As has been evident for quite some time, legalized U.S. sports betting isn’t going to come to fruition without plenty of proverbial blood, sweat and tears.
Exhibit A is naturally New Jersey’s protracted legal battle with the pro sports leagues in the form of Murphy vs. NCAA. The Garden State endured multiple losses at various levels of the legal system until finally getting their day in the highest court in the land last December 4th. While oral arguments seemingly went very well for New Jersey in front of the Supreme Court that day, the time that’s subsequently elapsed without a decision easily exceeds the 93-day average between those two ends of the process that’s been the norm since 2000.
Then there’s the fact some of the defendants in the case are causing headaches on the other side of the very issue they’ve fought New Jersey tooth and nail on. With a legal defeat of some sort looking more and more like a possibility, both the NBA and MLB are trying to ensure they’re not caught flat-footed in terms of having some skin in the legalized sports betting game.
- The two leagues are asking for an integrity fee and have also pushed to be the exclusive source – at a cost as well, of course – of the game data that is used to grade wagers. They’ve also made some rumblings about wanting a certain degree of control over what type of wagers can be offered. Consequently, numerous states considering legalized sports betting find themselves in varying degrees of conflict with both MLB and the NBA over the issue. And recently, the PGA jumped into the fray by officially joining the lobbying effort.
Major overseas entity inserts itself in conversation
To top it all off, the English Premier League (EPL) has gotten in on the act, to an extent. Last week, they emphasized their support (by way of Football DataCo, their official rights holder) for the positions held by the aforementioned trio of organizations with respect to integrity and data licensing fees in an official interview with ESPN.
Naturally, the states and any would-be sportsbooks need that overseas interference like a hole in the head. And in this particular case, the EPL, which even has a club (Stoke City) owned by online sportsbook Bet365, could serve as that “corrupting influence” that you certainly don’t want in the ear of U.S.-based sports leagues if you’re on the other side of the equation.
After all, the EPL has been raking in money from UK sportsbooks for data rights fees since 1992. They also allow individual clubs to have sponsorship agreements with sportsbooks, and as such, nine of its teams are involved in such partnerships.
Notably, there isn’t an integrity fee paid out to EPL or any other league by sportsbooks in the UK’s robust sports betting market, although that hasn’t been for lack of trying. Football DataCo GM Adrian Ford noted in his interview that there have been multiple attempts to persuade the country’s government to take up the issue to no avail.
The successful implementation of such a structure in a betting market as large as the U.S. could certainly help the UK’s pro sports leagues make a stronger case in that regard, hence one of the likely motivations for their public support of the policy stateside.
Because it works elsewhere doesn’t mean it will work here
Meanwhile, Australia, France, and New Zealand actually do have integrity/royalty fees in place, and still enjoy thriving sports betting markets. With the model proving successful elsewhere, do the states and prospective sportsbooks have a leg to stand on when arguing that a similar paradigm in the U.S. would be a non-starter?
The view here says that to a large degree, they certainly do. A major reason has to do with apples and oranges, and not the ones on the slots reel, either. One major difference between that quartet of overseas markets and the U.S. comes down to simple history, as in how tenured sports betting is in each of those countries.
With single-game betting having been widely legalized and available for decades in those jurisdictions, bettors are accustomed to dealing with the country’s sportsbooks. That means that unlike in the U.S., the issue of having to ween them off offshore books or unregulated bookies in these countries is virtually non-existent.
Meanwhile, the plethora of new sportsbooks that would presumably pop up in the U.S. over time if PASPA is fully repealed would immediately be faced with luring a reported 12-15 million Americans already betting illegally each year through either local bookmakers or offshore sites. That task would be made infinitely harder if they had to offer considerably steeper odds to make up for all the hands in their cash registers, so to speak. After all, in addition to what the leagues are asking, the states would be right in line behind them to collect whatever percentage of tax revenue they’d be entitled to.
Potential light at the end of the tunnel
The willingness of the leagues to lower their integrity fee demands from 1 percent to .25 percent in a recent draft of sports betting legislation in New York is certainly a step in the right direction. In the same bill, the leagues have also shown some compromise on official data by requesting it only be required for certain types of wagers.
The most important takeaway is that regardless of what’s worked elsewhere, the leagues should be highly conscious of the dangers of indirectly putting nascent sportsbooks at a severe competitive disadvantage from the jump. By doing so, there will likely be much fewer legal wagers from which to draw any profit from.