NJ Senate President Urges States To Shun ‘League Extortion’ On Sports Betting

Posted on May 23, 2018 - Last Updated on May 24, 2018

Just as New Jersey led the nationwide push for legal sports betting, it’s leading the pushback against the financial interests of sports leagues.

Today, NJ Senate President Steve Sweeney released a passionate letter he sent to the governors of all 50 states. InsiderNJ posted a copy of the three-page correspondence, dated May 21.

Sweeney doesn’t mince words, admonishing lawmakers to shun the notion that sports organizations should receive a slice of the sports betting pie.

The Leagues should not in any way profit from sports wagering that finally has been legalized notwithstanding their opposition in order to purportedly protect the integrity of games and reduce the suspicion from fans when outcomes result in more betting.

This week, we also learned that state officials are considering legal action against the leagues to recoup legal fees and opportunity costs. Wait until you see the fire Sweeney spits about “League extortion.”

Sweeney lays out the backstory

More than half of Sweeney’s letter is dedicated to a historical retelling of the battle between NJ and the leagues.

He narrates the way in which the state’s 2012 law was “immediately attacked by the Leagues” in federal court. Those leagues “dragged the state” back into court again following an updated law in 2014. As the letter points out, the leagues won every battle across multiple courts in those two Christie vs. NCAA wars.

Every battle until the last one, though. The US Supreme Court took up the case last year, eventually deciding the renamed Murphy vs. NCAA in the state’s favor. In all states’ favor, really, with a full repeal of the federal ban known as PASPA.

Sweeney finishes the tale with a poetic flourish:

Thus, after the six years of being raked over the coals by the Leagues suffering loss after loss and spending over ten million dollars in legal fees and hundreds of millions of dollars in tax revenue, New Jersey is finally able to carry out the will of its people by permitting sports wagering by adults.

The state is now on the verge of legal sports betting, and Sweeney is among those working to craft the updated legislation and regulations. Those should be ready for launch within weeks, and you can be certain the leagues won’t like what they see.

Sweeney rakes the leagues over the coals

Let’s get to the juicy stuff! The leagues have really gotten under Sweeney’s skin — and understandably so — as they’ve sought to profit from NJ sports betting. Here’s more:

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.

The senator is talking about the so-called integrity fees being lobbied for by the NBA and Major League Baseball, primarily. If lawmakers concede, operators would pay a portion of every dollar bet to the respective sport’s governing body. Leagues would be in line to skim away as much as 20 percent of the industry’s revenue.

Sweeney called these integrity fees an “extortion attempt.” He questions what the leagues would now start doing to preserve the integrity of their games that they weren’t already doing before. A valid question, one we’ve had ourselves. (The leagues have partnered with data companies to state their case for integrity fees and data rights here.)

He’s also correct when he adds that the leagues don’t collect fees elsewhere in the US. You have to laugh at the way he worded it, though. “Neither Nevada nor any other state pays the Leagues to play sports,” he said. And his state certainly won’t.

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.

Lastly, Sweeney underscores that league involvement in sports betting may create a lack of integrity rather than the opposite. Or at least the perception.

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Four others pen their own sports betting letter

Sweeney’s memo wasn’t the only noteworthy one about sports betting this week.

Yesterday, regulators from four states lobbed a media statement in the general direction of Congress. In it, the top gaming officials from Louisiana, Massachusetts, Michigan and Nevada joined 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.”

Following last week’s SCOTUS ruling, Sen. Orrin Hatch announced plans to introduce a federal sports betting bill. Although this statement doesn’t mention Congress directly, the tone seems to have a certain audience in mind.

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.

In other words, keep your congressional fingers away from the frosting on our sports betting cake.

Guidelines for sports betting legislation

The regulators lay out a five-point framework for states considering sports betting legislation. Here are their pillars:

  1. Coordinated action among jurisdictions is the best way to eradicate illegal activities.
  2. Real-time betting information should be shared to combat match-fixing.
  3. Responsible gaming controls should be implemented.
  4. Reasonable taxes and fees are necessary to compete with illegal operators.
  5. “Additional fees, including the so-called ‘integrity fee,’ increase the costs of legal sports betting, siphon much-needed tax revenues away from state coffers, and increase state regulatory burdens.”

Most of those items are actually present in the leagues five-point model, as well. They, too, support information sharing and responsible gaming rules. That last bullet is a shot across the bow, though.

The four regulators also indicate plans to form a Memorandum of Understanding between their own jurisdictions and any others “sharing these values.”

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Eric Ramsey

Eric is a reporter and writer covering the NJ gambling industry, online poker, sports betting regulation, and DFS. He comes from a poker background, formerly on staff at PokerNews and the World Poker Tour.

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