (July 28, 2020), https://bit.ly/3R5XTsG.
30. Jill R. Dorson, “’Sooner’ Than Later? Sports Betting ‘Approved’ But Up For Debate In Oklahoma,” Sports Handle (Apr. 22, 2020).
31. Id.
32. Jill R. Dorson, “Oklahoma Tribes Get Ok From Feds For Sports Betting, But Opposition Remains,” Sports Handle (June 10, 2020),
    https://bit.ly/3CIRaAC.
33. Treat v. Stitt, 2020 OK 64, 473 P.3d 43 (decided July 21, 2020).
34. “Facts About Indian Gaming,”Ok. Indian Gaming Ass’n,https://oiga.org/about/#facts (last visited June 9, 2022).
35. Id.
36. West Flagler Assocs. v. Haaland, No. 21-5265, 2021 US. App. LEXIS 35854 (D.D. Cir. 2021) (holding that the Department of the Interior should have rejected the newly signed Seminole Tribe of Florida compact as it authorized gaming that took place off of tribal land, contrary to IGRA).
37. Id.
38. Id.
39. Dustin Gouker, “Inside the New Tribal Sports Betting Bill In Congress,” Legal Sports Rep. (Dec. 24, 2019), https://bit.ly/3KyI7nL.
40. Though 5% is considered the historical mark, sportsbooks are currently holding 7% on average across the country. “US Sports Betting Revenue and Handle,” Legal Sports Rep.,
    https://bit.ly/3edvUss (last visited June 9, 2022).