Arkansas Takes a Major Step Towards a Legal Online Sports Wagering Industry

Fans of the Arkansas Razorbacks storm the field. Wesley Hitt/Getty Images/AFP.

The Arkansas Racing Commission has unanimously voted in favor of rolling out the legal online sports betting industry.

Retail sportsbooks have been permitted at the state’s three brick-and-mortar casinos since 2019, but Arkansas residents have not been able to place online wagers. That could all change soon after the commission approved a new set of statewide regulations for sports betting.

The rules still need to gain final approval from a legislative committee, which is expected to review them in early 2022. If the committee gives the regulations the green light, each of the state’s casinos will be permitted to host two online skins.

A fourth casino has been approved in Pope County, so there could eventually be eight online sportsbooks in Arkansas when that casino is built.

The 51% Rule

Thursday’s hearing predominantly focused on a contentious plan to award a 51% share of all online sports betting revenue to the brick-and-mortar casinos.

FanDuel Director of Government Affairs Andrew Winchell spoke at the hearing, calling the 51% share initiative “unprecedented”. He listed several states in which online operators must tie up deals to launch on the master licenses of retail casinos, including Michigan and Iowa, but said profit sharing is always a matter of private negotiations as opposed to a specific, statewide law.

However, Carlton Saffa, the chief market officer at Saracen Casino Resort in Arkansas, hit back, claiming that the state does not need big nationwide brands like FanDuel, DraftKings, and BetMGM to succeed.

“We take millions of dollars in on-premises bets already,” he said. “It’s being done on premises now and it’s working. Are the numbers huge? No. They’re never huge when it’s on-premises only. As an Arkansan, I’m tired of hearing that we can’t do it. That it takes someone from Boston who knows what they’re doing. We can do it.”

He added that operators like DraftKings and FanDuel were happy to agree to a 51% revenue tax in New York – which is set to introduce legal online sports betting during next month’s NFL playoffs – and said they should be willing to hand over 51% of revenue to casinos.

Industry Heavyweights Form Lobbying Coalition

The Arkansas Racing Commission voted in favor of the 51% rule. Some industry analysts believe it could have nationwide implications.

Saffa said casino operators across the country have told him they wish they had secured a 51% rule in their states. However, industry experts have argued that such a rule would scare off national operators, leading to a lack of competition in the market and leading residents to bet offshore instead.

Saracen is one of three casinos in Arkansas, along with Oaklawn Casino Resort in Hot Springs, and Southland Casino Racing in West Memphis.

If the rules are ratified by the committee, online and mobile sports betting could begin in Arkansas in February.

Yet online sportsbooks are likely to continue lobbying for the 51% rule to be scrapped. DraftKings, FanDuel, BetMGM, Bally, and Fanatics have formed a five-strong coalition called Bet on Arkansas, which has its own website and Facebook page. Its main argument is that private companies should be able to negotiate profit-sharing terms with one another, as opposed to the state government stipulating a set amount.

“Customers should have access to the most competitive prices, the best promotions, and bonuses and the strongest customer protections, which would be limited by regulation directing 51% of revenue to casino partners,” the website contends.