Since the start of legislative sessions across the U.S. at the turn of ‘18, we have seen an avalanche of state bills creating rules for legal sports betting, pending a change in the federal law known as PASPA that effectively bans sports betting outside Nevada. But a somewhat surprising development has been the qualified support that the NBA and MLB have offered for New York sports betting, Illinois sports betting, Iowa sports betting and beyond.
League officials and lobbyists support legal sports betting, but only bills that would grant them a number of beneficial clauses, most notably a 1% “integrity fee” on all sports wagers, as well as rights to control betting operator data and a right to limit which wagers a sportsbook can offer. (Read here why 1% is actually about 20% of sportsbook operator revenue.)
In support of these measures, leagues and their lobbyists have testified to their necessity, wined and dined lawmakers, and circulated a one-page memo. But they’ve done more behind the scenes: They have drafted an eight-page “Model Sports Wagering Act” for “gaming states,” which SportsHandle has obtained from sources in multiple states where sports betting legislation is on the table. This explains why we have seen almost identical language cropping up in bills across the U.S. A decision in Murphy v NCAA, the Supreme Court Sports Betting case, will come as soon as March 5. In the interim, we’ll see if more officials will oblige the leagues.
Take a look at the full document below, followed by a breakdown.
Here’s the ‘Model’ Legal Sports Betting Playbook From NBA, MLB: The ‘Model Sports Wagering Act’ for Gaming States, Which Contains the Leagues’ Wish List
Click the document below to view in full size in your browser (use arrow keys to flip pages) or PDF here.
Focusing on the major clauses, not the definitions or other reasonable suggested elements, let’s cross-reference this language with HB 1325 in Indiana, the recently-proposed SB 3432 “Sports Wagering Act” in Illinois, and a Senate draft bill in Missouri that does not yet have a sponsor.
Indiana
In HB 1325, much of the of the Model Act’s Section 5 (integrity requirements) and almost the entirety of Section 6 (record keeping; information sharing; fees”) appears.
These clauses appear in Indiana’s Chapter 8, Sec 3., and Chapter 9, Secs. 1, 2, 3 and 4. Those clauses grant leagues:
(a) The right to “restrict or limit wagering on a sporting event” after providing notice;
(b) The right to impose “restrictions on the sources of data and associated video upon which an operator may rely in paying wagers;”
(c) The right to restrict the types of bets that may be offered;
(d) The right to collect real-time information on operators’ wagers; and
(e) The 1% “integrity fee” remitted at least once per quarter.
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Illinois
The Illinois sports betting bill SB 3432, Section 35 (“record keeping, information sharing),” is nearly a carbon copy of the Model Act Section 6. The leagues are granted:
(a) The right to collect real-time information on operators’ wagers; and
(b) The 1% “integrity fee” remitted at least once per quarter.
In Section 30 (“integrity requirements”), we see more identical language from Section 5 of the Model Act, granting leagues:
(a) The right to “restrict or limit wagering on a sporting event” after providing notice;
(b) The right to impose “restrictions on the sources of data and associated video upon which an operator may rely in paying wagers; and
(c) The right to restrict the types of bets that may be offered.
Kansas and Missouri
HB 2752 in Kansas introduced this week and a Missouri draft bill not yet introduced both contain the same Model Act wording. We need not walk through it line by line.
Other States Have Balked at These Terms, Limitations and ‘Integrity Fee’
The West Virginia sports betting bill (SB 415), the Iowa sports betting bill (HSB 592) and the Pennsylvania sports betting bills are the main examples. In their final forms, should they advance and ultimately pass (Pennsylvania has passed its bill but it contains prohibitive taxation and fees; SB 415 just passed the West Virginia senate), the bills might contain some league-approved information sharing clauses, but not the other Model Act provisions.
In New York, Connecticut, Massachusetts, Rhode Island, Michigan, the contents of the legislation remains to be seen. Those states are holding hearings on sports betting or have passed legislation tasking gaming boards with creating rules and regulations. There are lobbyists registered in those states, and it seems likely that some have seen the Model Act. But not all.
“We were unaware of this model legislation,” Mark Sternman, media relations representative for Massachusetts state senator Eileen Donoghue, sponsor for an act to regulate online sports betting said via e-mail Tuesday. “There’s no [model] sports betting bill about which I know.”
NBA Adam Silver’s Recent Remarks Muddies the Waters
Through lobbying efforts, the NBA and MLB have offered a cornucopia of justifications for the “integrity fee” and other components of the Model Act. But mainly the arguments have pointed to the leagues’ purported need to institute greater and costly integrity monitoring, or oversight of wagers to detect any malfeasance or irregularities.
[Also See: The NBA Has Zero Legal Claim to One Percent of Sports Bets]
But running through the public remarks and one-sheets is the subtext that it’s really an intellectual property tax. The idea that without their games, there would be no sports betting. NBA commissioner Adam Silver just came out and said it this weekend.
“This notion that as the intellectual property creators that we should receive a 1% fee seems very fair to me” Silver said of levying a fee on potential operators. “Call it integrity fee, call it a royalty to the league.”
In ongoing league lobbying efforts at hearings and in conversations, will they begin to call it what it is? In any case, many state lawmakers already know.
Also Check out From SportsHandle:
New Illinois Sports Betting Bill Includes MLB, NBA’s ‘Integrity Fee’
MLB Concocts Ridiculous New Argument for Cut of Sports Betting Wagers
West Virginia Official Discusses State’s Sports Betting Bill and Future of Wagering
