Leagues Could Make Billions If States Implement Sports Betting ‘Integrity Fees’

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Provisions in a new Indiana sports betting bill would make sports leagues the recipient of money from legal sports wagering.

How much money could that mean for leagues? It’s in the billions, with a “b.”

The Indiana sports betting bill and ‘integrity fees’

While a Senate version of a sports gambling bill appeared in Indiana last week, a House version dropped on Monday.

In the House version was a previously unseen “integrity fee” that would be paid to sports leagues, depending on how much money is wagered in the state. That fee would be paid by sports betting operators. Such a fee is a new development in any state.

The fee is set at one percent of handle for sports betting in the state — not revenue. (Read this for more on handle vs. revenue.)

Taking one percent of handle could represent a pretty sizable windfall for the leagues — namely the NFL, NBA, NHLMajor League Baseball and NCAA. (It could also potentially affect other sports if Indiana were to offer them, such as the PGA Tour, Major League Soccer, etc.)

All of this requires a victory for New Jersey in the US Supreme Court case about the federal sports betting ban, of course.

So how much money is ‘one percent of handle’?

How much handle would there be in the US if states start widely legalizing sports wagering?

Eilers & Krecjik Gaming took a stab at estimating handle if 32 states eventually legalize sports betting. (That number comes from the jurisdictions they feel are most likely to eventually green-light sports gambling).

The report from Eilers presents a wide range of possible outcomes, ranging from $150 billion to $250 billion in annual handle. For the sake of round numbers, let’s settle on $200 billion as a possible number for handle across the US down the road.

That would mean if the Indiana model is ported to every state, the leagues would stand to realize $2 billion in revenue annually.

But how would that break down by league?

How much each league would benefit?

Because of numbers from the Nevada sports betting industry, we have a rough idea of how much handle we can expect would be wagered on each sport.

Here’s handle for December 2016 through November 2017 in Nevada:

Nevada regulators don’t break down football and basketball handle by pro/college numbers. But we know anecdotally there could be about a 60-40 split for football between pro and college. For basketball we’re going to assume a 50-50 split, for the purposes of this exercise.

Using the above numbers and our figures of $2 billion going to leagues from $200 billion handle, we can make some educated guesses about how much money each league would get:

The “other” would include betting on sports like the NHL, soccer and golf, among other things.

Parlay wagering accounts for a little over one percent of Nevada handle, or another $20 million that would have to be divided among the leagues, depending on how parlays would break down.

Quite simply, the leagues stand to make a lot of money if “integrity fees” are copied everywhere. And that profit would likely far outstrip and costs associated with integrity the leagues would incur.