West Virginia Legalizes Sports Betting Despite MLB, NBA Opposition

On Friday, West Virginia Governor Jim Justice formally announced his intention to allow a sports betting bill to become law. The bill, which legalizes sports betting in West Virginia on the condition that the federal prohibition is repealed or stricken down, will become law without Gov. Justice’s signature.

SB 415 allows licensed gaming facilities in West Virginia to apply for sports betting licenses in the event the federal prohibition of sports betting is ended one way or another. Currently, the most likely avenue for that to happen is for the Supreme Court to rule in favor of New Jersey in its ongoing challenge of the federal law that prohibits states from authorizing sports wagering. The Supreme Court is expected to issue a decision within the next few months.

Under the terms of the bill, entities that hold a valid racetrack video lottery or gaming license will be able to apply to the West Virginia Lottery Commission for a sports betting license. Licenses will cost $100,000 and be valid for five-year terms. Mobile and online sports betting will also be permitted under the law.

Interestingly, the West Virginia sports betting bill includes text permitting the Lottery Commission to enter agreements with other states or jurisdictions. The bill even goes so far as to flat-out state that licensed operators “may accept wagers from an individual physically located in a state or jurisdiction with which the commission” has entered into a sports betting agreement – and this does include online wagers.

If other states follow West Virginia’s lead in this regard, it could set the stage for a competitive sports betting industry at the national level by allowing operators to sell their services across state lines. Other states would have to follow suit with their own laws and agreements would have to be reached, but West Virginia is an early mover in sports betting and may one day serve as a model for other states.

MLB and NBA Opposed Bill, Failed to Stop It

The MLB and NBA came out against this bill, in what has become predictable behavior for the major sports leagues. Both leagues opposed the bill not on moral grounds, but on the fact that the bill does not include a 1% integrity fee on betting handle payable to the leagues. This money is presumably supposed to be used by the leagues to protect their integrity of their games, but many are skeptical.

The MLB and NBA may have overplayed their hand with this sports integrity fee. The leagues are demanding “just” 1% of betting handle, which works out to about 20%+ of actual revenue. The amount of money a 1% betting handle tax actually represents has not been lost on anyone.

Both leagues have pushed different explanations for why the integrity fee is necessary, but so far none of the four states that have recently passed sports betting bills have included an integrity fee. Legal Sports Report explains here why West Virginia was especially important in this early battle over integrity fees.

However, Gov. Justice did leave the door open for further discussions with the sports leagues. In a press release published on the Office of the Governor’s website, a quote from Gov. Justice says this:

“After the U.S. Supreme Court issues its decision on sports wagering, to address any provisions of the legislation that might be in conflict, I will ask the Legislature to look at the advantages of partnering with the major sports leagues. I believe there could be real value to this partnership. I expect the Supreme Court to rule on this issue in the next few months.

“This approach will allow us to develop a relationship with all the major sports leagues so that it is beneficial to everyone.”