Former NJ State Senator Ray Lesniak called the NBA’s proposed integrity fee a kind of “tribute”.
State regulators from Nevada, Massachusetts, Michigan, and Louisiana released a statement last week saying the sports betting regulations should not be overseen by the federal government. The statement said US states should develop “coordinated action among jurisdictions” to combat illegal gambling on sporting events and match-fixing corruption in the sports.
The statement was issued by UNLV’s International Center for Gaming Regulation, one of the top gaming research and data collection institutions in the country. Officials from the four states signed the statement, because they wish to forestall the US Congress from writing federal sports betting regulations which might not takes US states’ best interests in mind.
The UNLV Center for Gaming Regulation statement said that state-level gaming regulators, along with tribal agencies, welcome “strong support from federal-level enforcement agencies”. Despite that call for assistance, the state agencies believe they are best suited to license and regulate sports betting.
Better put, agencies from Nevada, Massachusetts, Michigan, and Louisiana believe their various state legislatures are better suited to regulate sports gambling within their borders than lawmakers in the US Congress. They do not believe a one-size-fits-all approach works for sports gambling.
Arguments for State Regulation of Sportsbooks
One reason the state regulators prefer to legislate themselves is they do not trust the US Congress. A particular point of criticism was the suggestion by the US sports leagues — the NFL, NBA, Major League Baseball, and NHL — that they deserve a “sports integrity” fee for maintaining the integrity of the sport.
The statement read, “The so-called ‘integrity fee’ [would] increase the costs of legal sports betting, siphon much-needed tax revenues away from state coffers, and increase state regulatory burdens.”
Sports Betting Integrity Fees
NBA Commissioner Adam Silver latched onto the idea of an integrity fee as a way to collect 1% of all gross revenues handled by legal US sportsbooks. The idea is the NBA and other leagues would be compensated for the additional effort it will take to guard against match-fixing and problem gambling.
Potential sportsbook operators complain the additional 1% in fees would make it that much harder to compete with unlicensed online sportsbooks and bookies. Gaming pundits and pro-gaming lawmakers have ridiculed the idea as absurd. If the leagues have spent the past 25 years making every effort to guard against sports betting corruption, their argument goes, then legal sports betting should not cost them a dime extra.
Sara Slane, a spokeswoman for the American Gaming Association (AGA), was one of the prominent voices who made that point. Slane said sports betting integrity “is going to require the same sort of rigor that’s been in place for the past fifty years.”
Not “One Dime of Tribute to the Leagues”
Many of the top proponents of an end to the PASPA federal sports betting ban (in 46 states) point out the irony that these same leagues spent millions of dollars to squelch legal sports betting in 50 US states. After spending 6 years trying to cost casino-sportsbook operators hundreds of millions of dollars, they come along wanting 1% of the bookmakers’ revenues.
Ray Lesniak, the recently retired New Jersey state senator who championed expanded gambling in his 40-year career of public service, spoke what was on the mind of many opponents of the integrity fee when he said, “We strongly believe in a regulatory body in conjunction with other states, and believe that could work much better than the federal government taking over the reins. We have been very clear: We’re not going to pay one dime of tribute to the leagues.”
MLB Hints at Support for Federal Regulations
Major League Baseball weighed in on the topic after the Tuesday statement, giving their full support of Adam Silver’s integrity fee. A MLB spokesman called criticism of integrity fees “casino propaganda”.
The spokesman added that “the fee actually would be paid solely by the casinos and would have no negative impact on state tax revenues”, ignoring the argument by the casinos that their total tax rate must be low enough to compete with local bookies and offshore unregulated sportsbook sites.
MLB’s spokesman said Nevada and the other states had come to conclusions “without even soliciting the views of other stakeholders, such as sports leagues, governing bodies, and universities,” but said MLB would “support regulation of sports betting by the states, but only if the states enact statutes and regulations that protect the interests of all stakeholders — not just the casinos.”
Major League Baseball’s spokesmen ended by saying, “Proposals like the one out of Las Vegas [would force MLB] to seek federal regulation of sports betting.”
Are Sports Leagues Stakeholders of the Bookmakers?
Casino operators take umbrage at the idea the sports leagues are “stakeholders”, since they have been opponents for casino operators down through the years. Another argument the leagues have made is the sportsbooks are using their intellectual property. It is similar to the argument the NFL once made against fantasy sports sites, before they realized all the free publicity and viewer fervor that fantasy football brought to their league.
It is a case of projection that the league, after fighting to keep businesses from opening, now want a profit off every single bet those businesses take. A number of US congressmen have supported the integrity fee or intellectual property arguments, which is why the state regulators do not trust the US Congress to hold their best interests in mind.
Major Opposition to Federal Sports Betting
The individual US states had to fight for 25 years to end the onerous PAPSA ban, so they are unlikely to give back that power to the federal government. James Kilsby, the managing director of Gambling Compliance, said when asked about the state/federal dynamic: “All forms of gaming have historically been regulated at the state level. I think you’re going to see the gaming industry be extremely reluctant to bend on that issue.”
Each of these states has its representatives in the United States Senate and House of Representatives. Given the fact that 20 states signed an amicus brief stating their support for New Jersey’s challenge of PASPA, many US lawmakers in Congress likely would support their state’s right to regulate sportsbooks. Given that many lawmakers support states rights, that would make federal regulations harder to pass. Given that some states, like Utah and Hawaii, do not want to sanction any form of gambling, that would add more to the opposition.
Proponents of legal state-level sports betting regulations should keep an eye on the brewing debate. In all likelihood, the sports leagues are going to seek federal sports betting regulations.
