Indiana's House Floor

After Spirited Hearing, Indiana Lawmakers Will Continue to Explore Sports Betting

Indiana on Friday became the latest state to hold a sports betting hearing, when lawmakers heard from various corners of the industry — a technology provider, the NBA, an anti-gambling group and small business owner Patrick Doerflein, who owns an app called “Burn and Bet,” referred to himself as a “hillbilly guy from Brown County” and asked legislators not to over regulate.

While the session had moments of levity, it was very different from the hearing in Illinois on Wednesday. Indiana state lawmakers put forth several sports betting bills in 2018 and the Gaming Commission signed on with a market analysis firm, but Hoosier State legislators on the Interim Joint Public Policy Committee still appeared to be in the early learning stages of learning about sports wagering.

One lawmaker asked if a technology professional had said “toad system” when he was referring to a “tote system,” and another asked NBA executive Dan Spillane if any states that have legalized sports betting passed a law granting the league an “integrity fee.” (None have.) This was in stark contrast to Illinois, where lawmakers asked detailed questions and focused on what sports betting would look like, rather than surface-level background questions.

Indiana Sports Betting Conversation Continues With Public Hearing, Testimony From Various Stakeholders, and Continued Education

As with hearings across the country this year, a highlight was Spillane’s testimony, during which he laid out four key principles that the NBA (and Major League Baseball) are looking for in state-level sports betting legislation:

• Requiring betting operators to share anonymized real-time data with sport leagues so they can monitor activity, and allowing leagues to submit “reasonable restrictions on betting on our own games” Spillane said, because some forms of wagering are “more susceptible to manipulation”;
• Requiring sportsbooks to use “official league data“;
• Allowing for betting on mobile platforms, like smartphones; and
• “Legislation should provide a modest royalty to the leagues. We have proposed 1/4 of 1 percent, which translates into 25 cents for ever $100 that was bet paid by sportsbooks,” Spillane said.

[Related: Indiana Sports Betting Bill Contains Bombshell ‘Integrity Fee’ Provision for Leagues]

In response to Spillane’s list, one lawmaker asked “if any of the six early adopters decided to pay a ‘royalty’ or ‘integrity fee’ — whichever it is” to the leagues. When Spillane answered in the negative, the lawmaker said, “So, currently zero?” and went on ask if professional leagues could “resolve this with just a commercial contract with gaming entities independently?”

Spillane did acknowledge his league’s agreement with MGM, through which the NBA provides official league data to the MGM’s sportsbooks and allows for use of trademarks, but went on to say, “So that’s all good and gets us a lot of what I’m talking about today, but I say it’s partial, because it wouldn’t be practical to do a commercial deal with every operator.”

There was plenty of back and forth following Spillane’s comments, including discussion about whether or not the NBA would increase its integrity monitoring efforts if no fee was mandated.

Rep Lucas to Spillane: "I'm a small business owner. Integrity is a cost of doing business."

"I don't understand the more pressure if someone else's betting $1 or $1M. You should be maintaining that integrity no matter what. that's something that escapes me."

— Sports Handle (@sports_handle) October 19, 2018

Representative Jim Lucas said: “I would hope that right now you’re doing all of those things whether you’re paid for it or not. For me as a legislator, it’s a simple fix — (mandate) a $5 million fine for anyone involved in this kind of situation. Ten million dollars for second, death penalty for third.

“To hear you say you want to be paid to ensure being ethical or to make sure you’re not committing fraud and deceit … that causes concern for me. You have to talk me out of that corner your words put me in.”

Spillane’s reply likely didn’t help his — or any of the professional leagues’ argument for a fee: “We’re going to do that regardless of what you decide here. We’re going to do everything we can to protect our sport. We’re going to do that whether or not you pay us, but it’s going to cost us. Gaming operators are going to make huge amounts of money, $260 million in this state alone … it’s hard to think of any other businesses that are built on other businesses.”

Other Stakeholders Weigh In

Shortly after Spillane’s testimony, Matt Bell of the Casino Association of Indiana offered his group’s thoughts on what sports betting in Indiana should look like — and that vision does not support what Spillane and the pro leagues are looking for. Among the principles Bell said his group would support:

• Licenses should be limited to already-licensed casinos;
• The Indiana Gaming Commission should be the regulating committee;
• Reasonable license fees  (i.e. no $10 million license fee like in Pennsylvania);
• Mobile sports betting;
• Allowing betting on in-state sports teams;
• In-game wagering;
• Legal sports betting age should be set at 21;
• Responsible gaming policies;
• A “single-digit” tax rate; and
• No fee of any kind to the professional leagues.

Among the other presentations was a study from the firm Eilers & Krejcik that shows that the U.S. would be the biggest legal sports betting market in the world. Gaming commission representatives Sara Tait (executive director) and Jenny Raske (deputy director) gave an overview of the study, which is 144 pages long and touches on how consumers would bet on sports, “skins,” explores limitations on sports betting, data sources, fees, taxes and what kinds of industry licenses would be available.

When the three-plus hour session wrapped up, lawmakers seemed to be in agreement that they should move forward studying sports betting, but be mindful of making the most educated decision when the general assembly does put forward a bill or bills.

There was no motion to vote or date specified for another hearing. The goal is to broadly move forward with sports betting with special attention to stomping out illegal wagering.