The North Carolina state budget bill changed the state’s sports betting law with an eye to long-term sporting and sports betting expansion in the state.
Whereas House Bill 347, which legalized online sports betting, authorized 12 untethered commercial sports betting licenses, the budget changed the parameters to require applicants to secure a “written designation agreement” from one of a pre-selected list of entities.
This change has two significant effects on the launch of online sports betting in North Carolina.
The first, well-documented thus far, is to shift the power from the operators to the pro sports teams and venues in the state. The second and more subtle effect of this change is to prepare the sports betting industry for sporting expansion in the state.
Shifting the power from sportsbook operators to NC pro sports teams
HB 347 imposed few restrictions on sportsbook operators applying for licenses in North Carolina.
Under the law, the North Carolina Lottery Commission (NCLC), regulator of the sports betting industry, would have considered various factors in selecting operators–investment in the state, history of a quality product, partnerships with local pro teams. None of them, however, were prerequisites for licensure. Regulators, as such, had the latitude to select 12 online operators on a best-fit model, ensuring that the most well-established operators in the country had an easy pathway to licensure.
The budget has shifted the NCLC’s burden with its changes to the sports betting law.
Now, the law requires sports betting operator applicants to secure a “written designation agreement” from one of a prescribed list of entities, including:
– A pro sports team.
– A pro golf course with an annual tournament.
– An auto racetrack.
– The PGA.
– NASCAR.
Along with giving each of the above-listed entities (of which there are 11) the power to choose which online sportsbook it would like to do business with, this change ensures that only the online sportsbook partnering with that pro sports team, golf course or racetrack can build a retail sportsbook on-site.
For example, if BetMGM Sportsbook partners with the NC Courage of the NWSL, only BetMGM can build a retail sportsbook at WakeMed Park in Cary.
By requiring online operators to receive a written agreement from the above entities, the state is essentially making those entities the gatekeepers of the industry and the sports betting branding on display at their attendant venues.
One outcome of this change is that sports teams and venues and not regulators will have first crack at tailoring the sports betting industry to serve North Carolina’s unique sports landscape best.
Which sportsbook is going to do the most for NASCAR betting in the state? Is it industry-giant DraftKings with its two 23XI-branded racecars? Or is it the smaller Tipico Sportsbook with its innovative portfolio of auto-racing markets?
If NASCAR wants to provide auto-racing bettors in North Carolina with the best auto-race betting products on the market, who better to make a written agreement with a NASCAR-focused sportsbook than a NASCAR racetrack or the sport’s governing body?
Regulators, to be sure, will have the last say in who receives a license, but this change in the law puts North Carolina sports teams, owners and governing bodies in a position at the forefront of the industry.
Acknowledging the growing North Carolina sports landscape
The amended language of North Carolina’s sports betting law removes the cap on total operators in the state in acknowledgment of the state’s potential for sporting growth.
James Hallas, senior manager of commercial communications at NASCAR, told NCSharp that this new approach to licensing under the budget “makes it so that if a new sports team wants to come to North Carolina, they can go for a sports betting license.”
While, at present, the budgetary language reduces the number of online operators from 12 to no more than 11, it states that a potential online operator in North Carolina must secure a written designation agreement from “a pro sports team.” Currently, there are five, but if MLB Raleigh gains more traction and an MLB expansion team lands in North Carolina, that team could partner with an online sportsbook not currently operating in the state.
Further, two golf courses host annual PGA events–Sedgefield Country Club and Quail Hollow. But what if another of North Carolina’s more than 600 golf courses should take on an annual PGA event? The budget makes room for the owner/operator of that course to also partner with an online sportsbook.
The open-ended language of the new budget makes room for both sporting and sports betting growth in the state, which means North Carolina could end up with more than 12 operators. That’s long-term thinking. Moreover, it’s planning with a growth mindset, which benefits Tar Heel sports fans.
Will this make the job of NC sports betting regulators easier?
It’s difficult to say whether the work of the NC Lottery Commission will be streamlined with the new requirement for written designation agreements for all applicants. The process appears cut and dry at face value, but it has some wrinkles.
For example, how a written agreement between an operator and a sports team takes shape is anyone’s guess. Two teams, for example, play at Bank of America Stadium, and both can partner with different sports betting operators. However, only one of those operators would have priority to build the retail sportsbook at The Bank. How does that deal get made and what hand, if any, will the NCLC have in determining how the deal gets done?
The NCLC hasn’t yet set any deadlines for applicants. In fact, the Commission hasn’t even started accepting applications. Once the application window opens, we’ll learn more about how these sports betting partnerships are taking shape.
The reality is that North Carolina’s sports betting launch window (from Jan. 8 to June 14, 2024) looks more like a launch deadline with the changes made under the state budget and the slate of new hires the Lottery has made to aid in the launch.
At the most recent NCLC meeting, Sterl Carpenter, executive director of sports betting, gave the most unambiguous indication of where the industry currently stands when he said that they “are working to get sports betting and parimutuel wagering up before the June deadline.”
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