AGA to Schumer: Sports Betting Doesn’t Need Federal Oversight

By Jill R. Dorson | Published: September 13, 2018 at 3:02 pm

“Additional federal engagement is not warranted at this time.”

Those words close the first paragraph of the American Gaming Association‘s latest volley in the discussion about the creation of federal sports betting regulation. The AGA, a national trade group, has been on the front lines in working with stakeholders to streamline the legislative process as sports betting becomes legal in more and more states.

On Thursday, it released a letter sent to Democratic Senator Chuck Schumer (New York), in response to Schumer’s call for a federal framework that would, among other things, require sportsbooks to use “official” league data and would allow the professional sports leagues a voice in determining what kinds of bets could be placed. The letter is intended as a reply to Schumer’s staff, which requested additional information from the AGA following an Aug. 2 meeting.

AGA: State Oversight of Sports Betting Protects Integrity, Creates Jobs and Will Effectively Kill the Black Market.

Schumer publicly outlined his position on Aug. 29 in a memo he originally released to ESPN. Schumer’s framework would benefit the professional leagues, which have been lobbying across the country for a sports betting “integrity fee,” which amounts to a royalty or a percentage of wagers to leagues — paid by sportsbooks — for bets place on their games.

Stakeholders are vehemently opposed to such a fee and in general a federal framework, preferring to work with each state legalizing sports betting. To date, no state that has legalized sports betting has required by law a fee to the leagues.

In the letter, signed by senior vice president of public affairs Sara Slane, the AGA reiterates its stance against a federal framework and its commitment to shutting down the illegal sports betting market. Slane argues that when the Supreme Court struck down the Professional and Amateur Sports Protection Act (PASPA) in May, it was an “essential first step” to eliminating the sports betting black market.

“Bringing sports betting activity into a transparent legal market, under state and tribal regulatory oversight, empowers law enforcement to tackle illegal gambling, provides essential consumer protection and better ensures bet and game integrity,” she wrote.

The AGA goes on to outline how legal sports betting regulated at the state and tribal levels can effectively quash the black market, create jobs, protect integrity and eliminate the possibility of legislative favoritism. The letter comes on the heels of a Neilson study released by the AGA last week that shows that the NFL would see increased revenue of up to $2.3 billion once a fully regulated legal sports betting market is established in the U.S.

Though the NFL has long been opposed to sports betting and has been lobbying for a federal framework, the league’s stance has clearly softened in recent months. Just last week, the Dallas Cowboys announced a partnership with an Oklahoma casino and in 2017, NFL owners voted the Raiders to move to Las Vegas. The NHL became the first pro league to put a team in Nevada when it put the expansion Vegas Golden Knights there in 2016. The team played its first season in 2017-18, and advanced to the Stanley Cup Finals.

Schumer joined Utah Republican Senator Orrin Hatch in his call for a federal sports betting framework. Until Schumer released his memo last week, Hatch, one of the original architects of PASPA, was the lone voice at the federal level. It is not terribly surprising that a New York lawmaker is making a move to support a federal framework — all four of the major professional leagues have their home offices in New York City, creating a unique situation for the Empire State.

Schumer’s Plan Would Force Sportsbooks to Buy Data Directly From the Leagues, Giving Them Additional Revenue Even Without an Integrity Fee.

Though Schumer did not point to the pro leagues’ business offices as a reason for his desire for a federal framework, the NBA, Major League Baseball and the PGA released a joint statement supporting his ideas. The three leagues have banded together previously to lobby for a “betting right and integrity fee.” Even without a payout, the professional leagues would benefit financially from Schumer’s plan, as sportsbooks would have to pay the leagues for “official data.”

The AGA has been steadfast in its opposition to a federal framework and offered a firmly worded response to Schumer’s memo when it was initially released. Thursday’s second reply was certainly equally as strong worded.

“Replacing an already proven regulatory regime with a non-existent and untested federal oversight apparatus would be out of step with 7 in 10 Americans who think this decision should be left to each state and tribe,” Slane said.

Since PASPA was deemed unconstitutional, Delaware, New Jersey, Mississippi and West Virginia have legal sportsbooks operating within their borders. Pennsylvania, which legalized sports betting in 2017, has rolled out its regulations and is in the licensing process, while Rhode Island legalized sports betting over the summer and plans are in place for legal sportsbooks to open in November. Lawmakers in many other states, among them New York, Kentucky, Ohio, Illinois and Michigan, are seriously working to legalize sports betting as well.

[Related: Veteran Oddsmaker Explains ‘Integrity Monitoring’ From Sportsbook Perspective]