Realizing Sports Betting is Imminent: Pro Leagues Take Action

leagues preparing sports betting

An interesting report from the Washington Post published over the weekend reveals the extent to which the nation’s major professional sports leagues are preparing for legal sports betting. The outcome from a pending Supreme Court case pitting New Jersey against the national sports betting prohibition is far from guaranteed, but the sports leagues have made it clear they believe the Supreme Court is more likely than not to rule in favor of New Jersey.

New Jersey is currently awaiting a decision from the Supreme Court in its challenge of the federal Professional and Amateur Sports Protection Action (PASPA). The Supreme Court has already heard arguments from both sides and is expected to send down a decision sometime between now and this summer.

If the Supreme Court does rule in favor of New Jersey, it is likely there will be legal sports betting taking place in at least one or two states before the end of the upcoming baseball season. The leagues have traditionally taken a strong stance against online sports betting, but all are preparing for the reality of the situation and some are even preparing to capitalize in their own ways.

Many have been speculating that the Supreme Court will rule in favor of New Jersey even though the outcome remains uncertain, and the sports leagues have taken note. The NBA and MLB have been particularly active of late in terms of preparing for the possibility and lobbying state governments across the country to pass sports betting legislation favorable to the leagues.

Although the leagues have opposed sports betting for decades, that hasn’t stopped them from attempting to capitalize on what could potentially become a new billion-dollar industry. As a part of their lobbying efforts, the NBA and MLB have both urged lawmakers in multiple states to include a massive “integrity fee” in legislation that seeks to regulate sports betting in the eventuality that the Supreme Court rules PASPA unconstitutional.

According to the Washington Post, baseball players on every MLB team will be receiving a new type of training this spring this year – an education of sports betting and what it means for the league. Coaches and umpires are also being briefed as the league prepares for what it considers to be a very realistic probability that sports betting is legal in some parts of the country by the end of this season.

NBA and MLB Most Active in Preparing for Sports Betting

Each of the major professional sports leagues in the USA has taken a slightly different approach to dealing with betting. The NBA and MLB have been the most vocal and active as they send representatives across the country lobbying for an integrity fee, giving leagues the authority to prohibit certain types of wagers and permitting online betting.

Lobbying for an Integrity Fee

Representatives of the NBA and MLB have argued that the sports integrity fee is necessary to help the leagues offset the costs of ensuring the integrity of games as well as the compensate them for the increased risk to their reputations brought on by sports betting. The leagues have also at times argued that they deserve an integrity fee as a type of royalty for all the money and effort they expend hosting the games that others would profit off of in a world where sports betting is legal.

NBA General Counsel Dan Spillane put it this way at a hearing in Connecticut earlier this month:

“Sports betting is built on our games. If something goes wrong, if there’s a scandal, something that tarnishes the image of the game, that’s going to be a cost borne by the sports leagues, and less of a cost borne by the operators that offer sports bets.”

The idea of an integrity fee has received significant criticism from lawmakers and pundits alike. The leagues have pitched the integrity fee as just 1% of betting handle, but it seems few have lost sight of the fact that sports betting is a low margin business that is lucky to see 5% of betting handle kept as revenue before all other expenses are paid. A 1% fee is the equivalent of a 20% or higher tax on revenue.

William Hill Vice President of Strategy and Business Development Dan Shapiro countered that “this is a low margin business. Any other taxes or fees would make it difficult for legal bookmakers to price the product competitively.”

If William Hill’s fears hold true, legal operators would have few options other than to offer worse odds to their customers. That would in turn lead to a percentage of potential customers going right back to underground/offshore operators for better value on their wagers.

Betting Restrictions Sought

The NBA and MLB are also seeking the authority to restrict certain types of bets placed on their games. This demand can be interpreted in at least two different ways depending on who you ask.

In the Washington Post article mentioned previously, it is explained that the leagues wish to have the ability to restrict specific types of bets such as who will commit the first foul or whether the first pitch will be a ball or a strike.

Such restrictions could potentially give the NCAA and NFL (which have both showed sustained opposition to sports betting) a way to opt-out of sports betting altogether.

Permitting Online Betting

The sports leagues are also lobbying in favor of online betting as a means to compete against underground and offshore sportsbooks. Convenience is huge for the next generation of sports bettors, and many customers would be turned off from betting in the USA if it requires driving to the casino to place every bet. If bettors are forced to fill up the car and drive to the casino to bet legally, it is highly likely a significant portion of them will just go right back to unregulated sportsbooks.

NFL, NHL and NCAA Not On Board

The NFL, NHL and NCAA have had little to say one way or another regarding sports betting in recent months. Out of those three, the NHL has been the most noncommittal. The league seems mostly unconcerned with sports betting in general.

NHL Commissioner Gary Bettman has said he is “agnostic” to sports betting because the NHL accounts for such a small percentage of the sports bets placed in the USA, but did say he hopes the Supreme Court sides with PASPA. NHL Deputy Commissioner Bill Daly recently told the Washington Post that the league will “digest the opinion and make adjustments to our existing policies as necessary.”

The NFL remains opposed to sports betting but has also said the league will be prepared no matter the outcome. NFL Commissioner Roger Goodell has repeatedly emphasized that the NFL’s main priority is the integrity of the game.

The NCAA has been the league most consistently opposed to sports betting. The NCAA has said little on the matter except to leave up a statement on its website stating, “The NCAA opposed all forms of legal and illegal sports wagering…”

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