For Ravens, Saints, and Thunder fans, making a legal bet on your teams may not happen for a long time.
Earlier this month, lawmakers in Maryland, Louisiana and Oklahoma axed the sports betting sections of new gambling bills that would’ve gone into effect in the event that the Supreme Court of the United States decided in favor of New Jersey’s appeal that the states be allowed to create and enact sports betting legislation.
All three states are home to professional sports franchises but they’re on both ends of the political spectrum – Maryland the blue and Oklahoma/Louisiana the red.
The story in Oklahoma
Most bills that go through the legislative process start out in a committee, then head to the House and, finally, the Senate.
Gambling-related laws typically find favor in either the House or Senate, but since both bodies have to approve, they end up dead multiple times before they make it through. Once they get the approval of the House and Senate, they go to the governor’s desk.
Lawmakers in the Sooner state were happy to pass a gambling bill earlier this month that addressed a variety of gambling issues. However, an add-on piece of legislation that would’ve allowed sports betting pending the Supreme Court decision didn’t make it through.
There are many theories as to why sports betting died in this most recent attempt, particularly considering that a 10% tax would’ve applied to revenue, bringing in a decent stream of cash for the state.
- One major factor here is the state’s First Nation tribes; they don’t want to deal with competition that an influx of sportsbooks would bring.
- Another factor that could be at stake is the conservative nature of the state – sports betting is a little too ‘sinny’ for lawmakers’ stomachs.
That second possibility is less likely, mainly because those same lawmakers voted to expand gambling for casinos in the state.
What went down in Maryland
In Maryland, things were looking good for sports betting after the House passed the bill 124-14. Blowout wins like this are common and usually aren’t so decisive when the Senate votes. And, that was the case in the Old Line State.
The Senate chose not to vote on the bill before they closed up shop for the year, which means the next time a vote can take place is January 2019. By then, there’s a good chance that sports betting could be legal and functioning in multiple states.
Louisiana bill fails
On Tuesday, a bill to legalize sports betting in Louisiana parishes was shot down 6-3 by the Louisiana Senate Finance Committee. Several committee members expressed concerns about the negative effects of gambling expansion — even though a daily fantasy sports bill advanced through the Louisiana House on the same day. Senator Danny Martiny, the bill’s sponsor, worries that his state will fall behind neighboring states, potentially losing out on a lot of tourism.
“I’m not saying this is the cure all for everything but I’m telling you right now that we will lose customers and money if Mississippi and Arkansas have sports betting and we don’t,” Martiny said.
Mississippi already passed legislation to legalize sports betting if given authority by the U.S. Supreme Court. Arkansas passed daily fantasy sports legislation in 2017 but has not introduced a sports betting bill.
What this means for a post-PASPA world
There’s a perception out there that a SCOTUS decision in favor of New Jersey that repeals PASPA will unleash a 50-state cavalcade of sports-betting bill passages.
However, the recent failures of sports betting bills in these three states indicate that eradicating PASPA may not mean that every state allows sports betting.
In some states where tribal communities are home to the state’s only casinos, expanding sports betting could be seen as a threat and, therefore, reason to lobby against opening books off reservation land.
In other more conservative states like Utah, a conservative push could stymie bills and mire sports betting in endless cycles of committee meetings, House votes, and Senate shoot-downs.
While recent polling indicates that the American public is, for the first time in decades, supportive of sports gambling, things could be much more complex on a state-by-state basis.
Until last week, the players’ associations from the MLB, NBA, NFL and NHL had been silent about their position on sports betting. It was a curious position considering at least three of the leagues have expressed interest in raking in an integrity fee that would bring a 1% cut of all bets taken on each league’s games.
On April 12, the players’ associations broke that silence and they didn’t mince their words. Here is the players’ statement, which we’ll break down afterward:
“Given the pending Supreme Court decision regarding the Professional and Amateur Sports Protection Act (PAPSA), representatives of the MLBPA, NBPA, NFLPA and NHLPA have been working together on the legal, commercial, practical, and human consequences of allowing sports betting to become mainstream. The time has come to address not just who profits from sports gambling, but also the costs. Our unions have been discussing the potential impact of legalized gambling on players’ privacy and publicity rights, the integrity of our games and the volatility on our businesses. Betting on sports may become widely legal, but we cannot allow those who have lobbied the hardest for sports gambling to be the only ones controlling how it would be ushered into our businesses. The athletes must also have a seat at the table to ensure that players’ rights and the integrity of our games are protected.”
The associations have been working together
The odd silence coming from the players’ unions was, in fact, an aberration. Associations from the MLB, NBA, NFL and NHL were in talks with each other, according to this statement. They’ve been going back and forth about the “legal, commercial, practical and human consequences of allowing sports betting to become mainstream.”
The legal and commercial part we get. They’ve got to understand how state sports betting laws will affect game wagers. They also need to be well-versed in how each state’s legislation and gaming divisions enforce laws about age and location restrictions.
Practically speaking, they need to be clear on exactly how bets are presented and made, how the money is processed and how it gets into the league’s pockets, provided the leagues work out a deal with states.
The human consequences are important too, but, our guess is that the focus is on the first two aspects of sports betting.
Discussions about the potential of legalized gambling
From a player’s perspective, their value and brand power go up when sports gambling is legalized. Bettors putting their money on the performance of individual players will be more interested in players that outside of their local market or not a part of their favorite team.
The players also need to be concerned about (legal) wild swings in fortunes as the result of their games, as well as the possibility of players being on the take and throwing games.
These are legit concerns but the heart of their argument goes beyond these issues.
Unions don’t want leagues, casinos getting all the benefits
The final part of their statement takes aim at, most likely, the league and casinos who stand to benefit the most from legal sports betting.
As they have in past negotiations with their leagues, players want a seat at the table when it comes to formulating agreements between states, leagues and the casinos.
Their demand isn’t misguided, either. In March, an anonymous NFL exec was quoted as saying that the league should get a cut of wagers because they make the product on which people are placing bets.
The PGA Tour is betting on big data.
Over the past few weeks, they expressed their support of USsportsintegrity.com, a new website launched by sports-data behemoth Genius that would track all wagering from legal sports books around the country. The site features a video interview with PGA SVP or Tournament Administration Andy Levinson, who waxed dryly about sports betting and integrity.
“Integrity is a fundamental tenant in the game of golf. Our athletes call penalties on themselves,” he said with rather catatonic excitement. “If regulation would require more reporting and transparency from the gaming operators, then that would be a positive for all sports.”
Leagues say big data protects game
Levinson went on to say that big data is a tremendous resource for the PGA, announcers and the players themselves. Ball speed, drive apexes, greens-in-regulation, and a litany of other data points are the engine that dries player analysis, good commentary and, apparently, the integrity of the PGA as well as the MLB and NBA.
If you’re having a hard time understanding how good data relates to sports betting, you aren’t alone. The missing factor here is the belief that illegal sports books use unofficial data — data that could push bettors to place money based on data that just isn’t accurate. Crap in, crap out, basically, official-data proponents say.
What the leagues really mean: We get paid when you use our approved data providers
The NBA, MLB and PGA have expressed their desire to see official data worked into sports betting legislation on a state-by-state basis.
While USsportsintegrity.com makes the concept of official data seem warm and fuzzy, there are those who would argue it’s anything but.
- For example, their argument is partly based on the fact that gremlins of bad data run rampant through illegal betting economies. This isn’t exactly an airtight argument, as sports betting analysts have noted that the damage done by “unofficial” data among illegal sports books isn’t the problem that it is.
- Second, the call for legislating the use of official data is a roundabout way for the leagues making money. If your state legislator tells you that, as a sports book, you have to use data sources approved by the leagues whose games are generating handle, then you’ll be forced to choose, for example, Genius’s services.
Those services will come at a cost. You pay for the data, Genius makes money and, most likely, there will be a premium worked into that price that will go directly to the leagues.
What about the integrity fee?
The PGA hasn’t made an official statement on the integrity fee that the MLB and NBA are asking for – 1% of the total dollar amount of bets placed.
However, it would be hard to believe that the PGA wouldn’t ask for 1%; why settle for par when an eagle is within grasp, financially speaking?
The sports betting industry was probably smiling when the NFL allowed the Oakland Raiders to move to Las Vegas.
That grin is no doubt halfway to a scowl laden in bitterness and outrage after a choice quote from an anonymous NFL owner who told the Wall Street Journal that it’s just not fair that bettors make money off NFL sports betting without paying a cut to the league.
Here’s a direct quote of said owner, according to WSJ reporter Andrew Beaton: “Why would we let other people have all the benefit of something we’re creating?”
While the anonymous owner provided no specific percentage of what they’d want from the handle (amount bet) on NFL games, the NBA and MLB appeared before New York lawmakers to ask for 1% of the handle of any bets made on their games.
NFL’s Cheeky Response Smacks of Entitlement … and Good Sense
Let’s be clear, here. The NFL has not said that they want a cut of NFL betting handle. In fact, as recently as Dec. 2017, Commissioner Roger Goodell made it clear that the league wants to preserve its integrity, a refrain he’s repeated on multiple occasions.
There’s some debate about what “preserve its integrity” means — tight regulations, or a flat-out rejection of legalized sports betting? With a team moving to Las Vegas, the former seems to be the likely outcome.
This, of course, leads us to the anonymous owner’s comments. He thinks the NFL is entitled to a gambling cut because they are responsible for the very popularity that sports books (legal and illegal) leverage into absurd amounts of betting.
Now, as repulsive as that might seem – the NBA won no fans by proposing a 1% take – it also makes good business sense for the league; ask for 1% and a “No” is the worst outcome.
Asking for a Cut of the Handle Is More Complex Than You Think
It’s easy to reduce “asking for a cut” to a yes-or-no type discussion. However, the debate needs to be seen in the bigger picture.
First, the NFL probably isn’t going to ask all states at one time to surrender 1% of their gambling handle. Such an ask would be impossible at worst – it’s not guaranteed every state will allow sports betting – and lazy at best.
They’d have to knock on the door of every state legislature and ask for a few minutes before lawmakers to plead their case. And, says Michelle Minton, senior fellow at Competitive Enterprise Institute, there’s a good chance that only states with a considerable interest in NFL games will want to pay what amounts to, in her words, “rent”.
While Minton did not mention any specific states, a few come to mind: California (four teams at the time of publishing), Florida (three teams), Texas (two teams) and Pennsylvania (two teams).
Regardless of whether a state has an acute interest in currying favor with the league or not is beside the point, Minton said. In her opinion, no sports league should be given the power of taking a substantial integrity fee.
“It puts (the NFL) on an unequal footing for future regulation. They can strongarm (states) by saying, ‘Hey, we won’t let you take bets on games,” Minton said. “If (the league) has the power to decide which games the industry take bets on, they could, say, ‘We won’t let you ever take bets on any game.’ I don’t think that any entity should have that kind of power.”
A sports betting bill is making its way through the legislative channels this week in New York.
News broke Monday that a bill authored by Sen. Jon Bonacic and his aide (who spent a prodigious 150 hours working on the bill) made its way through the Senate Racings, Wagering and Gaming Committee (SRWGC) and will now move to the Senate Finance Committee. It’s all normal stuff for bills – committees first, then the gauntlet that is the House and Senate.
The truth is that what happens with this bill is not nearly as interesting as the massive dog-and-pony-show the NBA and MLB will put on as they try and convince lawmakers from Sacramento to Albany to give them a cut of all that’s bet on their games.
NBA and MLB ask for integrity fee
The two leagues have already revealed their greedy hand by showing up at a public hearing hosted by said SRWGC. At the meeting, they made it clear that, among other demands, they want a 1% cut of what’s gambled, something known as an integrity fee. Oh, and they also support a comprehensive sports betting bill.
Back-of-the-napkin math shows that the leagues stand to rake in $2 billion collectively from this ask should sports betting be legalized in most states. Now, states like New York aren’t going to care as much about this ask because any money brought in via sports betting tax revenue is new money.
Nevada probably hates the integrity fee
Nevada has a legit beef, though. They’ve been operating sports betting books, basically, since the government lowered their excise tax in 1975 from 10% to 2%. In 1985, that dropped down to 0.25%.
The last thing Vegas casinos want is a 1% take of their handle (dollar amount of best made), especially when the underdog wins, I don’t know, say, the Super Bowl and book revenues plummet as Zach Ertz stretches into the end zone in another Oh-my-god-is-that-a-catch-or-not moment.
A 1% cut would be more manageable; the “losses” will be much easier for Nevada books to handle.
Meanwhile, the Supreme Court doesn’t actually care about sports betting…
While all the talk of the SCOTUS decision about New Jersey’s sports betting appeal is about sports betting, the justices aren’t concerning themselves with what kind of money they can make from an 11 seed making it to the Final Four.
Their main concern is whether or not the Professional and Amateur Sports Protection Act (PASPA) is unconstitutional. When PASPA was passed in 1992 and implemented in 1993, Congress basically told states they didn’t have the right to decide their own sports gambling laws.
SCOTUS will decide if that act violated the anti-commandeering principle inherent in the 10th Amendment, which says Congress can’t pass a law that restricts state’s rights to create their own laws about non-essential matters like sports gambling.
Here’s how Dickinson Wright casino lawyer Greg Gemignani put it: “Congress can legislate that the sun rises in the West and sets in the East but that doesn’t mean it’s going to happen.”