Have The Sports Leagues Come To The End of the “Integrity” Fee Road?

Posted on February 14, 2019

For years, the four major US sports leagues (Major League Baseball, National Basketball Association, National Football League and National Hockey League) tried to stop sports betting altogether. However, now that the Supreme Court deemed sports betting legal, every league is posturing to see some of the profits.

The first attempt was to try and convince states rushing to legalize and regulate sports betting to include an “integrity” fee in their bills. That didn’t go over too well.

When West Virginia sports betting was being debated, Gov. Jim Justice sought to include integrity fees. However, the bill signed into law did not include it.

Although the leagues have been unsuccessful in getting integrity fees into current sports betting legislation, they know many states will follow. Not to mention, there are other ways to capitalize on sports betting fever.

However, the leagues must act quickly to grab a piece of the sports betting pie before they’re completely left out of the equation.

WV said no, but is there still hope for the leagues?

One approach to monetizing sports betting is to deal with the states on an individual basis. Some league officials are looking for states to offer 0.25 percent of all money wagered on sports bets in their state.

There are currently at least six states that have fees payable to the leagues in the range of 0.2 percent to one percent in their most recent bills:

  • Missouri
  • New York
  • Kansas
  • Illinois
  • Iowa
  • Massachusetts

However, just because the fees are in the bills, doesn’t mean they are a lock to happen. Multiple lawmakers have stated the fees are in the bills as more of a point for discussion because there are still many who oppose giving the leagues anything.

The MLB, NBA and golf’s PGA Tour have all begun the process petitioning individual states to include these fees in their new bills. The leagues are now using a more friendly term, “royalty,” while legislators still say it’s an integrity fee.

Leagues entitled to their share of sports betting revenue

Leagues feel entitled to some sort of profit based on the fact that it is their sport which benefits the masses. They also believe they deserve money to keep the league clean from manipulation and foul play now that gambling is a reality. Of course, many say sports betting helps find the problems, not create them.

Bryan Seeley, a senior vice president of Major League Baseball, recently spoke about the fees to The Intelligencer.

“It obviously helps the leagues in providing compensation to us for our product. It also helps defray the costs for us for integrity and regulatory costs.”

Some of these “costs” come from hiring employees to watch the games and monitor betting activity to ensure the integrity of the game. No matter how true this actually is, league’s are going to stick with that narrative to find a way to get their share of the money.

Seeley continued,

“I can’t think of another industry where a class of people is able to make hundreds of millions of dollars off someone else’s product, put risk on that party, and pay them nothing. Some of the revenue that’s going to be made by the gambling companies needs to be shared.”

Leagues creating partnerships with gambling companies

Another route to take is to try to reach deals with the casinos and gambling companies themselves. So far, none of the five WV land-based casinos have deals in place with any of the sports leagues.

The NHL has been creating partnerships with companies like MGM Resorts International over the past year. League commissioner Gary Bettman thinks that if the league should be compensated if it is providing information and content to others making money.

Bettman said,

“We believe that, whether it’s our intellectual property, our data, whether it’s video of our game, we have important assets, and if somebody is going to avail themselves or want to avail themselves of those assets in order to conduct their business, then we’re going to need to have a negotiation.”

Another part of the discussion is regarding where the fees come from. Some leagues want the fees to come from a percentage of all bets made, while the lawmakers and sportsbooks want it to pull just from profits. There would obviously be a large discrepancy between the two.

At the complete opposite end of the spectrum, the NFL has surprisingly taken a back seat from lobbying for money. Despite being the most popular US sport to bet, the NFL claims it has never gone after a percentage of bets.

NFL spokesman Brian McCarthy said,

“Rather, we are focused on game integrity and consumer protection.”

That argument, however, doesn’t hold much weight. If the leagues need additional money to “protect the integrity of the game,” how have they been funding the protection of the game until now? Remember, Nevada has had some form of sports betting since 1949.

For now, however, the leagues seem to have found a way to profit off of sports betting by partnering with the companies at the heart of sports betting, the casinos.

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Chris Imperiale

Chris Imperiale covers sports betting and the online casino industries. He has a journalism degree from Rutgers University and was formerly on staff at Bleacher Report.

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