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April 30, 2018

Retroactive Integrity Fee Sales Pitch From Leagues Makes For Entertaining Political Theater

Juan Carlos Blanco April 30, 2018
Integrity Fee

It’s no secret the NBA and MLB have been doing some heavy lobbying around the country on the sports betting front in recent months. With the forthcoming decision in Murphy vs. NCAA likely to at least partly go against them, the leagues are scrambling to figure out how they’ll get compensated from the very activity they’ve publicly railed against for decades.

They’ve made headway pitching integrity and data licensing fees in areas still considering legislation. But where things get interesting is in the handful of states where bills have already passed without either of the leagues’ two pet provisions.

Handful of states have beat leagues to the punch

Each of those jurisdictions has its own set of circumstances.

For example, the leagues may have a malleable situation in West Virginia, where integrity fee-less sports betting legislation went into law March 9. Governor Jim Justice allowed the bill to become law by procedural means — as opposed to with his signature — and immediately began laying the groundwork for compromising with the leagues on their requests (demands?) in a press release shortly thereafter.

Unsurprisingly, the leagues are now slated to meet with representatives of the states’ five casinos (and potential sportsbook licensees) and angle for modifications to the new law that would include their desired stipulations.

They predictably received a much frostier welcome when attempting to do the same in New Jersey. Garden State representatives basically told the leagues to take a flying leap, by all accounts. The fact the leagues have already cost the state $8,6 million in legal bills over the last six years while fighting them tooth and nail played a large role in that.

Meanwhile, Pennsylvania and Mississippi both saw sports betting legislation pass in 2017 as well, as part of larger gaming bills. Neither has yet given any indication that they’d be willing to bend to the NBA and MLB’s demands, either.

Appeal to a higher power?

The quartet of potential outliers begs the question – how do the leagues deal with these jurisdictions if PASPA is fully struck down at some point over the next two months by the SCOTUS?

In the short term, they really don’t have any say in the matter, unless the states suddenly get into an acquiescing mood. For the moment, that possibility seems to range from virtually impossible (New Jersey) to relatively conceivable (West Virginia). At a minimum, it appears the leagues would be shut out of any sports betting revenue in at least a couple of those states for the foreseeable future.

Their best hope for countering these “rogue” elements may ultimately lie at the federal level.

That’s because Congressional intervention is the next logical and seemingly inevitable domino to fall if PASPA is fully repealed. The eradication of one federal law very likely begets a new one in this case. In fact, a model for one has been floating around for several months – Representative Frank Pallone’s GAME (Gaming Accountability and Modernization Enhancement) Act.

Pallone, who hails from New Jersey (where else?), introduced his first piece of sports betting-related legislation way back in 2015. However, the GAME Act in its most updated iteration was put forth in December, shortly after oral arguments in Murphy vs. NCAA. The proposed legislation repeals PASPA as one of its provisions, which would be a moot point if it’s already taken care of by the SCOTUS. It also decriminalizes sports betting under federal law for anyone offering it at a state level in accordance with that jurisdiction’s regulations.

What the text of the bill doesn’t include – yet – is any mention of a uniform rate of compensation to the sports leagues.

Post-Murphy vs. NCAA lobbying/legal battles looming?

That’s not surprising, considering the integrity fee didn’t make its first appearance in a piece of sports betting legislation until approximately a month after Pallone introduced the GAME Act. However, like any bill, the GAME Act naturally remains open to modifications and amendments. Therefore, a future push for inclusion of integrity and data licensing fees as a standard component of a federal legalized sports betting framework would appear to be a virtual certainty.

Subsequent pushback will be just as likely and could make for an interesting heavyweight battle on the lobbying front.

For example, in one corner, Sheldon Adelson, founder and CEO of the Sands Corporation and mega-Republican Party donor. He’d certainly figure to be a major opponent of any federally mandated fees if those were to be extended to the Nevada establishments that have never been required to pay them. In the other, the equally powerful pro sports leagues, which would undoubtedly make for a formidable foil.

And incidentally, granting Nevada-based sportsbooks an exemption under a grandfather clause doesn’t shape up as a tenable compromise by any stretch. Rather, it seems like a surefire recipe for a new round of court battles.

The one principal takeaway is the leagues’ whiplash-inducing flip on its sports betting position – from staunch opponent to supporter under circumstances favorable to their bottom line – is leading to some intriguing scenarios in the handful of states that were proactive enough to beat them to the punch with legislation.

Leagues Pulling Out New Stops In Fight For Favorable Sports Betting Legislation

Juan Carlos Blanco April 30, 2018
Sports Betting

“Post-truth” is often bandied about these days to sum up our overall state of affairs. A cousin of “surreal”, the term intends to aptly describe the many things we read and witness that base reality on anything other than objective facts.

Most of what boggles the rational mind these days emanates from the political arena. The epidemic seems to be pervasively seeping into other areas, as well. For example, the entire legalized sports betting discussion – which offers a fair share of political theater in its own right  – has recently produced a couple of “WTF” moments that stretch the limits of credulity.

One of those moments involved representatives from the pro sports leagues meeting with the very New Jersey lawmakers they’ve been an expensive thorn in the side of for years. As was previously reported, the state has already incurred nearly $9 million in legal fees as a result of their years-long legal battle with the leagues in Murphy vs. NCAA.

The central theme of those discussions caused a fair share of double-takes: The leagues were asking the Garden State to fall in line and agree to give up significant portions of any future sports betting revenue to those that have bled them dry while fighting against them on that very issue.

All hands on deck

Another moment unfolded approximately a couple of hundred miles away in Connecticut, where Constitution State legislators were paid a visit by former Celtics forward Cedric Maxwell and 19-year major-league hurler Al Leiter last Tuesday. The rub? The pair of ex-players – both prominent in the Northeast for their athletic exploits – were representing the NBA and MLB in the capacity of legalized sports betting supporters. That sentence that would have been virtually unthinkable as recently as last fall.

A bit eye-popping on its face, the scenario somehow makes perfect sense in the bizarro-like environment engendered by the Supreme Court’s decision in June 2017 to hear Murphy vs. NCAA. Before oral arguments in the case appeared to heavily go in favor of New Jersey last Dec. 4, the leagues remained confidently entrenched in the anti-sports betting position that defined their role as defendants.

Fast forward a few months, and it looks like there’s little they won’t do to ensure a significant stake in future sports betting proceeds. That clearly now includes holding Old Timer’s Day at state capitols as needed.

In Connecticut, where a representative of the state’s Lottery Corporation recently testified that the entity is “ready to operate sports betting”S540  is the Senate sports betting bill under consideration. With the proposed legislation containing several of the leagues’ pet provisions, the NBA and MLB are naturally pushing for it to advance.

No shortage of irony in latest strategy

The whole scene is particularly ironic considering the two leagues involved. Each has a prominent case in its relatively recent past that culminated in the ostracizing of a former employee due to sports betting-related infractions:

  • Pete Rose, a surefire MLB Hall of Famer if not for his documented sports betting activity while serving as manager of the Cincinnati Reds, remains banned from Cooperstown. The overriding reason is his corroborated wagering on baseball – including most notably, his own team – but he was also shunned for gambling on sports in general.
  • Former NBA referee Tim Donaghy was eventually discovered to have bet on games – including those he was officiating — during the 2005-06 and 2006-07 seasons, and to have directly made calls to influence the point spread.

Granted, the conduct in those situations was undeniably actionable. The leagues would argue that having ex-players support a regulated, legalized sports betting environment is therefore comparing apples and oranges. While they’d be right in one sense, the non-post-truth version of the truth is they wouldn’t be pushing for any type of legalized sports betting — much less trotting out alumni in front of lawmakers — if they didn’t see a monetization opportunity.

The deployment of past stars is just one aspect of what’s generally regarded as a serious case of duplicitousness on the part of the NBA and MLB with sports betting. Yes, the two leagues’ “epiphany” represents an improvement over their previous approach. However, they’re also asking states to turn a blind eye to the past and accept a new “truth” based on fear — the integrity of the games being wagered on will be at stake unless they subsidize a comprehensive monitoring system.

And if Rose is seen schmoozing with Ohio lawmakers someday on Rob Manfred’s behalf, we’re going to need a new catchphrase – “post-truth” ain’t gonna be the half of it.

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