Leagues Are Losing The Sports Betting Debate And They Only Have Themselves To Blame

Posted By Steve Ruddock on May 25, 2018

Since the US Supreme Court ruled the federal sports betting ban unconstitutional, I’ve often felt like I’m trapped in a Twilight Zone episode. Some of the rhetoric and statements simply can’t be real… but it is.

A perfect example is the malleable attitude towards sports betting the professional sports leagues and NCAA have shown.

After fighting to keep the federal sports betting prohibition known as PASPA in place, the professional sports leagues and the NCAA are now trying to cash in on legal sports betting following the SCOTUS ruling.

In a classic case of wanting to have your cake and eat it too, the leagues and the NCAA have gone from claiming sports betting would cause irreparable harm to their product, to wanting to share in the financial benefits of sports betting by being cut into the action.

The pivot is mindboggling. More so when you consider they’re now arguing the exact opposite of their previous position; that a post-PASPA regulated sports betting environment is superior to the PASPA era environment.

That shouldn’t be too surprising considering many professional sports leagues have been cozying up to DFS operators, and expanding into markets with legal sports betting:

  • The Vegas Golden Knights of the NHL
  • The soon to be Las Vegas Raiders of the NFL
  • The NFL hosting games in London
  • MLB announced it will play London games in 2019

Still, the leagues’ sudden evolution on sports betting hasn’t gone unnoticed, nor is it going unchallenged.

NJTHA files lawsuit seeking $140 million in damages

In a new lawsuit filed by the New Jersey Thoroughbred Horsemen’s Association, the group points out the hypocrisy of the about-face the leagues and the NCAA have taken:

“Most recently, despite a repudiation by a clear majority of the Supreme Court of all of the Leagues’ legal arguments, they have had the audacity to lobby the State of New Jersey to enact a law that would compel Monmouth Park to share with the Leagues its sports betting revenues, as well as the sports betting revenues of others. The Leagues have the nerve to call this bid for a share of sports betting revenues an “integrity fee.” The Leagues’ conduct is shameless. Their hypocrisy has no limits.”

The lawsuit further alleges the leagues have been facilitating certain forms of sports betting (forms they benefit from) for years.

The lawsuit reads:

“At the very same time as the Leagues were convincing this Court of the “imperative” need to stop the spread of sports betting they were doing the exact opposite by actively fueling and profiting from the rapid expansion of sports betting throughout the United States and internationally. Behind this Court’s back, the Leagues have aggressively promoted and facilitated the spread of betting on both the outcome of the Leagues’ games as well as the statistical performances, via fantasy wagering, of the Leagues’ own players in the Leagues’ own games.

“[…]

“It is the epitome of bad faith for the Leagues in-house counsel to certify in a Verified Complaint, and for the Commissioners to falsely swear before this Court, that if sports betting is allowed to spread it would be disastrous for the Leagues, while at the same time outside this Court the Leagues and some of its team owners have hypocritically facilitated the spread of sports betting.”

A problem for the leagues?

The lawsuit isn’t a suprise. But without the leagues’ policy reversal and ongoing efforts to profit from sports wagering, the lawsuit would be on much shakier footing.

The admission that they have the capability to profit from sports betting pretty much undermines the leagues’ previous arguments that sports betting would do great damage, and it appears the lawsuit has legs.

Integrity fees aren’t necessary…

As strange as the flip-flopping is, it’s nothing compared to the leagues’ “integrity fee” argument.

The leagues and the NCAA are asking for an inordinate cut of the sports betting revenue via this so-called integrity fee; one percent of all wagers to be precise. Not only would the integrity fee handed over to the leagues work out to more than the amount the sportsbook operators and the states would receive, but because it’s a percentage of handle (all wagers) and not revenue, that money is guaranteed.

If the book has a bad month and is in the red, it loses money; the state receives zero dollars in tax revenue; but the leagues still get their cut.

It’s a deal not unlike partnering with Paul Cicero in Goodfellas, “Struck by lightning? F-you, pay me!”

What makes the whole integrity fee debate such a head-scratcher is that at the end of the day it hurts the legal sports books the leagues would be getting money from. The leagues’ greed will make it harder for legal sports books to compete with the better pricing of illegal books that give the leagues (and the state) nothing. As such, handle and revenue won’t hit their ceilings.

… And nobody wants them

In a letter sent to the governors of all 50 states, NJ Senate President Steve Sweeney cautioned them not to fall victim to the leagues’ siren song:

“New Jersey, after all of the time and expense put into making sports wagering legal, will not make itself uncompetitive by being the only State to pay the League extortion.”

Furthermore, when the “integrity fee” is divvied up, it amounts to a drop in the bucket for the major sports leagues.

It’s almost as if they’re going to war with sports betting, and trying to undermine the industry out of spite, because the logic behind the “integrity fee” is completely lacking.

As Sweeney put it in his letter:

“The Leagues fought with all of their resources to stop states from allowing their citizens to legally wager on sports. Now that their efforts have been ultimately unsuccessful they wish themselves to make “the fast buck” and to “get something for nothing.” Essentially, the Leagues are now asking to be paid to allow games to be played fairly.”

In addition to Sweeney’s comments, gaming regulators from four states — Massachusetts, Nevada, Louisiana and Michigan — wrote to Congress to “confirm and assert that states and tribal gaming regulatory agencies have the capacity, resources, and ability to oversee the regulation of legalized sports betting.”

The letter uses Nevada’s successful sports betting industry, as well as the many state and tribal regulatory bodies to refute the leagues’ assertions that they alone can protect the integrity of the game in a post-PASPA world.

“Sports betting in Nevada has already been regulated with integrity and success, and gaming jurisdictions across the United States, including tribal jurisdictions, have demonstrated their ability to oversee gaming of all sorts while adhering to the highest standards,” the regulators wrote.

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Steve Ruddock

Steve covers nearly every angle of online poker in his job as a full-time freelance poker writer. His primary focus is the developing legal and legislative picture for regulated US online poker and gambling.

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