Since the US Supreme Court struck down a federal law prohibiting sports betting in May, major sports leagues have been trying to get in on the action. MLB, the NHL, and the PGA Tour are seeking integrity fees to help protect the integrity of their sports. While their previous lobbying efforts in West Virginia failed, it seems that they aren’t taking no for an answer.
Background of integrity fees
The major sports leagues in the United States tried hard to prevent the ban on sports betting from being overturned. They opposed those in favor of legalized sports betting at every turn, using any legal means that they could.
Ultimately, the efforts of the NHL, MLB, NBA, NFL, PGA Tour, and the NCAA were in vain because the ban was ended. Since then, they have implemented policies to protect the integrity of their sports and their intellectual property. They don’t want sports betting operators profiting from the intellectual property of the leagues without having to pay any compensation.
That’s why the NBA and MLB have been calling for the introduction of integrity fees. They are seeking a percentage of every sports bet on their league’s events. Of course, that would be a significant chunk of change over time and would be an additional cost for gambling operators.
These leagues have done significant lobbying to get individual states to implement a provision for integrity fees, but they have not yet been successful.
Integrity fees in West Virginia
West Virginia was the fourth state to offer legal sports bets after the federal ban was ended.
Previous attempts by the NBA, MLB, and PGA Tour to get West Virginia officials to implement an integrity fee provision was not successful. Now they are making one last attempt.
The West Virginia Lottery Commission, which is tasked with creating long-term rules for sports betting in the state, had received a letter from the PGA Tour, MLB, and NBA.
One of the main points they are pushing to have integrity fees implemented was explained in the letter: “If the Sports Wagering Rule does not include strong and reasonable integrity protections the leagues are seeking, legalized sports gambling in West Virginia will deprive the leagues of important tools to detect and prevent manipulation and corruption.”
Some officials have supported integrity fees, but most of them are opposed. The chairman of the Senate Finance committee, Craig Blair, said: “They weren’t getting a cut when the bookies were doing it and when it was offshore. And they’re not getting it now. And as long as I’m the Senate Finance chairman, it’s not going to happen.”
There was a ton of speculation going around when the lottery’s director, Alan Larrick, resigned one day before the launch of sports betting in the state without giving a reason. The justice administration also got rid of Danielle Boyd, the general counsel for the lottery, who had the most knowledge about sports betting.
The sports betting bill passed easily, but Governor Jim Justice did not sign it because of a conflict of interest. His family is the owner of the Greenbrier Resort, which includes a casino.
Justice also has links to sports league lobbyists: Larry Puccio, Justice’s transition team leader, is a Greenbrier Resort lobbyist. Puccio is also registered as a lobbyist for the PGA Tour, NBA, and MLB in the state.
Governor Justice was seemingly in favor of integrity fees at a certain stage in the process. He reportedly wanted a deal struck between the casino operators and the sports leagues during a meeting that took place in May. The casino operators would not play ball; they believe that any such deal should be carried out privately rather than being enforced by the state.
These debates are still ongoing as the nitty-gritty aspects of this bill are being finalized. In their letter, the sports leagues proposed an amended version of the integrity fee. They now want a tiered system.
One tier would be based on outcome type bets that use public information. The other tier would be for live betting that could only be conducted by using official league data. This second tier would be the mechanism through which some sort of integrity fee is introduced in return for the use of this data.
The leagues also want to have working relationships with sports betting operators to monitor suspicious betting patterns and with state regulators to prevent the introduction of some exotic types of bets that would hold greater integrity risks.