The Oregon Lottery is paying high fees for sports betting.

  • The state of Oregon is losing money on the sports betting market as they have to pay over half of the revenue gained to their operators like SBTech.
  • Oregon has a multi-year contract with SBTech which means they will continue to see a loss in profits from sports betting in the state.

SALEM, Ore.The Oregon Lottery gambled and lost when they chose SBTech as their mobile sports betting operator for the state’s Scoreboard app.

There has been a continued back and forth with the two parties regarding the contract between them and the lack of profits for the Beaver State from the sports betting market.

Currently, the only people benefitting from sports betting in Oregon is SBTech rather than the state itself.

Bad Contract Deal For Oregon

Too many large chunks of revenue from sports betting are being taken from the Oregon Lottery’s share because of their bad contract deal. The Scoreboard app officially rolled out to the public in October.

In five months, it has made about $6 million in revenue but over half of that is lost in payments to SBTech for various reasons. That’s a huge percentage for any state to pay their operators.

It was the low profit margins that led the public to want to know what type of contract was in place for their sports betting app. However, the tech company filed suit because of confidentiality reasons in an effort to halt specific trade secrets they didn’t want their competitors to know about.

In January, SBTech tried suing the Oregon Lottery because the lottery was going to release the contract documents to the public.

After publicizing a highly redacted form of the contract, the courts decided to force the hand of SBTech in releasing the original documents in full. It was only then that the people of Oregon were able to see just how much money was being lost to keep their Scoreboard app running.

Before the official release, the Oregon Lottery offered a version of what SBTech was being paid that wasn’t exactly in line with the reality of payment percentages.

The lottery said that the tech company was receiving anywhere from 9-11% of revenue from the net profits on sports betting in “Access Fees”. After three years, they would have a 12% chunk of profits from the market.

However, the real documents revealed that SBTech is receiving much more than that in other associated fees.

The company requires a minimum payment of $300,000 each month through April 2020 where that payment will then be increased to $350,000. Additionally, the net revenue they make from sports betting is set at 16% with a jump to 17% after three years which is all under the “Managed Service Fees” part of their contract.

These combined fees allow SBTech to gain a maximum of 29% of net profits with the added bonus of their $350,000 a month payment.

With these fees, on top of additional payments to other companies for services such as the processing of payments by users equals as much as 51% of the sports betting market profits for the state being paid out to others

The state of Oregon is left with the minority share on all money made on the gambling of sporting events. Companies like SBTech and others that are helping to keep Scoreboard running have the majority share over sports betting profits.

With their current contract in place for years to come, the Beaver State may continue to lose money on legalized sports betting as they gain less than half of all net profits.

News tags: | | |