After failing to thwart the spread of sports gambling, major-league football, baseball, basketball and hockey could wind up earning billions in additional fees to help protect the integrity of their games and exploit data-licensing opportunities, thanks to a Supreme Court decision this month that’s expected to open the floodgates to legalized gambling around the country.
The National Football League, Major League Baseball, the National Basketball Association and the National Hockey League League all favor a 1 percent assessment on the total amount of money wagered — known as the handle — to offset their costs of keeping their games free from the influence of gamblers. Bills pending before a half dozen states contain what are called “integrity fees,” although recently passed gambling legislation in West Virginia doesn’t have the fees despite lobbying from the leagues. According to sports gambling experts, the proposed 1 percent fee would erode 20 percent of the profit of the bookmakers, which makes them a tough sell for the gaming industry.- Advertisement -
“It is something that the leagues are going to push incredibly hard for,” said Chris Grove, editor-in-chief of Legal Sports Report, which tracks the gambling industry. “It is an uphill battle but [the leagues] wield considerable influence and have friends on both sides of the aisle in most state [legislatures].”
The potential windfall from integrity fees could top $1 billion annually, depending on the number of states that enact sports betting, estimates market research firm Eilers Krejcik Gaming.
And the potential payoffs for leagues from licensing their games and players data, which they also are lobbying for, could exceed integrity fees, according to Grove. “There’s a school of thought that says the leagues are asking for integrity fees almost as a red herring … as something to be able to give away or to give up ground on in order to hold their ground on their data requests,” Grove said. “Monetization of data is something the leagues look at .. as their next content-driven revenue stream.”
Though game statistics and scores are in the public domain, a league can copyright data that is organized in a certain way, according to Jodi Balsam, an assistant professor of law at Brooklyn Law School. She notes that thwarting gamblers inside the professional sports industry won’t be easy — or cheap.
“They are going to be spending a lot of time investigating the whole range of stakeholders within the league — owners, front office officials — you name it,” she said, adding “they are going to be looking into bizarre spending habits and behaviors [of insiders].”
According to The Legal Sports Report, Major League Baseball and the National Basketball Association and are “actively opposing” state legislation that doesn’t include an integrity fee. Leagues are also pushing for sports bookmakers to use official data.
MLB estimates that it will incur millions in additional expenses to monitor newly available betting data, investigate suspicious activities and implement new player compliance and education program, according to spokesman Michael Tevan. “Like other leagues,” he said, “making official data available in the marketplace is a potential avenue [of revenue] and one of many areas of this topic that we must explore.”
Officials from the NBA pointed to a recent interview that Commissioner Adam Silver gave to Bloomberg News where he noted that the League will incur an “enormous expense” to comply with sports gambling legislation. In addition, Silver noted the NBA expects to be compensated for the $7.5 billion it spends on the “intellectual property” that fans enjoy on the basketball court.
“So this notion that as the intellectual property creators that we should receive a 1 percent fee seems very fair to me,” he said.
The NFL — by far the most popular U.S. professional sport — has called on the U.S. Congress to develop a regulatory framework for sports betting, noting in a statement to the Associated Press that “Congress has long recognized the potential harms posed by sports betting to the integrity of sporting contests and the public confidence in these events.” NFL officials didn’t respond to requests for comment for this story.
According to Balsam, the NFL is especially interested in data licensing “A state could still condition a ‘sportsbook’ betting license on using and paying for official league data,” she said, adding that bookmakers may want to use the information to bolster their own legitimacy.
Speaking to CNBC, National Hockey League Commissioner Gary Bettman argued that sports betting could “create a fair amount of opportunity” for hockey. He also favors congressional action to ensure a consistent regulatory approach. The NHL couldn’t be reached for comment for this story.
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