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Public Hearing Testimony of Rich Pingel: Support for Senate Bill 540: An Act Authorizing Sports Wagering and Online Lottery Draw Games in the State

Public Hearing Testimony of Rich Pingel

Support for Senate Bill 540: An Act Authorizing Sports Wagering and Online Lottery Draw Games in the State
April 2, 2018

Greetings Senator Fonfara, Senator Frantz, Representative Rojas and the distinguished members of the Finance, Revenue and Bonding Committee. I am Rich Pingel, Chief Legal Officer for Sportech PLC., the licensed operator of Connecticut’s Off‐Track betting system. I offer this testimony with specific regard to the sports wagering aspect of Senate Bill 540, of which Sportech is delighted to be included as a trusted partner of the State of Connecticut for the past 25 years.

Our businesses relating to sports, wagering, technology and consumer betting behavior goes back more than 100 years. We have a wealth of experience and knowledge of the betting business, operating in highly‐ regulated markets, and in 2017 our systems processed approximately $12 Billion of wagers across 37 countries. Our industry leading, pari‐mutuel betting systems are also deployed in 37 U.S. States to a wide variety of clients.

Sportech’s American operation is based in New Haven, Connecticut. Here in Connecticut, Sportech employs over 400 people within our 16 existing Off‐Track Betting venues, Bobby V’s restaurants, and our online wagering platform, MyWinners.com. We have invested over $25 Million in our Connecticut properties and in our online and mobile services in the last few years and hope to continue expanding our presence in the State utilizing the remaining 8 locations authorized by the Legislature last session, creating further local employment opportunities and additional tax revenues to benefit both the State and our host municipalities.

Senate Bill 540 recognizes the commitment and dedication of the existing licensed, regulated and approved gaming operators within the State, and in our view, acknowledges the specific role each plays in our society as it relates to discretionary consumer spending and the consumer’s choice of entertainment. Connecticut is already well served by each group, and Sportech is proud to be part of the solution and stands ready to deliver Sports Wagering within a safe, legal, compliant, and regulated environment.

Independent expert‐estimates suggest that Connecticut residents currently wager more than $600m per annum on sports with illegal gaming operations that are completely unregulated, untaxed, and neither overseen nor monitored for purposes of providing protections for the customer. Sportech can change that for the State, should the U.S. Supreme Court provide that opportunity, by expanding its existing operations and domesticating those sports wagers into a regulated intrastate system, resulting in both consumer protections and significant tax revenues.

Senate Bill 540 also sets out numerous compliance requirements, fiscal considerations, consumer protections, and market surveillance obligations which we believe are reasonable and justified. The proposed elements are consistent with what we currently provide to our global clients, and what we aim to deliver in Connecticut.

We have some suggestions for SB 540 that we would like to bring to your attention at this stage:

1) The suggested minimum age of 21 years old is consistent with the minimum age required for Casino Gambling, however, 18 years of age is the minimum for every other gambling outlet in the State, including OTB’s and pari‐mutuel wagering. To facilitate a seamless integration into the State’s existing wagering outlets, we recommend that the sports wagering age limit be adjusted concurrent with the other wagering forms in which the product is offered.

2) We recognize the requirement for taxation, obviously, and that it has to be meaningful for the State, but draw your attention to independent expert analysis that finds that excessive taxation can inadvertently support the continuation and potential expansion of the illegal competitor marketplace, particularly online, even when a legal marketplace exists. Ref., Regulus Report, attached hereto as Attachment 1.

Sports Wagering is a risk‐business and very different from pari‐mutuel or lottery based models which derive a risk‐free gross profit from sales. The margin on sports wagering is low and competition with the ‘established’ illegal operators will remain fierce for some time. We therefore support the proposed 15% wagering tax, but caution that any excess taxation may unintentionally promote the illegal operator activity with no benefit to the State or consumers. As confirmed by the information set forth within the attached Regulus Report, we believe that a properly regulated and taxed sports wagering offering has the potential to generate approximately $100M in tax revenues over the first 5 years.

It is my testimony that Connecticut’s existing brick‐and‐mortar locations are the only logical outlets to evolve and deliver safe Sports Wagering, in tandem with a secure, regulated and appropriately taxed intrastate online platform. These existing outlets are experienced and proven in delivering key protection and safeguards, such as age verification, know‐your‐customer guidelines, anti‐money laundering monitoring and reporting, account funding compliance, and various other consumer protection machinations.

Thank you for your time and consideration of my testimony.

   

See testimony here: https://www.cga.ct.gov/2018/findata/tmy/2018SB-00540-R000402-Pingel,%20Rich-Sportech-TMY.PDF

McDowell Jewett