So Which Is It, NBA: Is Sports Betting Going To Help Your Bottom Line Or Not?

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NBA betting impact

There’s a lot of questionable information and dissonance coming from the NBA and Major League Baseball when it comes to sports betting legalization.

The two pro sports leagues have insisted it’s either their way or the high way, thus far, when it comes to new wagering laws that are being considered if the US Supreme Court strikes down the federal ban.

They’re not getting their way with a West Virginia sports betting law that is about to be enacted. They are still lobbying in plenty of other states, however.

But apparently, the leagues don’t have their talking points lined up on whether sports betting is going to help them economically.

The NBA appears to be confused

The NBA and MLB have been pushing back on the idea that they’re due for an economic windfall should sports wagering become widely legal in the US.

TV ratings and the amount of time fans spending watching broadcasts is almost certainly going to increase in that scenario. How much benefit they will actually get is certainly up in the air, but to say there’s none is pretty disingenuous.

The first take on this from the NBA

Here’s Scott Ward, representing the NBA and MLB as a lobbyist, from a hearing in the WV legislature last month on the idea that leagues will benefit. This was in a response to a question from a lawmaker asking why should West Virginia give the leagues a “sports betting integrity fee” — a one percent tax on handle payable to the leagues — when they stand to benefit anyway:

“I’ve heard this a lot, that people are going to bet and then they’re going to watch the games, and you are going to get so much more money from people watching the games. I think that’s based on a faulty premise. And there’s really no data to support that. And here’s the faulty premise. The premise is that if you bet on a game, you’re going to watch the sport.

Well in order for that to grow, we’re talking about a large illegal market that exists now. So let’s assume also those people are now watching sports because they’re betting. So in order for us to have additional eyes, and for this large amount of money come to us, we have to find people who 1. don’t watch sports right now and 2. don’t bet right now. That’s not your market to come and bet. So I think that faulty premise that underlies that we’re going to get a bunch of money from people watching really just doesn’t exist.”

To boil all that down: Ward says the NBA and MLB aren’t going to get much out of sports betting in terms of organic economic impact.

But what, the NBA also said this…

Here’s Commissioner Adam Silver in 2015:

“It’s good for business, I don’t want to hide from that,” he continued. “Putting aside whether or not we’re actually actively involved in any of the betting, it creates more engagement. We all know as fans if you have, even like a gentleman’s bet or a $5 bet with your friend on a game, all of a sudden you’re a lot more interested.”

Here’s what some folks from the NBA are saying about the possible impact, in a story by the New York Business Journal:

The league has no assurance that the structure will play out, but even without it, every team is seeing green. Many already receive sponsorship dollars and ad support from casinos.

“How it all works out, relative to the league getting that 1 percent, is not clear yet,” said Brett Yormark, CEO of Brooklyn Sports & Entertainment, which owns the Nets. “On a team level, the audience we can deliver for these companies will be very coveted. Every team is really focused on that. It’s a big opportunity for us and I’ve got my guys really focused on it. I haven’t pegged a number yet, but clearly there’s real upside, so I’ve got my guys really modeling it up right now.”

So, sports betting is going to help. Got it. And:

“It’s really impossible right now to scope out what the precise opportunity is,” said NBA Deputy Commissioner Mark Tatum. “What we do know is that now it’s a multi-hundred-billion industry and most of that is illegal.”

That seems to imply that the opportunity for the league is not “nothing.”

(Let’s also note that the black market is not nearly as big as Tatum implies here. The American Gaming Association puts the total amount wagered illegally in the US at about $150 billion. An estimate from Eilers & Krejcik Gaming puts the illegal market at about $50 billion in terms of handle. And revenue from those two figures is just a fraction of the total amount wagered, in any event.)

It would help if the NBA and MLB wouldn’t go over the top

The NBA and MLB know sports betting is going to help their bottom line, no matter what they say publicly. That’s with or without “integrity fees” or royalties or whatever you want to call the money the leagues want states to give them.

Silver didn’t pen his editorial years ago solely based out of integrity concerns. Whether he thought that getting an “integrity fee” eventually was a slam dunk we don’t know, but he clearly knew it would be good for business.

The NBA and MLB — and indeed all sports leagues — deserve and should be given a seat at the table when it comes to sports betting laws. But they need to tone down the rhetoric. Originally the integrity fees were supposed to go toward integrity. Now they’re supposed to be paid to the leagues for any number of reasons. That they should be compensated for “spending billions of dollars” putting on games is one of the silliest talking points I’ve ever heard; pro sports leagues aren’t running games for charity.

It’s possible for the leagues, gaming interests and state lawmakers to have a civil and rational discourse about sports betting without being disingenuous. Let’s hope that happens before it’s too late to create better policy in states around the country.