Date: 13.07.2023

by Bartosz Burzyński

Better late than never: Puerto Rico unfreezes the online sports betting market

The rescission of the PASPA Act, by the US Supreme Court in 2018, opened the way for legalization of sports betting not only in the US states but also in dependent territories. This is exactly what has taken place in Puerto Rico, which has the status of “organized unincorporated territory of the United States with the status of ‘Commonwealth’.” However, to legally place their first online bet, Puerto Ricans had to wait another five years Recently, however, the local industry has gained impetus after a period of stagnation. 

A winding road to market launch 

We have seen from the example of the United States that, despite the legal possibility, not all states look favorably toward the legalization of sports betting. At first, everything indicated that things would move much faster in Puerto Rico.

Indeed, as early as 2019, Governor Ricard Rossello signed a bill that legalized sports betting in Puerto Rico. The newly created Gaming Commission, in consultation with Gaming Laboratories International, developed even then a preliminary set of regulations.

Everyone was about to find out that there is a long way to go from preliminary regulations to final market regulation. The work on the norms and standards, to which the bookmakers operating in Puerto Rico would have to adapt, took over two years.

When talking about the date of regulation of the sports betting market, November 8, 2021, seems more relevant, when the Gaming Commission opened the way for bookmakers and fantasy operators to apply for a license.

Another important date on our timeline is February 11, 2022. At the time, Puerto Rico’s regulated sports betting market had its first operator. Under an agreement signed with Casino del Mar, BetMGM has appeared on the Caribbean island. At the beginning, the bookmaker offered its customers 12 stands and 5 betting windows.

“This is a monumental day for BetMGM as it marks the launch of our first operation outside of the U.S. mainland,” “Casino del Mar delivers exceptional guest experiences and is an ideal partner as we look to extend our brand in Puerto Rico.” said back then BetMGM CEO Adam Greenblatt.

The operator also shared his ambitious plans for the future. BetMGM has announced that it intends to offer its services to customers also via a mobile application by the end of the year. However, we already know that achieving this goal has become impossible within the set deadline. However, the launch of the online market was only a matter of time.

When the industry was only talking about launching the Ontario market on April 4, 2022, Draft Kings, which dropped out of the Canadian race, was involved in a completely different project. It was then that the bookmaker officially began cooperation with the Foxwoods El San Juan casino and appeared with its retail offer in Puerto Rico.

Caesars also followed in DraftKings’ footsteps on December 21, signing a contract with Casino Metro and deciding to try his hand at the Caribbean island.

While 2022 was mainly marked by the development of the retail market in Puerto Rico, it seems that 2023 will be marked by online activity.

BetMGM and Caesars enter the online market 

As we have already mentioned, BetMGM’s plans to launch a mobile app in Puerto Rico back in 2022 turned out to be a bit too optimistic. The online market took a little longer to take off, but quite recently online betting in Puerto Rico has become a reality.

The two companies, which received their licenses in April of this year, have already moved forward with their offerings. On June 8, BetMGM launched its application, and a month later Caesars entered the market. As announced, more serious players – DraftKings and FanDuel – will soon come to the Caribbean.

“The launch of our mobile sports wagering platform is an excellent complement to the elevated experience we’ve provided customers at MetroBets with Caesars Sportsbook at Casino Metro,” said Eric Hession, President of Caesars Digital. “We’d like to thank our partners and the Puerto Rico Gaming Commission for making our sportsbook available throughout all of Puerto Rico and we’re confident customers will enjoy an experience they can’t find anywhere else.”

Little has been heard about further planned launches so far. However, it is worth remembering that we are talking here about a jurisdiction with a population of just over 3 million. To put it more figuratively, if Puerto Rico were a full-fledged part of the US, it would close the top 30 ranking of the most populous states.

Will online sports betting in Puerto Rico spread its wings? 

The much larger markets of the individual US states are already a prime example of how smaller companies are in a hopeless situation in these markets. So, if all of the “big four” appear in Puerto Rico within the first few months, it’s hard to expect any of the smaller operators to decide to face Goliath.

Moreover, while the retail market is very friendly to betting operators with only 7% of the applicable tax, in the case of online betting we can no longer talk about such an attractive tax. In this case, bookmakers are forced to pay 12% of the tax.

Of course, this is still not an exceptionally high rate, because in many US states regulators are much less understanding for bookmakers (20% tax in Massachusetts and 51% in New York). However, the overall attractiveness of the Puerto Rican market is difficult to compare with these states. For example, Iowa, which is the closest to Puerto Rico in terms of population, has a tax of just 6.75%.

Unfortunately, Puerto Rico does not stand out at the moment also in terms of player friendliness. Customers of bookmakers offering their online services are obliged to personally verify their identity at the operator’s stationary outlet. Customers in the United States are also not unfamiliar with such a regulation, as this type of rule applies, among others, to players in Nevada.

Once again, however, it is worth noting that it is difficult to compare the state enjoying the reputation of the cradle of American gambling and the jurisdiction in which legal online gambling is taking its first steps.

Of course, we can be glad that after five years of waiting Puerto Rico has decided to finally unfreeze the online betting. This is good news for Puerto Rico itself which will enjoy more tax revenues, for local casinos that will gain powerful partners such as FanDuel, DraftKings, Caesars, or BetMGM, as well as for players who will eventually be protected.

In the long run, however, regulatory issues may slow the growth of the industry, which, unless it becomes a bit more operator- or player-friendly, may find it difficult to spread its wings.