The DraftKings sportsbook and casino app. The Vermont House of Representatives passed legislation on Friday that would legalize online sports betting platforms like DraftKings in the state. Photo by Shaun Robinson/VTDigger
The Vermont House of Representatives on Friday passed a much-anticipated bill that would legalize online sports betting in the state — and set aside some of the revenue to mitigate the sharp rise in problem gambling officials expect is causing would follow this example.
Lawmakers approved a number of amendments to the H.127 bill late Thursday night and gave it final approval on Friday. The bill was passed almost unanimously.
Under the amended bill, Vermont would capture at least 20% of the adjusted gross revenue that sportsbooks — like DraftKings and FanDuel — generate in the state each year.
The state would also charge each company an annual operating fee based on how many other companies are in the market here. If Vermont contracts with an operator, it would ask for $550,000. But if there are six — the maximum allowed by the bill — each would pay $125,000.
Vermont lawmakers have long known, based on data from states where online sports betting is already legal, that the practice would be a modest source of new revenue.
Gov. Phil Scott’s proposed fiscal 2024 budget estimated the state would bring in $2.6 million. But the Legislature’s Joint Fiscal Office estimated this week that the state could expect to bring in just $2 million after changes to the bill in the House Treasury Committees.
Rep. Diane Lanpher, D-Vergennes, who chairs the House Appropriations Committee, said during a hearing on H.127 Monday that state officials will need time to fully understand the revenue impact.
“It’s going to remain volatile until things sort themselves out in the first five years — until we get a handle on what we think the revenue could be,” she said.
The Joint Fiscal Office also estimated that sports betting revenue would grow to at least $4.6 million and could reach as much as $10.6 million in fiscal 2025.
House lawmakers on Thursday agreed to create a “sports betting fund” to hold revenue and fees the state Department of Liquor and Lottery would collect in its role in overseeing sports betting in Vermont. The department already uses similar pools known as corporate funds to run alcohol control efforts and the state lottery.
In fiscal year 2024, the state would allocate $250,000 from the betting fund to the Department of Mental Health to build programs to address gambling problems, and double that amount in the following fiscal year, under the amended bill.
The House of Representatives also passed an amendment proposed by Rep. Matt Birong, a Vergennes Democrat and a lead sponsor of the bill, that would increase the penalties the state would impose on individuals and businesses that violate the state’s online sports betting rules .
The state would fine sports bettors up to $25,000 for a first violation; $75,000 for a second violation; and $150,000 for a third violation. Officials could also strip a company of its license to operate if it violates the new laws.
“Having witnessed that the fine structures of other states were not sufficient to deter nefarious behavior, which some people see as a cost of doing business, I felt that we (the penalties) needed to escalate,” Birong said in an interview Thursday.
The amended bill also includes a last-minute provision from the House Committee on Ways and Means that requires the state to negotiate a cap on the amount of money both it and sportsbooks can spend advertising betting platforms.
The committee was responding to concerns that Vermont residents are being oversaturated with advertising for sports betting companies – a trend widespread in other states.
Wendy Knight, the liquor and lottery commissioner, told the House Appropriations Committee on Monday that she thought the measure was “unnecessary” because the bill already requires betting companies to submit an advertising plan to the state.
House lawmakers essentially ran out of time to further debate advertising cap language before Friday’s transition period expired, Birong said, and decided to leave it in the bill for consideration in the state Senate — the bill’s next stop .
