The sports betting lobbying push from Major League Baseball and the NBA kicked into high gear in a new state, as the former has drafted a bill in Missouri with a number of interesting provisions.
Those include a one percent tax on all wagers in the state payable to the leagues on which betting takes place — called an “integrity fee.” The draft legislation also has a number of provisions about how data related to sports betting and statistics should be handled and appears to put leagues in a prime position to benefit.
The bill is not officially introduced as of yet. But industry sources tell Legal Sports Report it is a draft that MLB is advancing. You can read the full draft here.
The Missouri sports betting effort so far
It’s early days for the Missouri sports betting effort, but there have been two bills already introduced in the state — H 2320 and H 2406. The former is a short bill that hands all regulation and rule-making power to the state’s gaming commission. The latter is a fairly robust piece of regulatory legislation. The draft, if introduced, would be the third.
Thanks to lobbying registration in the state, we already know MLB and NBA were getting involved in any efforts to legalize sports gambling in Missouri (in addition to a number of other states). The NBA and MLB have already gotten their favored version of a bill in the pipeline in Indiana — complete with an integrity fee/tax — but its prospects for this year are uncertain.
How the Missouri lobbying effort would manifest came to light with the MLB draft bill. While the NBA has taken the lead on lobbying to date, the presence of two MLB franchises in Missouri — Kansas City and St. Louis — is likely the reason why the MLB is in charge in Missouri.
The nuts and bolts of MLB’s sports betting bill
What exactly MLB and NBA want in sports betting bills became even more clear in this draft legislation. And it would appear the leagues are fine-tuning their legislative desires on the fly, as the bill is quite a bit different from the Indiana legislation.
The law, at core, allows the state’s existing gaming facilities to offer both land-based wagering and online/mobile betting.
The integrity tax remains a focal point for the leagues and is included in the draft. The one percent tax on handle advanced by MLB in the draft would equate to roughly 20 percent of all revenue generated in the state; sportsbooks generally hold only about five percent of the wagers they take. More on how much the leagues stand to make here.
Other base provisions:
- Calls on the Missouri Gaming Commission to regulate the industry.
- Sets up a means for registration for any platform wishing to provide online or mobile wagering, including a $10,000 application fee.
- Institutes basic problem gambling protocols and minimum standards for advertisements related to sports betting.
- It appears the tax rate would be the same as other forms of gaming in the state, which is 21 percent. The effective tax rate, including the integrity fee on handle, would thus eclipse 40 percent of all revenue.
Here’s where it gets interesting…
The bill does all sorts of things that are not codified in Nevada sports betting regulation — the only state in the US where single-game wagering is legal currently — or other bills we’ve seen to date. (Nevada’s monopoly could change if the US Supreme Court strikes down the federal ban in the New Jersey sports betting case this spring.)
Who can’t place bets
The bill would mandate that sports betting operators prohibit a wide range of people from placing bets in the state, without equipping operators with any information they could use to enforce such a request. That certainly sets up all sorts of potential compliance issues. From the bill:
2. Sports wagering operators shall employ commercially reasonable methods to:
(1) Prohibit the operator, directors, officers, owners, and employees of the operator, and any relative living in the same household as such persons, from placing bets with the operator;
(2) Prohibit athletes, coaches, referees, team owners, employees of a sports governing body or its member teams, and player and referee union personnel from wagering on any sporting event overseen by their sport’s governing body. In determining which persons are excluded from placing wagers under this subsection, operators shall use publicly available information and any lists of such persons that the sports governing body may provide to the commission;
(3) Prohibit any individual with access to non-public confidential information held by the operator from placing wagers with the operator;
(4) Prohibit persons from placing wagers as agents or proxies for others…
The last provision would prevent “messenger” betting, which is currently legal in Nevada.
Powers for any ‘sports governing body’
Not shockingly, the bill gives a number of powers to the leagues, defined in the legislation as “sports governing bodies.”
The leagues can tell the state’s gaming commission to limit wagering, and the state will have to comply:
A sports governing body may notify the commission that it desires to restrict, limit, or exclude wagering on its sporting events by providing notice in the form and manner as the commission may require, including, without limitation, restrictions on the sources of data and associated video upon which an operator may rely in offering and paying wagers and the bet types that may be offered.
The leagues have previously indicated their desire to have control of where the data comes from as it relates to sports betting. That showed up in this draft:
Sports wagering operators shall use in all sports wagering only statistics, results, outcomes, and other data relating to a sporting event that have been obtained from the relevant sports governing body or an entity expressly authorized by the sports governing body to provide such information to sports wagering operators.
The impact would apparently be that sports betting operators having to purchase data from whatever data provider the leagues require.
Who is in charge of integrity?
Even with the one percent tax going to the leagues for integrity, the draft bill seems to put a lot of the onus on the state and operators to deal with integrity.
The bill compels operators, not integrity monitoring services hired by the leagues, to notify the commission of abnormal betting activity. The gaming commission also in charge of designating a “state law enforcement entity” to have primary responsibility for investigations related to integrity.
More on data
The leagues would also be able to request “account-level betting information and audio or video files relating to persons placing wagers.” The bill compels operators to divulge in real time, if leagues tell them to, all live betting information including personally identifiable customer information, IP address of the bet, the amount bet and bet type.
While operators are beholden under the bill’s language to provide for the confidentiality of such betting data, there is no visible requirement for the leagues to take similar steps should they ask for such data.
The leagues haven’t gotten much traction so far
The leagues are playing catch up, as their state-level lobbying efforts are relatively new. A full-court press in West Virginia appears to be falling largely on deaf ears as legislation is advancing in the statehouse.
But they’re better poised to throw their weight around in states that have teams in their respective leagues (like Missouri).
Will they get some or all of what they want here? That remains to be seen.
