After spending most of its time on the sidelines, the NFL has inserted itself squarely into the conversation about what it wants legal U.S. sports betting to look like – both for itself and gaming operators.
The Pennsylvania Gaming Control Board earlier this month received 14 letters from interested parties after its request for comment on the state’s temporary sports wagering regulations. PA sports betting became possible through the law HB 271 in 2017, and the state currently developing a framework to regulate the endeavor.
The NFL, on behalf of the league and its Pennsylvania-based teams, the Philadelphia Eagles and Pittsburgh Steelers, had plenty to say in response to the state’s temporary regulations and the enabling legislation.
NFL to Pennsylvania: $10 Million Licensing Fee and 34 Percent Tax Rate Will Make PA Sports Betting Unfeasible for Gaming Operators.
Interestingly, the league, which has publicly stated that it prefers a federal framework for sports betting and has generally been opposed to the legalization of sports betting, addresses Pennsylvania’s astronomically high licensing fees and tax rate in its letter.
The league calls out the state, stating that these costs may “render legal market participants unable to effectively compete with the illegal market” and suggests it “reconsider laws and regulations that could have unintended consequences of advancing illegal sports betting.”
The letter is signed by Jocelyn Moore, NFL Senior Vice President of Public Policy and Government Affairs.
Pennsylvania’s law calls for a $10 million licensing fee, a 34 percent state tax on gaming revenue and a 2 percent local tax on gaming revenue. While the NFL would not have to pay any of these fees, by addressing them, it seems the league has, at the very least, reached the point where it accepts that expanded legal sports betting has arrived.
In all likelihood it’s not purely a benevolent position: the NFL like the other leagues is looking to charge licensed operators for its “official” data feeds and strike other commercial agreements with operators.
The NFL wasn’t the only respondent to raise a red flag about the high cost of doing business in Pennsylvania.
In its letter, Penn National Gaming, which operates 29 gaming facilities in North America, including Pennsylvania, had this to say about the astronomical fees:
“PNG first notes that the $10 million license fee and 36 percent tax rate established in the Gaming Expansion Legislation are the highest in the world and may make it impossible for a casino operator to make any return on its investment capital.”
[Also See: Odds Shift in Race for Operator Dominance in Legal U.S. Sports Betting Market]
Gaming Operators Say It May Be ‘Impossible’ to Turn a Profit on PA Sports Betting.
Greenwood Gaming and Entertainment, a gaming operator based in Bensalem, Penn. that operates venues in Pennsylvania, also pointed a finger at the state for its high licensing and tax rates.
Besides the surprising comment about the high cost of doing business in the Keystone State, the NFL also suggests that the state “eliminate the illegal sports betting market,” and goes on to explain how the state could do so. The league’s enthusiasm at eliminating an illegal marketplace is, again, a show that it accepts the idea that legal sports betting is here to stay, possibly governed only at the state and not federal level, and now it must find ways to control and monetize the market.
In its letter, the league also reiterated its four “core” principals for legal sports betting, which include consumer protections, protection of the league’s intellectual property, official data and integrity monitoring.
A common theme among the 14 responses is integrity monitoring. A total of seven professional or college sports teams or leagues weighed in. The major professional leagues have been lobbying states across the country since the start of the 2018 legislative session for a payout to “protect the integrity of the game.” But Pennsylvania passed its law in 2017, before the NBA and Major League Baseball rolled out its “model legislation” it has been sharing with lawmakers.
Among those asking the state to reconsider an integrity fee is MLB’s Pittsburgh Pirates, who stated: “We are very concerned the current iteration of the Regulation does not call for any sort of sports wagering revenue to be set aside to ensure the integrity of the sports on which the wagering is based.”
The Pirates went on to ask the Gaming Control Board to earmark revenue for the upkeep and capital improvements at PNC Park in Pittsburgh.
MLB, NBA and PGA Tour Weigh in on PA Sports Betting Temporary Regulations, Saying They Want a Cut of the Action.
A joint letter from the NBA, Major League Baseball and the PGA Tour essentially addresses the need for an “integrity fee,” though it doesn’t specifically use the phrase. Pennsylvania’s law does not contain a payout to the leagues.
“When it comes to maintaining the public’s trust in the integrity of professional sports, there is no room for error. The loss of confidence in sports and the sports betting market that would result from a sports betting scandal, would harm the sports leagues, the millions of sports fans in Pennsylvania, and, in the form of lost tax revenue, the state’s treasury.”
The letter goes on to outline the leagues’ three key “areas of concern”: transparency, accuracy and safety. The leagues explicitly ask for control of data used by sportsbooks, referring to it as “official league data,” as well as addressing the ability to restrict certain kinds of betting (i.e. in-game wagering), which the leagues view as “inherently riskier.” In fact, the letter states that “minor leagues, for example, are more vulnerable to corruption because of the lower pay.”
In a departure from what other states have already set as precedent, Pennsylvania’s temporary rules allow for sports wagering on collegiate sporting events. Pennsylvania would be the first state to allow sports betting on college teams housed within the state. Both New Jersey and Delaware, both of which have already rolled out sports betting, do not allow betting on collegiate teams in their respective states.
PA Temporary Regulations Allow for Sports Betting on Local Collegiate Teams and Those Same Schools Are Crying Foul.
Penn State President Eric J. Barron and University of Pittsburgh Director of Athletics Heather Lyke, in their letters to the Gaming Control Board, strongly urged regulators to prohibit betting on collegiate teams that are based in Pennsylvania.
From Barron’s letter: “We are concerned that implementation is likely to have a negative effect on the integrity of college athletics and on the health, safety and welfare of Pitt’s students. Students may be more inclined to participate in gambling activities, possibly to their detriment. … Further, affected colleges and universities will have to confront issues they have not faced in the past. For example, there may now be obligations or pressures to disseminate information about student-athlete injuries or playing status, which would have to be balanced with student privacy expectations and interests.”