By now, you may have read thousands of our words about this so-called integrity fee. To make a long story short, the NBA and Major League Baseball are seeking direct and significant compensation for their role in a regulated US sports betting industry.
The fee is part of their conditional support for sports betting bills, one of five concessions they’re seeking from lawmakers. It’s the one we’ve covered the most because there are many millions (if not billions) of dollars at stake.
But there’s another concession in their blueprint that could have an even larger bearing on the industry. Leagues are asking for their data — or a source of which they approve — to be the only source used to settle bets.
It’s a small request hiding large implications beneath the surface.
What data restriction do leagues want?
Here’s the data language in the lobbying document leagues are circulating:
Requiring the use of official league real-time data will ensure the accuracy and consistency of betting outcomes for fans.
Clear enough, and noble. Everybody wants accurate and consistent outcomes.
And here’s the language that is in their so-called “model legislation:”
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.
During West Virginia sports betting testimony, the leagues argued that their data is simply faster and better than third-party data. League scorekeepers are trained and monitored in such a way that gives bettors confidence in the posted outcome.
Of course, the score of a game is usually not in dispute. But there are other types of wagers based on individual plays or series of plays that are more intricate. Particularly when it comes to in-game betting, “fast and reliable data” can be crucial.
From their point of view, then, league data is the only data that sportsbooks should use.
What data do they have?
Sports leagues are certainly in the business of big data.
Each of them has partnerships with one or more providers who compile and distribute more stats than you could probably imagine. Baseball, in particular, is a game driven by numbers. “Sabermetrics” is almost a religion to its adherents, and teams commonly employ data analysts.
The game also has some of the most granular options for bettors, who can speculate on the result of individual at-bats, or score totals by the half-inning. There might be 250 pitches in a game, and each one needs to be recorded precisely — both for keeping records and for settling bets. Was that a hit or an error, officially? The league tracks practically every single action of every game.
Fan engagement requires data nowadays, too. Especially as technology advances, broadcasts have become a constant stream of numbers and statistics. We can now know how fast a wide receiver was running to two decimals, or how many millimeters outside the zone that fastball was. And these are more than just clever toys; they’ve become essential to keeping fans interested.
Stats make daily fantasy sports possible, too, another huge tool for maintaining an audience. By providing real-time numbers, DFS operators allow fans to participate in a live gaming experience. And if you’re playing fantasy sports, you’re almost certainly watching the games. Both DraftKings and FanDuel rely on a third-party provider for their stats.
And, of course, data is especially crucial for bettors. In the world of 2018, the sharpest sports bettors aren’t always fans. Some of them are data experts (or even computers), and their spreadsheets might tell them more about a hockey game than your eyes tell you.
But what data will they provide?
Therein lies the crux of the issue. If states grant this request, leagues will have what amounts to a “data monopoly” over sports betting.
A Connecticut lawmaker pointed this out during a recent hearing, and an MLB lawyer agreed with the logic. “This is driven from consumer concerns, not money concerns,” he said. “But I understand.”
The data request ends up becoming a corollary to another, too. Leagues also want the ability to restrict wagering at their discretion.
In the case of the NCAA, that would likely result in no betting on collegiate sports whatsoever. If it had the power to stop Nevada sports betting on its games, it certainly would. For other leagues, it might mean restricting certain in-game bets, or prohibiting wagers on their minor-league games.
If the leagues are given their data ask, they’ll essentially have their power to restrict by association. If they don’t want certain types of bets being placed, they would simply not provide the requisite data. The NCAA could just shut off the whole pipeline to sportsbooks.
The more restrictions are placed on the industry, though, the tougher time it will have competing with offshore sportsbooks. And a data monopoly also opens up the possibility of additional royalties. Want to offer sports betting in a world where the league is in control of the data streams? You’re going to have to pay them. How much remains to be seen.
It’s not hard to imagine leagues holding sportsbooks ransom for the privilege of using their data. No data could equal no sports betting, if laws give this power to the leagues.
What would stop the leagues from charging for stats at their own discretion, or up-selling in-game stats to the clients they choose? Do they really own all the data (courts so far have said they don’t, on more than one occasion), or should they?
So while we and others have been focued on the integrity fees, the debate over data is probably a far more important (and potentially lucrative) one. And one that leagues have a better shot at gaining traction on.