U.K.’s Premier League supports integrity fee idea
As stakeholders across the U.S. anticipate a decision from the U.S. Supreme Court by June in Christie (Murphy) v. NCAA that could remove the federal ban on sports betting, the American Gaming Association held an event to bring together state-level stakeholders in a potential legal U.S. betting market.
Last week, the AGA held its first-ever State Stakeholders Summit, convening industry experts and invested stakeholders to drive the evolving national debate on expanding legalized, regulated sports betting. Held at the Hall of States, the event focused on potential policy solutions for state and federal legislatures and regulatory bodies. Drawing upon critical guidance from gaming regulators and AGA policy principles, stakeholders discussed the need for sound policy that would enhance law enforcement resources and drive customers to a legal, regulated sports betting market.
The Supreme Court, before its June recess, is expected to issue a decision in the case brought by the NCAA and four professional sports leagues challenging a law signed in 2014 by then-Governor Chris Christie creating a self-regulated sports betting program. The leagues contend the law violates the 1992 Professional and Amateur Sports Protection Act (PASPA), which bans sports betting in all but four states, and bans single-game betting everywhere but Nevada.
The AGA has made repeal of PASPA a primary focus, contending the law restricts state and federal economic benefits, exhausts law enforcement resources and perpetuates a thriving illegal sports betting market in the U.S. estimated to be in excess of $150 billion annually.
Participants in the State Stakeholders Summit included those who joined AGA in filing amicus briefs with the Supreme Court in support of New Jersey.
“This meeting was an opportunity to continue our longstanding dialogue about shutting down the illegal sports betting market with some of the most important stakeholders in the debate,” said AGA Senior Vice President of Public Affairs Sara Slane. “States are anticipating and are preparing to offer legal, regulated sports betting in a way that meets the needs of their constituents. The organizations represented are central to advancing effective and sensible sports betting laws and regulations, and enacting and enforcing these new rules.”
Participants included members of AGA’s Sports Betting Task Force, former and current gaming regulators, and representatives from the National Governors Association, Conference of Western Attorneys General, National Conference of State Legislatures, American Legislative Exchange Council, Fraternal Order of Police, Major County Sheriffs of America, National Association of Counties and the Council of State Chambers, among others.
The Stakeholder Summit preceded a meeting of AGA’s Public Policy Committee, which convenes biannually to discuss industry policy priorities and activities.
AGA will issue an after-action report outlining lessons learned from the summit, and next steps for advancing sound sports betting policy that shuts down the illegal market.
Meanwhile, the very leagues that brought the original lawsuit challenging the New Jersey law are continuing their efforts to get a piece of the sports betting action should PASPA be overturned. The effort initiated by the National Basketball Association to have lawmakers in more than 20 states include what they first termed an “integrity fee” has evolved to the point where league officials were joined by Major League Baseball representatives have been meeting privately with officials in New Jersey to negotiate a fee.
The “integrity fee” originally proposed by the NBA was 1 percent of all wagers on its league’s games. Various proposals have placed the proposed fee as low as 0.25 percent of wagers. NBA lawyers, cognizant of the fact that regulated sports betting is more likely to support integrity in sports than endanger it, are now calling the proposed fees a “royalty” for casinos or racetracks that profit from the league’s “product.”
Speaking at the National Indian Gaming Association’s Indian Gaming Tradeshow in Las Vegas, NBA Senior Vice President and Assistant General Counsel Dan Spillane said the league “doesn’t call it an integrity fee” anymore, although that language I used in state-level bills to regulate sports betting.
“It’s a ‘sports betting rights and integrity’ fee,” Spillane said. “It’s a royalty in a way… These are our games. They are the backbone of the whole business of sports betting, and we think it makes sense for us to be compensated. We’ve invested billions of dollars in creating this product. You can’t have sports betting without our game. We generate a lot of fan interest… that translates into people participating in sports betting. We think it’s reasonable for us to be compensated for that input just like every other supplier.”
He said the “integrity” term is relevant because there is a “risk to our business” even with regulated sports betting.
“The risk from (a potential) sports betting scandal or integrity incident would be devastating to our brand,” Spillane said. “People (need to) trust that the competition is fair and real… we think it makes sense that we should be compensated for (that) risk.”
He added that expanded sports betting will cause the league to spend more money to scrutinize wagering activity. “If betting becomes widely legal, that is going to cost money,” Spillane said. “The integrity fee is intended to cover those expenses.”
The AGA has criticized the integrity fee as unworkable, because it would cut into an already-thin profit margin for bookmakers, making them unable to compete with illegal bookmaker. At the Las Vegas event, a senior official of NIGA voiced a similar opinion.
“That makes it less viable for us as an amenity, so I think there needs to be more discussion and compromise,” said Deborah Skenandore-Thundercloud, chief of staff for NIGA. “We have federal, state and tribal regulation, and if we put a lot of dollars into that and (also) fees for other entities participating, it is not fair to us.”
Despite the opposition, the U.S. leagues gained support last week for the fees from one of the world’s largest legal sports betting markets, the U.K. In an interview with ESPN, the rights holder for England’s Premier League football (soccer), spoke out in support of a fee.
“Broadly, we don’t think what the leagues are asking for is fundamentally wrong, if you’re trying to come up with a framework that works for both parties,” said Adrian Ford, general manager of Football DataCo, the official rights holder for the Premier League and all professional soccer leagues in England and Scotland.
“We would not see why there would be an issue about sports getting a return from betting,” Ford told ESPN. “We’d echo some of the high-level statements the NBA has made. If someone is making money off us, there’s no reason why we shouldn’t be interested in that and why we shouldn’t have some level of involvement in the commercial return.”
The latest expert predictions logged by sportshandle.com have the U.S. Supreme Court narrowly holding PASPA to be unconstitutional. “I predict that by a 5-4 vote, the Supreme Court will find PASPA to be unconstitutional under the 10th Amendment in a way that allows any state to legalize sports betting, because four states were grandfathered in in the original legislation,” said Barry Lieberman, a Las Vegas-based sports, horse racing, and internet gaming attorney and former attorney in the U.S. Justice Department. “This is a broader ground than a narrow holding that would allow only New Jersey to conduct sports wagering if they repeal all laws regulating sports wagering.”
Kate Lowenhar-Fisher, a Las Vegas-based gaming attorney for law firm of Dickinson Wright, also predicted a win for New Jersey, although not a complete win. “SCOTUS strikes down two parts of PASPA that are unconstitutional: (1) The disparate treatment (grandfathering) of states violates the equal sovereignty doctrine and (2) The delegation of regulatory power to private sports leagues violates the private non-delegation doctrine,” she said. “The unconstitutional parts of PASPA are severable, so the rest of the law remains intact, and we have mass confusion!
“The vote: 6:3. Ginsburg, Sotomayor, and Kagan dissent. Concurring opinions among the 6 lead to serious head-scratching.”
In New Jersey, operators are preparing for a decision that repeals PASPA and allows the sports-betting program to begin quickly. In addition to sports books in Atlantic City casinos, racetracks like the Meadowlands and Monmouth Park are ready to immediately begin accepting wagers.
Connecticut Lawmakers Wrestle with Sports Betting
Connecticut Attorney General George Jepsen said last week that if a federal ban is lifted on sports betting, and if the state legalizes it, the state’s gaming tribes would not have a monopoly on it.
Jepsen’s opinion, issued at the request of the legislature, said, “It is our opinion that if sports betting were to become lawful in Connecticut, the tribes would not have an exclusive right under the existing compacts and memoranda of understanding between the state and the tribes, or ‘MOUs’ to offer it.”
That opinion makes it even less likely that a sports betting bill, HB 5307, will be voted out of the Public Safety & Security Committee and onto the floor. Currently its status is “tabled.” It is an open-ended bill that would authorize the state’s consumer protection commission to create regulations governing it.
Another bill, this one originating in the Senate, is friendly towards requests by Major League Baseball and other leagues that they be given a share of any sports betting taxes.
The advice is similar to an opinion Jepsen offered several weeks ago but adds detail. For example, Jepsen writes, “The tribal-state compact and agreements set out a list of authorized games. Sports betting is not listed as an authorized game. By contrast, for example, parimutuel betting on horse and dog racing and jai alai games are authorized games. The exclusion of sports betting from the specific list of authorized games is compelling evidence that the compacts do not presently authorize it.”
The tribes differ with the AG. In March, Seth Young of Foxwoods Resort Casino, submitted a written testimony: “While I am not a lawyer for Foxwoods or the tribe, I will also state for the record that I know the tribes believe sports gambling, daily fantasy sports betting, and iGaming fall under the exclusivity agreement.”
If the tribes are correct and not giving them exclusive rights violates the gaming compacts, that would threaten the $250 million or so that both tribal casinos are currently paying in revenue sharing. That 25 percent of slots revenue is considerably higher than any amount the state is likely to collect from sports betting.
The fate of the 1992 law is before the U.S. Supreme Court, which could issue a decision on it any day now.
