Sheridan: How The NBA Plans To Box Out Illegal Betting And Protect Consumers

More than five years ago, NBA Commissioner Adam Silver shocked everyone by writing an op-ed, calling for the legalization and regulation of sports gambling in the US.  Silver wanted sports betting regulated, and he wanted the major sports league to get a 1% cut. Now, 19 months later, so much of the US sports gambling landscape has changed, including the NBA’s requested piece of the action. In an exclusive interview with TheLines.com, Scott Kaufman-Ross, the league’s senior vice president in charge of fantasy and gaming, answered a series of questions about the league’s evolutionary position on gambling. The league wants to ensure its fans are wagering with legitimate companies and, in effect, attempt to keep the offshore gaming companies out of the US market as much as possible.

‘Protecting the integrity of our game’

Gone are the days when gambling was viewed as a dirty business. More so than any other sport, the NBA has embraced the industry, setting up partnerships with numerous companies to provide real-time data to its fans while also making much of the information as transparent as possible. “Obviously, Adam wrote the op-ed in 2014 and set our position on the subject. And since then, we’ve been consistent on a few things. We believe we’re in the best position to protect the integrity of our game in a regulated market,” said Kaufman-Ross. “We are trying to crowd out the illegal offshore market, and so what we are doing commercially is kind of trying to move in the direction we set five years ago. In the last year-and-a-half, we have started to build and execute that commercial strategy. “What we’ve done over the past 15 months or so is form a series of nonexclusive partnerships across the sports betting industry. So, we have two partnerships with data distributors: Sportradar and Genius Sports. They are distributors of official data, and we now have nine nonexclusive sports betting partners. “And our goal here is to put NBA assets into the legal and regulated ecosystem so that we can differentiate the legal, licensed operators from the offshore operators,” Kaufman-Ross said. 

Giving licensed books the advantage

There is much to be excited about in major market cities, such as Los Angeles and Philadelphia. Also, including small markets like Milwaukee, where the reigning MVP Giannis Antetokounmpo has the Bucks in position to make a title run. The NBA is happy to have its fans wager on those games, so long as those wagers are not at offshore sportsbooks. “Our entire commercial strategy is aimed at just this,” Kaufman-Ross said. “We think the most effective way to do this is to give the licensed operators an advantage over the offshore operators. “So, licensing official data only to official operators, and allowing the legal sportsbooks to have a much better product to organically crowd out the offshores. That is the most effective thing we can do to help educate our fans on who the legitimate operators are and differentiate them from the offshore market.” Good news for American books. Bad news for the ones operating off servers in Costa Rica, Anguilla, Latvia and other foreign countries.  The NBA is squeezing them out, and the Department of Justice is too. This relatively new revenue stream continues to grow, and the integrity of the NBA product can hopefully stay untarnished.

The NBA’s seal of approval

“In all the partnerships we’ve formed, they can all use official data; they all can use league marks and logos so they can create a much more authentic product. “We think the historical days where sports betting operators had to put ‘pro basketball’ and ‘LAL’ and ‘OKC’ … that shouldn’t be a norm in a regulated market. And folks should be able to use NBA and Logoman and team logos so that they know this is a legitimate, authentic product,” Kaufman-Ross continued. “We’re also giving them a designation of ‘authorized betting operator’ so that they can give that league seal of approval to their fans. And then, we list all of the authorized operators on our websites. “So, if fans are on the gaming site and want to know who are the approved operators who are using official data and working with the league and protecting the integrity of the game, they are all listed there for them,” said Kaufman-Ross.

Not just one exclusive partnership

In the case of the NBA, the league is there to facilitate movement. “So, we employ a commercial strategy where we have nonexclusive partnerships, and it’s interesting because that’s a real departure from how we generally monetize sponsorship,” Kaufman-Ross said. “We usually have exclusive partners — Pepsi, Kia, State Farm — but we thought that sports betting is such a part of the fan experience that we didn’t want to pick one operator and give them all those league assets. We thought the best thing we can do is (create) nonexclusive deals where we partnered with everyone,” Kaufman-Ross said.

Becoming the norm, not the exception

New Jersey has been the most proactive when it comes to legalizing sports wagering, and it was former Gov. Chris Christie who brought the lawsuit that led to the overturning of PASPA.  In NJ, bettors can wager on about anything; however, they cannot bet on local college sports. The NBA sees the industry moving toward where mobile betting is the norm rather than the exception. Much like in other parts of the world where people gather to watch a soccer or cricket match can also wager during the games. Different teams have taken different approaches to incorporate gambling into their in-game presentations.  At Madison Square Garden, FanDuel signage is everywhere, and the gambling company often sponsors promotions during timeouts. In Washington, D.C., parlors inside Capital One Arena allow fans to wagers.

Educating and raising awareness

It is an evolving part of the in-game experience, and different teams are taking different approaches. Kaufman-Ross’s department is there to help lend guidance. “We try to act as a resource to teams,” he said. “Before Adam wrote the op-ed, we had been studying this issue for more than a decade; the teams had not. “And so we try to be a resource to educate the teams on how sports betting works, what’s legal in their state or their surrounding states, who the operators are, what the early market share looks like and who might be interested in partnerships. So we try to educate them on the industry and try to guide them on what an appropriate partnership would look like in their state.” NBA players and employees are prohibited from gambling on games, which is a prohibition that extends to WNBA and G League games. The league engages in periodic educational programs to review and raise awareness regarding the NBA Gaming Policy. The NFL also enforces similar guidelines. Arizona Cardinals defensive back Josh Shaw was suspended after betting on NFL games on multiple occasions this season.

Staying on the up-and-up

On the legislative front, the NBA is all about consumer protection, monetization and keeping things on the up-and-up.  It has been a long time since the Tim Donaghy gambling scandal and the ensuing Pedowitz Report, and nobody wants a repeat of the bad publicity that ensued (many believe the report was a coverup). “We are also advocating for various integrity provisions, consumer protections, and we feel it is important that mobile betting be legalized, or we won’t successfully crowd out the offshore market,” Kaufman-Ross said. “We want there to be protections on problem gaming, responsible advertising. So there (is) a whole package of asks that are part of our legislative endeavors. It’s not just the royalty.”

And avoid negative bets

Earlier this season, one offshore book posted odds on which coach would be the first to be fired this season. At the time, David Fizdale, of the New York Knicks, was listed at 28-1. (Yes, we all should have flown to Costa Rica and bet the mortgage). However, those types of prop bets do not sit well with the NBA. Kaufman-Ross explained what seems acceptable and what does not. “Most of it is fine. If people want to bet if LeBron is going to score 30 points or more, we think that’s fine. We would not look to prohibit that. “But one we use as an example is who is going to commit the first foul of the game, that’s probably something that shouldn’t be offered. Somebody could give a foul very easily that has no impact on the outcome of the game, and we don’t think that’s an appropriate thing to bet on. “The NFL has said they don’t want betting on certain negative plays, so I think there are certain types of bets that we think are problematic, but the vast majority are fine,” Kaufman-Ross said.

The league’s reputation

All in all, the most significant change since Silver’s op-ed is the NBA’s lowering of its demand from 1% to a quarter of a percent. It is extraordinarily uncommon for the NBA to ask for less money in any business deal, but the reality of what is taking place in state legislatures around the country has more or less forced Silver’s hand. Someday, there will be a national standard on gambling as there was in the days before the overturning of PASPA. But Congress is sort of busy these days with impeachment hearings and various other higher-priority items, so nobody is holding their breath. The folks in NBA headquarters on Fifth Avenue take a fresh look at the landscape every day, feed the most accurate information to the most reputable sites, and cross their fingers that another scandal will not tarnish the game. The NBA is an $8 billion-a-year business. Its revenues are in jeopardy because of an ongoing dispute with China that evolved from the Rockets General Manager Daryl Morey’s preseason tweet about Hong Kong.