The Congressional hearing on sports betting, which was postponed in late June, is back on the docket.
Staff for the House Judiciary Committee on Thursday confirmed that the hearing “Post-PASPA: An Examination of Sports Betting in America” is slated for 10 a.m. ET on Sept. 27 before the U.S. House of Representatives Judiciary Subcommittee on Crime, Terrorism, Homeland Security, and Investigations. News of the hearing was first reported by ESPN’s David Purdum.
A full list of parties testifying was not immediately available. The American Gaming Association confirmed that Sara Slane, Senior Vice President of Public Affairs, will be testifying on behalf of the gaming industry. “Legal, regulated sports betting will enable increased transparency and enhance protections for consumers and betting and game integrity,” Slane said. “We look forward to discussing the U.S. gaming industry’s core principles for legalized sports betting with the Judiciary Committee at next week’s hearing.”
Becky Harris, Chairwoman of the Nevada Gaming Control Board and a former state senator and Vice Chair of Nevada’s Judiciary Committee, will also testify, per a Gambling Compliance report.
House Judiciary Subcommittee Set To Hear ‘Post-PASPA: An Examination of Sports Betting in America’
This hearing will come roughly four-and-a-half-months after the United States Supreme Court struck down the Professional and Amateur Sports Protection Act (PASPA) — a 1992 federal law banning full-fledged sports wagering outside Nevada. Since the high court ruled the law unconstitutional on Tenth Amendment grounds on May 14, four states have had licensed operators take legal sports bets — New Jersey, Delaware, Mississippi and West Virginia, with two more likely to join by the end of 2018 in Pennsylvania and Rhode Island, both of which have legalized sports wagering.
“My subcommittee will look at the implications of this SCOTUS ruling and talk about what it means for the integrity of sports as well as what sorts of improper or illicit activities could arise,” subcommittee chairman Representative Jim Sensenbrenner (R-Wis.) told ESPN. “Ultimately, we want to determine whether or not a basic federal framework is necessary to guide states’ new gambling policies.”
Meanwhile in the upper chamber … on the same day the PASPA ruling came down, Senator Orrin Hatch (R-Utah), a co-sponsor of PASPA, called for new legislation concerning sports wagering. Recently Senator Chuck Schumer (D-NY) joined him, saying that he wants to see sportsbooks across the nation use only “official league data” — information and stats, produced by the leagues themselves, used to grade wagers — and to allow the professional sports leagues a voice in deciding what types of bets should be allowed.
Absent a full list of people testifying, we can at least identify the major categories of stakeholders, most of which are likely to have representation directly or indirectly.
The Pro Sports Leagues and the NCAA:
We can expect that the NFL will be testifying, as was rumored the last time this hearing made the calendar. Probably the NBA (Dan Spillane), Major League Baseball (Bryan Seeley) and the PGA Tour will be there, too.
The latter three have been lobbying together according to the same talking points in two dozen state legislatures. Those leagues have acknowledged resistance to their desire for an “integrity fee” or a “betting right”– a cut of all wagers made on the respective leagues. But they are not giving up and are preparing to fight in Kentucky and continue to battle in West Virginia and elsewhere for provisions requiring states to use their “official” data, as well for a fixed fee.
The NFL appears mainly interested in monetizing its “official league data.” The other leagues, the NCAA included, view this as a core of their monetization strategy, as well. (The NFL is also acutely aware that nobody except the Bills Mafia and Vikings fans would be watching the Bills +17 at Vikings game on Sunday but for sports betting.)
Sportsbooks and Casino Companies:
At hearings in numerous states, officials from various gaming groups such as Hollywood Casino (Penn National Gaming), Foxwoods Casino, William Hill US and others have testified as to the negative impact of taxes and fees — such as an “integrity fee” — would/will have on the regulated U.S. sports betting industry.
Put simply, more taxes and fees means they’ll not have the ability to legitimately compete with an offshore and domestic black market that has flourished since U.S. Senator Bill Bradley ushered PASPA through in 1992, with the backing of the NFL and other leagues. The NFL has publicly agreed about the negative impact of such financial obstacles, urging Pennsylvania to reconsider its 36 percent tax rate on sports betting revenue in addition to a $10 million licensure fee.
None of the AGA or MGM Resorts International or Boyd Gaming or FanDuel or anyone on the bookmaker/casino side of things wants federal intervention. Especially given what it accomplished last time. Especially since Hatch and Schumer on the Senate side are echoing league talking points and are amenable to granting leagues a monopoly on certain data that courts have ruled is public domain and cannot be controlled. No bookmaker (or any business) wants the feds telling them they must purchase a data package from leagues — even at a “commercially reasonable” rate.
Lobbying Groups and Trade Associations:
We will likely also hear from from anti-gambling groups, from horsemen’s associations who will want equal access to sports betting licenses/certificates, and a tribal gaming representative such as the National Indian Gaming Association. One factor complicating things in several states is how to manage the tribal-state compacts and existing exclusivity agreements between states and tribes.
It is also likely that representatives from organizations that monitor betting activity will appear — perhaps someone from Sportradar (partnered with the NBA) or Genius Sports (partnered with the NCAA).
The Keg Has Already Been Tapped.
So, what is the goal of this hearing, what legislation may be in the works and what is the likelihood of passage with midterm elections less than 50 days away? Great questions. We don’t know yet.
There are now four states already enjoying a new, growing business and a new source of tax revenue that did not require the raising of an existing tax! Always a winner. There are numerous other states ready to fall in line and grasp a newfound freedom to license and regulate sports betting.
New Jersey, which led and won the fight against PASPA, saw its sportsbooks generate nearly $100 million betting handle in August and about $1 million in new revenue for the state in the month alone. The federal government’s piece is growing too, via the 0.25 percent federal excise tax that comes off the top (which is what the leagues want too — but a full percent if possible).
So this should be quite a spectacle. Last week we speculated that Congress does not have an appetite right now for something big and bold and objectionable, but rather might look to modernize a criminal statute — the Sports Bribery Act — to give it some more bite.
New Jersey Representative Frank Pallone (NJ-6), who has long championed legal sports betting, took his “GAME Act” off the table, which he first circulated in May 2017. It would have created a federal opt-in sports betting framework. No longer necessary in his view with states carving out their preferred frameworks.
It’s possible that all sides coalesce around something in the name of gaming integrity, as Ryan Rodenberg explores for ESPN.
“We believe a federal requirement that all parties share information is best suited to benefit sports integrity,” Andy Levinson, senior vice president of the PGA Tour, told ESPN. “Such a holistic approach would be a three-way street of transparency between sports leagues, regulators, and betting providers.”
Indeed, all sides share the goal of protecting and preserving integrity — clean games that consumers can trust.
“Everybody wants integrity,” said veteran bookmaker Robert Walker in a conversation about monitoring betting activity. “I mean, nobody would bet if there wasn’t integrity. My standpoint is, or viewpoint is, is that we don’t need the leagues for any of that. That’s what we do. That’s all we do. That’s all a bookmaker does, is monitor the games 24-7 and look for suspicious wagers.”
Licensed shops just don’t want the government forcing them to pay the leagues for public-domain data, or to finance the leagues’ own integrity safeguards.
Separate from governmental intervention, there are deals getting made: On July 31, the NBA and MGM struck a 3-year, $25 million deal making MGM the “official gaming partner” of the NBA.
It’s a non-exclusive deal that will permit MGM and its properties offering sports betting to use official NBA league data as well as NBA logos and marks in conjunction with its sports betting products.
“Integrating the NBA’s assets and having official NBA data showcased across the MGM Resorts platforms will provide us with a distinct advantage and instill more confidence in knowing that our data is directly from the NBA,” said MGM CEO Jim Murren.
