With three states on the verge of implementing data mandates on licensed sportsbook operators and other states continuing to see pitches about an off-the-top “royalty” payment to sports leagues, the controversial provision on official league data took center stage Tuesday at a hearing in Missouri.
A bill sponsored by Rep. Cody Smith (R – 163rd District), HB 2284, would have required sportsbooks to pay a “royalty” of 0.25% to the Missouri Gaming Commission (MGC) for one-fourth of one percent on “sporting events conducted by registered sports governing bodies.”
But Smith removed the section from a substitute bill, he revealed during testimony Tuesday at a Missouri hearing in Jefferson City. Smith appeared before the Missouri House Special Committee On Government Oversight alongside Rep. Phil Christofanelli (R – 105th District), the author of a competing bill. The committee weighed the merits of both bills, with the intent of molding the two into a workable piece of legislation.
Christofanelli’s bill, HB 2318, does not include any provisions on official league data.
“It is my belief that the free market can figure out how to distribute data across the casinos,” Christofanelli testified.
At present, Michigan, Tennessee and Illinois have provisions in place that would require operators to purchase official league data for in-game betting purposes. All three have yet to finalize sports betting regulations pertaining to the data mandates. Christofanelli’s bill makes also no mention of a “royalty” fee, which no state has yet imposed on legal operators.
Data mandate debate rolls on
A previous incarnation of Smith’s bill included a section that would have required sportsbooks to pay a “royalty” of 0.25% to the commission on sporting events conducted by registered sports governing bodies during the previous quarter. The bill further required the commission to disburse the funds to the registered sports governing bodies by April 30 of each year.
A fiscal note released Feb. 24 by the Missouri Joint Committee On Legislative Research estimated that the sports leagues and select Missouri public universities would have received approximately $10.6 million a year in royalties from the operators through Fiscal Year 2025. The professional sports leagues, under the projection, would have received an estimated $5.3 million annually, with the same amount apportioned to the universities.
The modifications assuaged some concerns of two panelists, Missouri Gaming Association Executive Director Mike Winter and Penn National Gaming Executive Director Todd George, who testified in opposition to Smith’s bill. The panelists still took issue with another section that remained in Smith’s bill on the commercial rates for official league data. The section enables operators to file a request with the commission if they believe the data is not being provided on “commercially reasonable terms.”
If a sports governing body does not notify the commission of its desire to supply official league data, an operator may use any data source for determining the results of any and all tier two sports wagers on athletic events of that sports governing body. Within sixty days of the commission notifying each sports wagering operator of a sports governing body’s notification to the commission, operators shall use only official league data to determine the results of tier two sports wagers on athletic events sanctioned by that sports governing body unless: the sports governing body or designee cannot provide a feed of official league data to determine the results of a particular type of tier two sports wager, in which case sports wagering operators may use any data source for determining the results of the applicable tier two sports wager until such time as such data feed becomes available on commercially reasonable terms. — HB 2284
When evaluating whether official league data is being offered on commercially reasonable terms, the commission may consider several factors, according to the bill:
- The availability of official league data from more than one authorized source
- Market information regarding the purchase of data by any authorized source
- The quality and complexity of the process used for data collection
- The extent to which leagues have made data for setting tier two sports wagers available to operators.
The committee also heard from Jeremy Kudon, a lobbyist who has represented the NBA, MLB and the PGA Tour at numerous state legislative hearings throughout the nation since PASPA was struck down by the Supreme Court in May 2018. Kudon criticized HB 2318 for lacking the consumer protections offered in Smith’s bill.
“The bill does not even reference data official or otherwise, which is pretty remarkable when you consider that data is to sports betting what cards are to blackjack,” Kudon testified.
Tax implications
The two bills also differ in terms of proposed tax rates. Christofanelli’s bill calls for a tax of 6.75% on the adjusted gross receipts (AGR) of a licensed sportsbook operator, while a bill from Smith pegs the tax rate at 9%. At that rate, the revenues from the tax could generate approximately $8.9 million annually for the state, the fiscal analysis found.
MISSOURI:
“I’m willing to negotiate to get (the deal) done. When I say I am not married to anything in this bill, I’m not. I’m just married to the idea of getting it to the altar of the governor’s desk.”
Keep an eye on this one. https://t.co/vuaLLvbwTX
— Sports Handle (@sports_handle) February 18, 2020
The hearing did not address any sports betting issues related to the possible expansion of Video Lottery Terminals on Tuesday. The committee previously approved a bill from Rep. Dan Shaul (R – 113rd district) that included an amendment that would allow sports wagering and slot machines in certain designated entertainment districts such as the Power and Light District in Kansas City.
The topic could be debated at a Missouri Senate Appropriations Committee hearing Wednesday. The committee may consider SB 566, a bill that seeks to establish the Missouri Video Lottery Control Act.
