And ideally, the NBA would like a cut of any money wagered on professional basketball games in the United States.
That was one of the bullet points proffered to the committee by Dan Spillane, the NBA’s senior vice president and assistant general counsel. Because the league will be taking on “risks that sports betting imposes,” he said, it should be compensated with 1 percent of the total amount wagered on its games.
“Without our games and fans, there could be no sports betting. And if sports betting becomes legal in New York and other states, sports leagues will need to invest more in compliance and enforcement, including bet monitoring, investigations, and education,” Spillane told the committee, via his prepared statement. “To compensate leagues for the risk and expense created by betting and the commercial value our product creates for betting operators, we believe it is reasonable for operators to pay each league 1 percent of the total amount bet on its games.”
Spillane went on to point out that some gambling operators in countries where the practice is legal have agreed to pay such a fee, naming France and Australia as examples.
That fee would be a massive financial windfall for the leagues, with one estimate by a gaming research firm pegging annual revenue at a collective $2 billion should states with legalized gambling agree to compensate the leagues. But such a proposal — which also has been floated in the Indiana state legislature as it considers its own sports gambling framework — was greeted with skepticism that bordered on hostility Wednesday in New York.
“Now, let’s be clear: [An ‘integrity fee’ is] just a euphemism for a ‘cut of the action,’ ” Joe Asher, CEO of William Hill US, told the committee (via sports-gambling attorney Daniel Wallach, who was there as an observer). “There will be plenty of financial benefits to the leagues. There is no need to divert tax revenue from the citizens of New York to a privileged few.
“Let’s be clear on another point. Any taxes or fees on sports betting, no matter what they are called, should be payable to the State of New York to benefit the citizens of New York, not to benefit wealthy private parties,” Asher also told the committee.
Asher’s opposition to the fee hardly is surprising, considering that any money paid to the leagues would be taken from the pot of money that usually is collected by sports-gambling operators such as William Hill, which runs more than 100 sportsbooks in Nevada plus an app with which gamblers can bet on games from any location within the state’s borders. Patrick Everson, who writes about the Las Vegas sportsbook scene and sports gambling for Covers.com, broke down just how much that 1 percent fee could eat into bookmakers’ profits on Thursday afternoon.
New York State Sen. Joseph P. Addabbo Jr. also pointed out to Spillane that the leagues have never charged such a fee to gambling operators that are legally established in Nevada, a fact the NBA official acknowledged as true.
Other observers, such as ESPN’s Brian Windhorst, pointed out that the NBA and other sports leagues already have systems in place to monitor sports gambling to detect any unusual activity or insider trading. And besides, as Windhorst mentioned in a story last year, the windfall the leagues could see from legalized gambling likely would be substantial even without a 1 percent cut of the action. Consider the Premier League in England, where sports gambling is legal. During the 2016-17 season, half of its teams had advertising partnerships with major casino companies worth tens of millions of dollars, with some deals involving advertisements placed directly on the players’ jerseys.
The NBA began allowing its teams to sell advertising space on their jerseys this season.
If anything, Wednesday’s hearing showed that legalized sports gambling is going to be a much more complicated issue than simply opening up a window and taking bets on the Wizards-Celtics total. There is much that will need to be worked out, including whether leagues that already are raking in billions should be allowed to skim a little bit more off the top.