The Georgia Senate Regulated Industries and Utilities Committee reconvened on Tuesday and passed Senate Bill 172, the enabling legislation for Sen. Bill Cowsert’s sports betting constitutional amendment – Senate Resolution 140.
The committee convened for a two-hour meeting that had 10 pieces of legislation on the docket.
Cowsert laid out key sports betting financial details
Cowsert addressed Georgia sports betting licensing fees and tax rate that would combine to net the state $50 million a year in tax revenue, he said.
Under SB 172, all Type 1 online sports betting operators would pay a one-time $100,000 application fee and a $1 million annual renewal fee. The Georgia Lottery would receive one sports betting license with allowance for at least five other operators, and “no cap on the total number of operators allowed in the state.”
Type 2 licenses for kiosk operators would require a $500 application fee and a $1,000 per machine annual renewal fee. Kiosk hosts would be capped at keeping no more than two kiosks in any venue.
Cowsert clarified that his bill would set a base tax rate of 20% on an operator’s adjusted gross income, with a 25% tax rate reserved for “high earning bets,” including paralys, prop bets and live bets.
When asked by a committee member how he landed on that tax rate, Cowsert stated he had considered that the Georgia Lottery is “required by law to generate 35% profit, but has never done it.” Since the lottery, under SB 172, would receive a sports betting license, Cowsert said he “wanted [sports betting] to be competitive with that so they’re not cannibalizing their own sale.”
Cowsert’s proposed tax rate would position Georgia as one of the highest-taxed states in the country.
Along with the high proposed tax rate, Cowsert clarified that the adjusted gross income from sports betting operators would not include “any incentives offered” to attract new bettors. In short, SB 172 would not allow operators to deduct promo offers from their income to decrease their taxable revenue.
In states where promo deductions are allowed, operators can avoid taxation on 40%-50% of their total gaming revenue. Combined with a higher tax rate, the denial of promo deductions means Cowsert’s bill returns a significant percentage of sports betting revenue to Georgians.
Problem gambling solutions addressed
Cowsert also championed what he referred to as “state of the art” problem gaming solutions in place within the resolution. Some of those included programs to address problem gaming, self-limiting lists, regulations to allow bettors “to cool off if they are exhibiting signs of problem gaming” and the requirement that all bettors in Georgia create an account with the Georgia Gaming Commission.
As well as these programs, Cowsert pointed to other limiting mechanisms such as the monthly $2,000 spending cap that would be imposed on all bettors across all platforms. In instances where bettors would like to bet more than $2,000 a month, they would need to provide financial documentation to the Georgia Gaming Commission showing they had the means to do so safely.
Cowsert said $2,000 was chosen because it represented just under half of Georgia’s median annual income, adding “if you’re betting $24,000 a year, that’s a pretty hefty share of your income and a higher number than I’m comfortable with.”
Finally, Cowsert noted a “unique” component of the bill – proposed by the University of Georgia – that prohibited proposition bets on college sports. He explained that “it creates a temptation for players to impact the outcome of their play to affect bets on the game, and that is a dangerous circumstance to have.”
Opposition groups made expected arguments
Prof. John Kent, who represented a group of professors studying gaming practices at various Division I universities, including Emory and the University of Georgia, offered the lengthiest counter to SB 172. Kent appealed to “hundreds of academic reports that condemn what you’re about to do.”
He referenced five years of testimony on the US National Gambling Impact Study Commission that proved that “geo-fencing doesn’t work. The sports gambling regulations are not going to work. We’ve got kids hacking the Pentagon.”
Kent presented arguments on the adverse effects gambling imposes on minority communities and claimed that it would become the “crack cocaine” of new addictive behavior.
Kent concluded that sports betting “would get out of hand and you’re not going to be able to control it. I’ve gone to state after state, and all the prohibitions that they’ve put in place have all fallen by the wayside.”
The National Council on Problem Gambling, which said it remained neutral on the bill, commended Cowsert’s bill for the lengths the legislation took to address problem gambling.
The committee recognized one “concerned citizen” who asked the committee “to bring morality into the conversation” and to “consider the degradation [legal sports betting] would have.”
House sports betting bill advances from committee
A substitute version of House Bill 380, which looks to legalize online sports betting without a constitutional amendment, passed out of the House Higher Education Committee on Monday.
The substitute made significant changes, including the tax rate imposed on operators’ adjusted gross income. The tax rate has jumped to 25% from the original 15%.
The HB 380 substitute also created differences in annual licensing fees between tethered and untethered online operators. The uniform $1 million licensing fee for either kind of online licensee changed to $1.5 million for untethered licenses and $750,000 for tethered licenses.
HB 380 now advances to the House Rules Committee.