As Sports Betting Takes Hold Nationally, Oregon Lawmakers Ponder What Comes Next Here

There are continuing pressures to expand an already expansive offering of gambling options.

When the Oregon State Beavers upset the Oregon Ducks 38-34 last weekend, bettors all over the U.S. wagered on the state’s favorite football game.

Few of them bet in Oregon—at least not legally.

Although Oregon became one of the first states to offer legal sports betting on cellphones in October 2019, Oregonians could only legally bet on the biggest game of the year on a Native American reservation. Betting on college sports via the Oregon Lottery’s app remains illegal.

It’s not for lack of trying. Last year, Senate President Peter Courtney (D-Salem), the most powerful man in the Capitol, pleaded with his colleagues to allow betting on college sports, as more than a dozen other states do.

In testimony, Courtney said he wanted to allow Oregonians to “safely gamble on college sporting events by moving bets from the risky black market to the legitimate Oregon Lottery.” The bill died.

But there are more ideas for expanding gambling in this state than the Ducks have excuses for their loss.

Almost overnight, gambling has gone mainstream across America, with ubiquitous advertising by betting purveyors FanDuel and DraftKings.

As The New York Times noted in an examination of legal sports betting published last week, the black-market boogeyman that Courtney mentioned is a frequent lever for oddsmakers, lobbyists and lawmakers seeking to expand state-sanctioned sports gambling.

“To persuade on-the-fence state lawmakers to board the sports-betting bandwagon, the gambling industry disseminated data about how much tax revenue states could expect to receive and how much gambling was already taking place outside of state supervision in illegal markets,” the Times found.

While Courtney came up short of the goal line, the pressure is on here to turn every cellphone into a legal, pocket-sized casino.

Here’s the state of sports betting in Oregon:

It’s not very lucrative.

When the U.S. Supreme Court legalized sports betting in 2018, the Oregon Lottery jumped at the opportunity, explaining to WW at the time that its customer base—which predominantly plays video slot machines—was aging and the agency needed new offerings to attract more gamblers.

Sports bettors wagered about $400 million with the lottery in fiscal 2022. That’s a lot of money, but it’s 40% less than lottery officials projected in 2019.

The slightly good news: After expenses, the lottery earned a profit of nearly $16 million on those bets, a little more than projected. But that’s still a tiny fraction—1.6%—of the agency’s net profit. The real action continues to be video slot machines: They provide 92% of the lottery’s net profit.

Lottery spokeswoman Melanie Mesaros says the agency is nonetheless pleased with results from sports betting so far. “It was anticipated to be a low-margin product, yet it continues to grow and attract new players in the state,” Mesaros says.

The key: new players. Kitty Martz, executive director of Voices of Problem Gambling Recovery, says sports betting is an effective way to hook a younger audience—including those whose impulsivity and immaturity make them easy marks.

She believes the ultimate goal of both the gambling industry and the Oregon Lottery is to move gamblers where the real money for both is—video slot machines. Except the machines would be mobile.

Under pressure from the state’s nine recognized tribes, Gov. Kate Brown forbid the lottery and private companies from offering more gambling options, pending a statewide review.

“Do we really want to put a slot machine in everybody’s pocket?” asks Justin Martin, a lobbyist for the Confederated Tribes of Grand Ronde.

Oregon takes a bigger cut than most other states.

Oregon originally contracted its sports betting with SB Tech, a shadowy gambling company based in Malta. But last year, DraftKings, one of two U.S.-based sports betting giants, purchased SB Tech and renegotiated its deal with the Oregon Lottery.

As long as DraftKings is the state’s only sportsbook, Oregon collects 51% of gross gaming revenue—that’s markedly better than the deal with SB Tech. It’s also a substantially different model from other states’.

A consultant’s report shared with lawmakers this summer shows that most of the 26 states that allow sports betting issue multiple licenses and tax licensees’ profits at a far lower rate than Oregon. Tennessee, for instance, has nine licensed partners and charges a 20% tax; Colorado has issued 33 gambling licenses and charges licensees a 10% tax.

The consultant, The Innovation Group, found that most states with sports betting promote “an open, competitive market and a tax rate [of] at most 20%. On average, their per capita mobile sports gaming revenue is more than six times that of Oregon’s.”

Martz, the lottery critic, says state officials mislead the public when they tout tax revenue without also reporting the societal costs of gambling. She says studies show those costs wipe out any revenue the state collects: “The only winner in this whole game is DraftKings.”

There’s a lot of pressure to expand.

The Times reported that 30-year-old whiskey, Cuban cigars and generous sponsorships are among the tools gambling companies have used to grease access to state-sanctioned betting across the country.

Those tools aren’t as necessary here, since officials are already deeply addicted to the nearly $1 billion that gambling generates annually. But Sport Oregon, the nonprofit that counts the Portland Trail Blazers, Timbers, Thorns, universities, and apparel companies among its members, is pushing hard to expand sports gambling in Oregon. Other groups want to expand poker, betting on computer-generated games, and horse races.

In a recent presentation to the Legislature’s Joint Interim Committee on Gambling Regulation, Sport Oregon spokesman Nathan Nayman offered a different critique from Martz’s. He argued that the state is certainly “leaving millions of dollars on the table” by taking too big a cut of DraftKings’ profits and not opening the state to other competitors.

Lawmakers and Gov. Brown deferred to the tribes’ desire to pump the brakes. But Nayman says there’s a danger in moving slowly.

“If we keep doing what we are doing, Oregon will lag dramatically behind other states that have moved forward with expansions,” Nayman tells WW. He notes other states with sports betting generate five or six times Oregon’s per capita revenue.

Although it might seem expansion is inevitable, California voters offered a different perspective Nov. 8, defeating a ballot measure that would have allowed mobile sports betting in the Golden State.

Martz says she takes hope from the California vote that expansion here isn’t a fait accompli—DraftKings and its allies spent $200 million to support the measure. The ability to gamble 24/7 with just a cellphone and a credit card is a far cry from the low-tech version of the lottery that Oregon voters authorized in 1984.

“Oregonians voted for a pared-down, community-based form of lottery,” Martz says. “It’s time to say what we have today is not what we agreed to.”