This is a developing story and will be updated.
As expected, the NBA has taken a strong stance on the efforts to legalize sports betting in New York. The stance itself is pretty eye-opening, though.
This morning, the Senate Racing, Gaming, and Wagering Committee conducted a public hearing on the issue. In advance of the meeting, the NBA submitted written testimony for consideration.
The letter offers support for legalization at the state level, marking a significant shift in tone:
“…we support the passage of a comprehensive sports betting bill that would serve as a model for a 50-state solution — whether that happens in Congress or on a state-by-state basis.”
It’s the first official comments from the NBA on potential state regulation of sports wagering, although it was behind the inclusion of an integrity fee and other language in an Indiana sports betting bill.
The state is looking to legalize sports betting if the federal ban on single-game wagering is struck down. The state has already moved to legalize such wagering at commercial casinos. Some in the state want to expand that possibility to horse racing tracks and off-track betting parlors.
NBA addresses NY committee on sports betting
NBA Assistant General Counsel Dan Spillane submitted the testimony to the committee this morning.
“The NBA’s position on sports betting has evolved in recent years,” according to Spillane. The league has long supported the Professional and Amateur Sports Protection Act, the 1992 law that prohibits sports betting in most states. The NBA is a litigant in the ongoing New Jersey sports betting case, for instance, trying to stop the state from having wagering within its borders, by using PASPA.
As the industry takes shape, though — both legally and illegally — the NBA’s stance is beginning to shift.
Our conclusion is that the time has come for a different approach that gives sports fans a safe and legal way to wager on sporting events while protecting the integrity of the underlying competitions.
This sentence alone represents a significant change of course for the league. It also seems to indicate that the NBA anticipates a US Supreme Court ruling that is permissive of sports betting expansion.
How lawmakers can win the NBA over
In the past, the NBA stated that it would only support legalized sports betting at the federal level.
That is still the preference today. “We believe a federal approach is the simplest way to create clear and uniform protections for the integrity of our games,” Spillane said in his testimony.
However, the league also indicated that it would not oppose state-by-state legislation that includes the requisite safeguards. Spillane laid out five bullet points that the NBA would like to see included in sports betting legislation:
- It should “enable the detection and prevention of improper conduct relating to sports betting”
- It should pay one percent of betting handle to the leagues to fund compliance and enforcement
- It should allow leagues to restrict wagering on their events
- It should include consumer protections for bettors
- It should include internet and mobile betting
“We urge the legislature to act as soon as possible to amend the existing law and create a robust regulatory structure that includes the protections we have outlined today,” Spillane concluded.
Lawmakers asked Spillane questions during Wednesday’s hearing, but did not question the possible inclusion of the proposed tax payable directly to the leagues. Whether the NBA would oppose state regulation if the integrity fee and other of its preferred policy points are not included in legislation is unclear.
Other tidbits from the NBA
There is a lot to unpack in Spillane’s letter. As part of the argument, he cites the growing popularity of legal, non-sports gambling in the US.
Most states offer lotteries, and there are hundreds of legal casinos and race tracks across the country. Regulated online gambling is still in its early stages but also is growing.
The letter contends that consumer protections in regulated sports betting markets have been effective, too.
In England, a sports fan can place a legal bet on a smartphone, at a stadium kiosk, or even on a television. There are extensive regulations in these jurisdictions to protect the integrity of sports and the consumers who place bets.
There is also some time spent highlighting the league’s physical presence in the Empire State. The NBA has been headquartered in New York since 1946, and it and has a total of five professional teams within its borders.
- New York Knicks
- Brooklyn Nets
- Westchester Knicks
- Long Island Nets
- New York Liberty
There are of course no shortage of other pro and collegiate teams in the state.
The tone of the NY sports betting hearing
The hearing appeared to go well for anyone hopeful of an expansion of sports wagering in the state, and it brought together a number of gaming interests from inside and outside NY. Lawmakers on the gaming committee seemed genuinely interested in the subject, and often asked good questions of the witnesses.
In particular, lawmakers were very engaged on the integrity side of the sports betting issue. Lawmakers had a number of questions for representatives from Sportradar and Genius Sports, the two sports data companies that work with pro sports leagues and bookmakers on integrity matters.
There were few questions or statements from lawmakers that appeared to push back on the idea of expanded sports wagering.
No reason to rush on sports betting?
All of the stakeholders in New York appeared to be on board with moving forward with sports wagering, should lawmakers legalize it.
But Joseph Appelbaum, president of the New York Thoroughbred Horsemen Association, said the state should not rush into a law. He said that good policy should be the state’s goal, not creating a law as fast as possible, as he contends first-mover status is not an advantage.
Appelbaum’s stance doesn’t have much grounds in reality on the latter point. New Jersey and Pennsylvania are already poised to move forward with legal sports wagering with the right verdict. Those states would then attract visitors who are interested in betting on sports; if New York dawdles, this could certainly have a negative effect on the existing racing and gaming facilities in the state.
Pushing back on ‘integrity fees’
The “integrity fee” that the NBA is lobbying for — a one percent tax on handle that goes to leagues directly — is a new idea in the US sports betting space. It’s not currently in any New York legislation.
Joe Asher — CEO of William Hill US, which operates sports betting in Nevada — testified on Wednesday. He pushed back on the idea that an “integrity fee” would be a good idea in any state. A one percent tax on handle equates to roughly a 20 percent tax on revenue, he told the committee.
As such, that would create a challenging environment for sports betting operators to thrive. And, Asher said, a high tax rate would make it tougher for legal sports wagering to compete with online offshore sportsbooks that already operate illegally in the US. Those books have no taxes to pay to operate nor regulatory hurdles to clear.
Nevada sports betting has created a climate in which regulated sportsbooks can easily compete with offshore books, Asher added.
Online sports betting?
Many of those who testified at the hearing were in favor of allowing online sports betting in the state. That includes the NBA. Whether that will make it into any legislation in New York is unknown.
Online horse betting has been a boon to the horse racing industry. In fact, the New York Racing Association already operates online horse betting in states around the country via a website.
While online poker has seen slow going in many states — it’s currently legal in just four (Nevada, Pennsylvania, New Jersey and Delaware) — the possibility of online sports betting appears to be picking up steam in many states.
Dustin Gouker contributed to this report.
