Sports Betting Survives Puerto Rico Shakeup, Senator Says

Political turmoil in Puerto Rico—which saw three different governors in just five days—won’t slow the progression of the island’s newly enacted sports betting law, according to a lawmaker familiar with the bill.

Sen. Carmelo Rios Santiago, a member of the new progressive party (PNP), said the temporary revolving door at the governor’s mansion won’t act as a barrier to legal sports betting, which he believes will kick off by the end of 2019.

“I guarantee you it’s going to move forward. I’ve been in talks with Gov. Garced, and the new law will be one of many things we will continue to work on when we start session on Aug. 19,” Santiago said.

Then-Gov. Ricardo Rossello (PNP) signed H.R. 2038 into law on July 29, and then submitted his resignation on Aug. 2 following weeks of protests. The bill sets a 7% tax on the gross gaming revenue of in-person wagers and a 12% tax on online wagers.

His successor, Pedro Pierluisi (PNP) held the title of governor for five days before the Puerto Rico Supreme Court ruled that he was sworn in on unconstitutional grounds, and removed him from office on Aug. 7. Following Pierluisi’s exit, Secretary of Justice Wanda Vazquez Garced (PNP) was sworn in as governor on the same day.

Gov. Garced has reportedly decided to to suspend some other programs—such as $450,000 contract to rebuild a power grid—but there is no slowing sports betting, Santiago said.

“We still need to set specific regulations, but we’re already receiving applications to permit betting,” he said. “This will make a great impact on the territory in the next three to four years.”

A report from Spectrum Gaming Group estimates sports betting in Puerto Rico could result in a gross gaming revenue between $44 million and $62 million a year. Santiago cited another independent study that indicated the territory could bring in $32 million per year in tax revenue, but said he thought the study was “overestimating a bit.”

“I hope I’m wrong,” he said.

Spread of U.S. Sports Betting

Richard Auxier, a research associate at the Urban-Brookings Tax Policy Center, said he expects around seven states to legalize sports betting in 2020.

“States have a lot more knowledge about sports betting legislation and regulation at this point,” he said in an email. “But the states that really wanted this already got there.”

Auxier said more states could push for sports betting if state revenue dips in response to a nationwide recession.

“Gambling is always an easy answer when your budget math doesn’t work. (Please note: It’s not a good answer. Just an easy answer.),” he said.

Attempts to legalize sports betting took off after the U.S. Supreme Court’s May 2018 ruling in Murphy v. NCAA, which repealed the federal Professional and Amateur Sports Protection Act of 1992 (PASPA). That law prohibited states from “authorizing” gambling related to professional and amateur sports leagues.

Sports betting currently live in ten states—Arkansas, Delaware, Mississippi, Nevada, New Jersey, New Mexico, New York, Pennsylvania, Rhode Island, and West Virginia. Betting is legal, but not yet active, in eight other states plus the District of Columbia, according to the American Gaming Association (AGA).