On March 25, 2020, Governor Jay Inslee signed House Bill 2638, which amends several laws and regulatory and licensing requirements/crimes in the Gambling Act, and now authorizes sports wagering subject to the terms of tribal-state gaming compacts. Tribes' Class III gaming compacts will need to be amended; new Commission rules will need to be adopted; and any new sports wagering licenses will need to be approved before tribes can offer sports wagering at tribal casinos.
What we’re doing to implement sports wagering
We are currently in tribal compact negotiations with tribal representatives for a new sports wagering compact amendment. We are also drafting and amending rules to implement sports wagering. A state regulatory structure will be created to cover all aspects of sports wagering, consistent with tribal-state sports wagering compact amendments. These rules must be created and amended through the public rule-making process.
What's the latest?
July 2020: Commissioners vote unanimously to initiate rulemaking to facilitate the implementation of sports wagering. Commission files CR-101 with Code Reviser’s Office.
December 2020: Prelicensing qualification rule language was drafted and is ready for review. The proposed prelicensing qualification rules are meant to authorize the agency's prelicensing investigation process for future sports wagering licenses. Our agency's goal is to allow individuals and/or organizations the ability to get a head start on our prelicensing investigation process through these rules. These rules are not intended to become a sports wagering license or give the individual or organization a license at this time. The final draft sports wagering license rules are still part of tribal-state compact negotiations and any final sports wagering rules will be forthcoming and publicly available in the future.
January 2021: The agency filed the proposed prelicensing qualification rules with the Office of the Code Reviser on Tuesday, January 19, 2021. These rules will be published in the February 3, 2021 issue of the Washington State Register (WSR 21-03-072). The agency can take final action on them any time on or after February 23, 2021.
Who is a Substantial Interest Holder?
A question or concern we received is how the agency will address substantial interest holders as it is used in the proposed prelicensing qualification rules. Substantial Interest Holder is already defined in WAC 230-03-045, and the agency’s licensing staff regularly uses this rule in processing current gambling license applications.
Agency staff believe this definition is sufficient in the context of sports wagering prelicense investigations and the level of scrutiny of the organization and individuals with in the organization will be developed through the application process, including discussions with the applicant, as needed. In practice, we can, and do, modify our scope of our requests for information on substantial interest holders based on the information provided by an applicant in the prelicensing application and then look to the stated level of actual or potential influence over the licensee and/or gambling activity.
What about Passive Investors?
“Passive investors” were another point of concern. The agency currently addresses this type of investor in the definition of “regulated lending institution” in WAC 230-03-212. In this definition, passive investors are an entity or a person who have no actual or potential influence over the operations of a licensee. We typically utilize an Institutional Investor Certification Form for an Investment Company registered with the SEC and:
* The Voting Securities held by the Investment Company were acquired and are held for investment purposes only, and were acquired and are held in the ordinary course of business as an institutional investor and not for the purposes of causing, directly or indirectly, the election or appointment of any director or management member of the Licensee. Nor are the Voting Securities held for the purpose of causing, directly or indirectly, any change in the chartering documents (including articles of incorporation, bylaws, and other documents), or other operating agreements, management, directorship, policies, or operations of the Licensee. Further, the Investment Company acquired the Voting Securities disclosed above solely for investment purposes, and the Investment Company has no involvement in the business activities of the Licensee, nor does the Investment Company have any intention of influencing or affecting, or participating in the affairs of the Licensee.
* If the Investment Company subsequently intends to influence or affect the affairs of the Licensee, they shall provide not less than 30 days written notice of such intent, and shall file with the Washington State Gambling Commission the appropriate application for licensure/suitability before taking any action that may influence or affect the affairs of the Licensee; provided, however, that the Investment Company shall be permitted to vote on matters put to the vote of the outstanding security holders at any time without providing notice to the Washington State Gambling Commission.
* For purposes of this Certificate and the matters set forth herein, the Investment Company acknowledges that it is bound by and shall comply with all regulations enacted by the Washington State Gambling Commission and, to such extent, is subject to the jurisdiction of the courts of Washington and consents to Washington as the choice of forum in the event any dispute, question, or controversy arises regarding the application of these regulations.
An application will also ask for the identity and personal identifying information for persons/entities with >5% interest in the Investment Company. If the applicant lists one person as 100% owner, then we treat the Investment Company as an individual.
We also use an Institutional Lender Certification Form for Lenders, for whom based on the amount or the terms of the loan are determined to be a substantial interest holder, who are not federally recognized lending institutions but an Investment Company registered with the SEC.
Who Should Consider Applying Under This Rule?
The goal of this rule is to authorize the agency to engage in its standard prelicensing investigation process before final licensing rules are agreed upon and become final. Our prelicensing investigation process takes an average of 60-90 days, and this rule, if it becomes final, will allow organizations to get a head start on the prelicensing process in anticipation of final licensing rules to be unveiled later this year once tribal compact negotiations are complete.
Therefore, standards for full licensing requirements and license classes are still under negotiation between the State and Tribes who have requested to negotiate a sports wagering compact amendment. Consequently, there will be some ambiguity on sports wagering licenses because the agency cannot yet provide a list of possible license types or which types of organizations who provide sports wagering products or services may need to be licensed.
Our prelicensing application process will be required for any sports wagering license, regardless if it is done through prelicensing qualification or through the final sports wagering licensing rules. We recommend that most companies licensed in other states where they provide sportsbook services and/or equipment consider entering this prelicense qualification process. You are encouraged to contact us if there is any question if this process is the right process for your organization and we will provide the best direction we can about the potential value of this process at this time.
Do we need this rule?
Yes. All agency licensing processes authorized by statute require our Commissioners to approve additional licensing rules. These rules authorize the same prelicensing investigation process the agency has historically utilized for any gambling license application, including applications for manufacturers, distributors, service suppliers of gambling equipment and services for all of our gambling activities. However, sports wagering is not authorized through agency rules and it must be done through the agency rule-making process whether it is done at this time or in the final licensing rules.
An alternative to this rule could be for the agency to wait to begin the prelicensing investigation process until the final rules are approved. However, agency staff and Commissioners feel it is best to try to authorize, through these proposed rules, this prelicensing qualification process now to give the agency and potential licensees an option to engage in the 60-90 day (average) prelicensing process now while the final licensing standards are being negotiated and before we engage in the final licensing rule-making process. We believe there is value in getting a head start on this process and believe it will help smooth out any bumps in the prelicensing investigation process as the agency and applicants become more familiar with each other.
Is Public Comment Still Available?
Yes. Public comment is welcome and still available on these prelicensing qualification rules. To submit public comment on the draft prelicensing qualification rules, please visit our Request for Public Comment page.
Frequently Asked Questions
Why can’t I play “free” sports betting apps?
This is a business decision made by the developer of the app. You should contact them.
Is any type of sports wagering legal?
In 1973, when the Gambling Act was first passed, 100-square sports pool boards were authorized. Bracket pools, office sports pools, and fantasy sports have never been authorized as gambling activities in Washington State and are illegal.
When will Washington launch retail sportsbooks at tribal casinos?
Washington’s new sports wagering law does not establish a date for when retail sportsbooks will being operating at tribal casinos. We are currently in tribal compact negotiations and are working through the rulemaking process.
Will tribal sportsbooks be allowed to accept wagers through a mobile app and/or the Internet?
Washington’s new sports wagering law does allow for mobile sports wagering as long as the wager is placed and accepted at a tribe’s gaming facility while the customer placing the wager is physically present on the premises. The specifics on how bets are placed through mobile apps or the Internet and where those wagers can be placed while physically on a tribal casino premises will be determined through the current tribal-state compact negotiation process.
What events and wagers are allowed under Washington’s new sports wagering law?
Washington’s new sports wagering law authorizes sports wagering on all professional sports and events, except for minor leagues, Olympics or international sports, in-state collegiate sports and esports. The official catalog of sports and events, or the process for approval of sports and events, will be determined through the current tribal-state compact negotiation process.
I am a sports wagering business wishing to enter the Washington market, can I start the license application process now?
No. The Gambling Commission’s current licensing system does not include licenses for sports wagering. We are currently in tribal compact negotiations with tribal representatives to develop a new licensing system for sports wagering. Once a licensing system is agreed upon, then the Gambling Commission will work with industry stakeholders to finalize the licensing system, including licensing fees, through the public rulemaking process. Once the licensing rules are finalized, sports wagering businesses will be able to apply for sports wagering licenses.
What is the cost of a sports wagering license?
We have not yet determined the fee for a sports wagering license or series of licenses. Fees will be determined through tribal negotiations and the public rulemaking process.
How do I know if my sports pool is legal (RCW 9.46.0335)?
Sports pools are allowed under Washington state law as long as: (1) the board is based on a single athletic event, (2) the board is divided into 100 equal squares, (3) numbers representing game scores are randomly assigned to squares, and (4) you must charge no more than $1 per square. Only one sports board is allowed per sporting event, per business or party. Both businesses and individuals can conduct sports boards within strict limitation.
Is bookmaking (sports book) legal in Washington?
No. "Bookmaking" means accepting bets upon the outcome of future contingent events, as a business or in which the bettor is charged a fee or "vigorish" for the opportunity to place a bet. This is illegal and would be considered professional gambling. Professional gambling statutes range from first degree (class B felony) to third degree (gross misdemeanor) depending on several factors, including the amount of money and persons involved.
Can I bet on my favorite horse?
Bets placed on horses follow different laws. For laws specific to betting on horse racing, please contact the Washington State Horse Racing Commission.
I won money on a sports bet but the bookie won't pay. What do I do?
If the bet was placed with a bookie, it is an illegal bet and you have no legal recourse; however, you can anonymously report the bookie and other illegal sports betting activity using our online tool.