The sports leagues plea for an “integrity” fee has fallen on deaf ears of the states that have already legalized sports betting, but it’s making headway in two states considering the wagers.
Missouri State Rep. Cody Smith recently filed HB 119, the first sports betting bill in the U.S. with a 1 percent royalty—formerly integrity fee–that directs a portion to the National Collegiate Athletic Association. Three-quarters of the 1 percent fee would be paid to “registered” professional leagues and the remaining one-quarter percent would go to the NCAA for wagers placed on games including at least one Division I Football Bowl Subdivision team or one Division I men’s basketball team. Smith’s bill states, “Royalties received by public universities under this section shall be used solely for athletics compliance.”
When the fee previously was called an integrity fee, professional leagues said it would be used to preserve the integrity of athletic contests. Now that the fee is called a royalty, it seems to promise little or nothing in return, according to observers. One percent of handle, as requested by the professional leagues, effectively results in 20-25 percent of a typical sports books’ gross revenue. To date not one of the eight states with legal sports betting pay the professional leagues or the NCAA any kind of fee.
Smith’s bill would tax sports betting adjusted gross revenue at 6.25 percent, lower than Nevada’s 6.75 percent, and direct it to a Gaming Proceeds for Education Fund. The bill also calls for an annual administrative fee of $5,000 and an annual “reinvestigation” fee of $10,000, which would be used every five years for a “full reinvestigation of the certificate holder.”
Smith’s bill does not require sports books to buy data from professional leagues; however it says sports leagues can inform the state if they want sports books to do that. Observers said every sports governing body will require Missouri sports books to buy data from them.
Among other provisions, Smith’s bill also would allow online/smartphone wagering when the bettor is on-site, similar to Mississippi’s sports betting requirements. Interactive gaming licensees would pay a $10,000 application fee and a $5,000 annual renewal; brick-and-mortar sports books would pay a $10,000 application fee. Also, athletes, coaches, officials, team owners and their families and others connected to professional or collegiate teams would be prohibited from placing sports bets on the team with which they are connected. Betting on Missouri teams would be legal.
Another sports betting bill, SB 1013, has been sponsored by state Senator Denny Hoskins and was filed on December 1, ahead of the 2019 session. The measure calls for sports books to pay one-half percent of handle into the Entertainment Facilities Infrastructure Fund, which would finance building, maintaining and improving sports or cultural facilities.
In Ohio, state Senator Bill Coley is urging state legislators to strike a multi-state agreement to agree to pay major sports leagues the “integrity fee” they have been seeking for sports betting.
He urged this action when he was testifying to fellow legislators in Kansas last week. He suggested that a fair percentage is .025 percent. He told a Kansas legislative committee “If we get it right, the big winners are the leagues,” adding, “Mark Cuban said it right, the value of your franchise just doubles.”
The games won’t be as valuable unless there is a centralized location for sports betting data, he said. That’s where major leagues come in. “When you allow sports betting, you are about the sport going on,” Coley said. “If we get this wrong, the biggest losers are the sports. Everything is going to look like pro wrestling.”
The leagues themselves haven’t exactly been batting a thousand in their efforts to get the states onboard with their “integrity fee.” Of nine states they have lobbied, nine states have turned them down. Ohio hasn’t said yes, although it hasn’t said no either.
Coley is one of the Buckeye state lawmakers trying to get others on board while crafting a bill to legalize sports book. Coley is also the chairman of the National Council of Legislators from Gaming States (NCLGS) so he has a national audience for his theories.
During his trip to Kansas he tried to persuade his hosts to send a delegation to a gaming industry conference in New Orleans, something that sounded to some people like an attempted bribe when he seemed to suggest that those who couldn’t afford to make the trip could have their expenses covered.
Rep. John Carmichael sarcastically suggested “Let’s all go down to New Orleans on these folks’ tab, and then after we’ve enjoyed their hospitality, we will write the legislation,” and then added, “That is far beyond the bounds of propriety.”
