A Missouri sports betting bill on Monday cleared the House General Laws Committee, and one of its provisions is a doozy: It calls for an “entry and facilities infrastructure fee” to be funded with an off-the-top cut from all legal sports bets — in order to pay for the construction and upkeep of private or commercial stadiums in the state.
This 0.6% fee on total betting handle would come in addition to a 0.25% “royalty” — aka “integrity fee” — included in the bill, combining for what amounts to a large 0.85% off-the-top tax benefiting sports leagues directly and indirectly, in exchange for nothing.
“Just so that everyone understands, the tax assessment here … between the royalty fee and the stadium fee, 0.85% would translate to a 17% tax rate,” state Rep. John Carpenter explained to the Missouri Times. “I’m willing to support a compromise, but this compromise has a 17% tax rate that isn’t going to go to the state.”
And keep in mind this is Missouri, where state taxpayers are still on the hook for roughly $75 mm out of an original $280 mm to finance the Edward Jones Dome that was built to house the NFL’s Rams … which just represented the city of Los Angeles in Super Bowl LIII. That debt isn’t expected to be paid off until 2021 at the earliest, with St. Louis taxpayers currently owing $5 mm per year on it. (Of course, pro sports league bilking of state taxpayers is hardly unique to Missouri.)
Nevertheless, amazingly, this bill has some legs.
“I thought, what if we put the integrity fee into a fund, because whether it’s the Scottrade Center or Arrowhead Stadium or the Edward Jones Dome … they don’t only need money to upgrade the actual facilities, but to upgrade the fan experience,” Missouri Sen. Denny Hoskins told Sports Handle in Nov. 2018 before pre-filing Senate Bill 44, where the entry and facilities infrastructure fee originated.
No doubt it’s understandable that lawmakers cannot be expected to become subject matter experts about the multitude of issues that cross their desks each year. But laws have consequences, and it is reasonable to expect proposals grounded in some logic and that would actually serve the constituents who put the lawmakers in office.
And on that note, we go to a variety of the more nonsensical sports betting proposals we’ve seen over the past 18 months. Some of these ideas have evolved, gained traction, been dismissed and/or ridiculed. Here goes.
No sports betting on Sundays or major holidays (Tennessee)
The amendment idea came up in a committee meeting — within a bill that would legalize sports wagering, ban Tennesseans from making wagers on major holidays (Christmas, Easter, and Thanksgiving), as well as on Sundays from 3 p.m. to 10 p.m. This potential partial ban, as you may have guessed, was inspired by religious sentiment. Meanwhile, for some folks and for sportsbooks, NFL Sundays are holidays. The amendment was narrowly shot down by a 10-9 vote.
A 3% sports betting ‘mobile convenience fee’ (Iowa)
Iowa state Rep. Mary Wolfe, a Democrat, felt that proposed taxes on gross sports wagering revenue weren’t sufficient enough and that mobile wagering might keep people out of the state’s casinos, so she proposed a 3% fee on all mobile sports bets to be paid by the sports bettors to keep funds flowing. Credit to her for discussing and engaging about the idea but … to impose such a transaction fee would destroy sports betting economics and backfire bigly.
A 6.25% sports betting quasi-sales tax (Texas)
Speaking of numbers and margins, in a state very unlikely to legalize sports betting anytime soon, there is a bill on the table that would levy a 6.25% tax on a sports bettor, on each bet, at the time it’s placed. Like a sales tax. Or bettors could pay 0% anywhere else. This idea is about 148% crazier than Wolfe’s.
Sports betting revenue to fix PNC Park (Pittsburgh Pirates)
Maybe Missouri doesn’t deserve credit for the idea of siphoning sports wagering revenue for the benefit of a privately-owned sports venue. Because earlier, during conversations about Pennsylvania sports betting regulations, Pirates President Frank Coonelly wrote in a letter to state gaming regulators that “without professional sports there can be no professional sports betting”:
“It stands to reason that a portion of the revenue collected from sports wagering should be allocated to the maintenance and upkeep of PNC Park and other sports-based facilities in Pennsylvania which provides for sports wagering in the first place. We are concerned that no such provision is included in the current law or the regulation.”
Relatedly, Richard Florida of City Lab wrote about public financing for privately-owned stadiums:
The overwhelming conclusion of decades of economic research on the subject is that using public funds to subsidize wealthy sports franchises makes zero economic sense and is a giant waste of taxpayer money. A wide array of studies have shown that professional teams add virtually no income to local economies. In fact, some of them find that large subsidies actually have a negative effect, taking money out of the local economy.
Something to keep in mind!
The ‘integrity fee’ itself (MLB, NBA, PGA, possibly others)
As you MAY be aware, the MLB and NBA and its lobbyists helped produce and introduce a piece of “model legislation” that first surfaced in January 2018 (when PASPA was still good law). The document, parts of which have survived and live in bills in various states, states in pertinent part:
(3) At least once per calendar quarter, a sports wagering operator shall remit to the relevant sports governing body a sport betting right and integrity fee of one percent of the amount wagered on its sporting events.
Initially conceived as a cut to help pay for integrity things, league officials have since admitted that, well, proceeds would represent regular league revenue as well. We’ve written and read enough about the damn thing, yet Missouri now appears willing to give away a 0.25% of potential state tax revenue in the form of a zombie royalty integrity fee — for nothing. Now please revisit Mr. Florida’s writing.
Allowing sportsbooks to extend credit directly to bettors (Vermont)
H 484, the third sports betting bill to be introduced in Vermont this year, is widely believed be the first of its kind in that it would allow the state to write rules for licensees to extend credit to sports bettors.
It would be attractive to some bettors, but not a good or responsible idea.
Banning betting on Kentucky college teams (Kentucky)
As a starting point, I think it’s absurd and illogical to ban wagering any state’s own collegiate teams, a conversation taking place in numerous states. It’s a silly, feel-good compromise with local universities, but makes no sense and yes, will keep bets those very teams in the black market.
Anyhow, Kentucky HB 175 aimed to ban wagering on college teams in Kentucky, home to the Kentucky Wildcats and Louisville Cardinals. In March, a study commissioned by the American Gaming Association found that 31 percent of Kentucky residents will/would make a bracket or a bet on an NCAA Tournament college basketball game — more than in any other state.
#MarchMadness continues. Since this map was made at the start of the tournament, another state has added legalized mobile sports betting — Rhode Island. https://t.co/XK3XL91ULf pic.twitter.com/8TKJ4CdMpK
— American Gaming Assn (@AmerGamingAssn) April 1, 2019
Banning sports betting games involving Kentucky teams in SEC country would be like opening a baseball park and not selling beers and hot dogs.
Requirement to ‘seek partnerships with sports leagues’ (Connecticut)
A Connecticut sports betting bill’s (No. 7331) statement of purpose reads:
To authorize sports wagering in the state if certain conditions are met and to require the Commissioner of Economic and Community Development to seek partnerships with professional sports leagues and governing bodies.
…
The commissioner shall set a goal of scheduling at least three major league professional sports events in the state each year, at locations that reflect the geographic and demographic diversity of the state.
This bill does not mandate the purchase of league data or impose any royalty/integrity fee, but, this is an odd way to play nice. Who can predict what kind of relationship would emerge from these required meetings. Integrity fee in exchange for the return of the Hartford Whalers?!
Today in 1997, the Hartford Whalers played their last NHL game. #TodayInSports pic.twitter.com/EUmbr06l1j
— TodayInSports🗯 (@TodayInSports3) April 13, 2018
