Maine government is about to legalize sports betting. If we take this path, we must tax it at a rate high enough to ensure that all Mainers realize the benefit.
Chris Babbidge Courtesy photo
When Maine voters rejected a proposed casino for York County in referendum in 2003, they also passed slots for a harness raceway that, by definition, qualified Maine as a full-blown class III gambling state. We now have two casinos; together, they made nearly $150 million in net income last year, a pandemic year. The casinos’ slot income is taxed at about 46 percent.
In 2018 the U.S. Supreme Court paved the way for states to authorize sports betting. According to the gaming industry, sports betting will attract a much larger population to gambling. According to the Tax Foundation, 30 states and Washington, D.C. have legalized and imposed taxes on it already. Many of the rest have legislation in the pipeline, some having scheduled referenda for approval. The wave to get this easy money has gathered momentum across America.
Despite my record of opposing expansion of gambling, sports betting in Maine appears to be inevitable, so I will advocate for a wise policy of implementation. I believe the proposals before us give away the farm for too little in return.
The bill I prefer is LD 585, a bill negotiated by Gov. Janet Mills that gives exclusive online sports betting rights to the federally-recognized tribes. Maine’s tribes have unsuccessfully petitioned the legislature for three decades to operate gambling. Casinos didn’t become a reality in Maine until 2011 after Oxford, a non-tribal casino, was approved with 50.4 percent of a statewide vote.
Mills proposed LD 585 to ensure ongoing income for the tribes through online wagering, with in-person betting also permitted at the state’s half-dozen Off Track Betting (OTB) locations. After criticism, the bill was amended to add Oxford and Maine’s two harness racetracks as eligible for in-person licenses only.
But, for me, LD 585 has a problem. The proposed state tax is just 10 percent, with only 6.5 percent going to the General Fund. For this gift of permission the state deserves more. I propose that the contribution to the General Fund be a minimum of 25 percent.
The General Fund is where accumulated fees, tolls, and tax income is returned to the taxpayer in services to pay for schools, public safety, some infrastructure, essential services, and revenue sharing with local government. Although federal pandemic money has us in a temporary surplus, the state of Maine has some big challenges demanding new and ongoing annual expenses.
We have an affordable housing crisis; housing for seniors, for the homeless, and for the workforce that drives our economy must be incentivized. We have an environmental crisis demanding repair, from infrastructure damage to PFAS contamination. We must address the needs in physical healthcare, retaining dedicated staff and providing new ongoing care for declining seniors. Behavioral healthcare must get its long-awaited funds; the pandemic has magnified our mental health crisis fourfold.
Finally, the state’s inadequate budget for lawyers for poor defendants has caused an ACLU lawsuit alleging failure to provide Sixth Amendment constitutional protections. Retired judges have acknowledged the challenges of providing equal justice for pro se litigants, and millions in additional money will be needed to implement a reformed system of public defense.
These Maine problems require money, and Maine taxpayers deserve a bigger piece of the pie if sports betting is to be permitted in Maine.
There will be three major players at the table when online sports betting becomes legal: the tribes, the contracted gaming operator, and the state. The out-of-state gaming operator will get 30 to 40 percent in a four-year contract, a national standard, with, in all likelihood, the operator’s share eventually going to the tribes once they determine they can run it themselves. With no brick-and-mortar overhead, in an industry where the house never loses overall, the tribes will do well. The state deserves to tax at 28.5 percent, with 25 percent, without strings, going to the state’s General Fund.
The 10 percent taxation in LD 585 is too small for online wagering and for in-person betting as well; the casinos should pay a higher rate and a higher fee, at least as much as the tribes pay.
According to the gaming industry, government taxation on sports betting varies greatly across the nation. Nevada is at 6.75 percent. Pennsylvania assesses a 34 percent state tax, all dedicated to its General Fund. Rhode Island’s share of revenue is 51 percent.
Mainers gamble legally by traveling to New Hampshire. For January, 2022, New Hampshire’s state share was $3.87 million, or 48 percent of revenue.
If we do legalize sports betting, knowing the obligations ahead, we must protect the Maine taxpayer by insisting that no less than one in four dollars, net, goes directly to the General Fund. If the financial pie is about to get bigger, it is only fair that Mainers, hungry with bills to pay, are properly at the table.
Christopher W. Babbidge is representative for Maine House District 8, Kennebunk. He can be reached at Chris.Babbidge@legislature.maine.gov.
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