It’s Time For Sports Leagues And Betting Operators To Bury The Hatchet

West Virginia now has a sports betting law that will come into effect as soon as the US Supreme Court issues a ruling allowing states to regulate the industry. But the fight to get the law passed was bitter, pitting the sports leagues led by the MLB and NBA against the sports betting operators. Now it’s time to bury the hatchet and join forces to ensure that legal regulated sports betting is as widely available as possible.

Unnecessary conflict will reduce spread of legal sports betting

One of the biggest problems is the issue of so-called “integrity fees” – payments to the sports leagues from sports betting revenues. The leagues want them, and the betting operators don’t want to pay them. The West Virginia bill, S415, became law on March 10 without Governor Jim Justice’s signature. It includes no integrity fee provisions despite frenzied lobbying on the issue. Connecticut, Mississippi, New Jersey, New York and Pennsylvania are all either ready to go with legal sports betting, or well on the way. That still leaves most of America out of the game, and even if other states introduce legislation, they will face the opposition of the sports leagues. The inevitable outcome will be that fewer states will pass sports betting laws, meaning the US market will be smaller than its true potential. Anyone with an ounce of understanding of game theory should be able to see that this is a sub-optimal outcome, but a win/win strategy is possible if both sides change their tactics. There is so much nonsense spouted by political opponents of legal sports betting that we risk ignoring the few arguments that are valid. If operators accept the integrity fee argument they can increase support for gaming legislation and therefore increase access to safe, regulated sports betting.

Integrity fees have a logical basis

The sports leagues invest in making their sports popular and betting operators get the benefit from that investment in increased wagers. An integrity fee compensates the leagues by giving them a share of revenues that they are partly responsible for creating. The leagues simply want to be compensated for the intellectual property rights they have in the game data that they have created. The problem is a mindset where the sports fixtures on which people bet are being considered as a “common good” like the air we breathe, or the water in the oceans.

• In previous times, this made sense because poor technology made the concept of an integrity fee impractical; it simply couldn’t be calculated or if it could, it couldn’t be collected.
• Now that this is no longer true, all that remains is the outdated belief that the games themselves are a common good.

The sports leagues and teams have paid good money to create the asset on which sports betting operators base their businesses, and they believe they have a legitimate claim to share in any revenues other businesses make by exploiting that asset. It’s time for betting operators to recognize the validity of this argument, and in doing so join forces with the sports leagues to spread legislation across as many states as possible. That would be a real win/win strategy, for leagues, operators, and the American people. West Virginia Governor Jim Justice made the point when he announced the new law:

“After the U.S. Supreme Court issues its decision on sports wagering, to address any provisions of the legislation that might be in conflict, I will ask the Legislature to look at the advantages of partnering with the major sports leagues. This approach will allow us to develop a relationship with all the major sports leagues so that it is beneficial to everyone.”