MLB (along with the NHL and Major League Soccer) are investors in DraftKings. That puts the leagues in the unprecedented position (for the US market, anyway) of holding an ownership stake in a sportsbook.
That is, of course, assuming DraftKings actually goes forward with the building of said sportsbook.
- This hire
- The company’s already-announced expansion plans
- Comments from CEO Jason Robins regarding his plans to pivot to sports betting
- The company’s rumored pursuit of a license to operate in the New Jersey online gambling market
… it seems like a fairly safe assumption.
An awkward spot politically
DraftKings’ planned transition puts MLB in a tricky spot.
The league, along with the NBA, has been actively lobbying for sports betting legislation that places a tremendous amount of power in the hands of professional sports leagues, largely at the expense of sportsbook operators.
With MLB now poised to profit from sports betting on the operator side, the optics of lobbying for a state-mandated revenue stream via the so-called “integrity fee” — already a relatively large ask — may become even more problematic:
- Lawmakers opposed to the concept of the fee will be quick to point to the fact that three professional sports leagues (effectively four, as the NBA will end up in the same spot once FanDuel makes a similar inevitable pivot) stand to reap direct benefits from sports betting.
- The argument that leagues should get a cut of handle, as opposed to revenue, to avoid any appearance of having a stake in the outcome of games also takes a meaningful, if not mortal, blow when a league owns a piece of a sportsbook.
- While not necessarily germane, the fact that MLB would be paying an integrity fee to itself won’t help matters from a PR standpoint.
How irreparable is that harm?
The pivot comes at a critical point for the issue of regulated sports betting. A decision from the US Supreme Court on New Jersey’s long-running challenge to PASPA is expected within the next few months.
Ownership in a sportsbook is a slight departure from MLB’s historical position on gambling.
Consider the words of former Commissioner Bud Selig, who offered this on the prospect of sports wagering in a deposition related to the first iteration of the current Supreme Court case, Christie vs. NCAA:
“… gambling on a sport, or any sport but on this sport is what you want to talk to me about, is I think the deadliest of all things that can happen. It’s evil, it creates doubt and destroys your sport.”
I’m not saying that DraftKings’ decision will have any direct impact on the Court’s decision. But the willingness of professional sports leagues to be so tightly connected to sports betting cuts against part assertions of “irreparable harm” arising from sports betting. That contradiction may not be lost on the Court.
The optics are also difficult for MLB, as it continues to answer questions about the involvement of one of its best players, Pete Rose, in betting.
Possible implications for NFL owners
Both Jerry Jones and Robert Kraft reportedly hold stakes in DraftKings via investment arms.
Given the NFL’s policy on gambling, it’s difficult not to wonder if the transformation of DraftKings into a sportsbook could cause a conflict for the two team owners.
Enforcement of the policy by the NFL has been notably uneven. But the high-profile nature of the players and the direct connection to sports betting could elevate the situation to one that the league feels compelled to address.