It turns out the sports betting integrity fee that pro leagues have been lobbying for around the country was invented by the same state that started the push for the legalization of gambling on games in the US.
NJ and integrity fees?
According to a 2014 story by NJ.com, a pair of New Jersey lawmakers first floated the possibility of giving pro sports leagues a cut of all wagers in a legal sports betting market. The idea appears to be the brainchild of state Sen. Jim Whelan and Assemblyman Vincent Mazzeo, in a memo they wrote to NBA Commissioner Adam Silver. Whelan passed away in 2017; Mazzeo is still in the Assembly.
New Jersey of course, has been fighting the NBA, NCAA, NFL, NHL and Major League Baseball in court since 2012 to offer legal single-game wagering. That case is awaiting a decision this spring in the US Supreme Court.
More from the NJ.com report on the memo to Silver:
We appreciate your recent comments recognizing the expansion of sports betting in other jurisdictions as inevitable, Whelan and Mazzeo, both Democrats, wrote in the letter released this morning. While we strongly support the legalization of sports betting in New Jersey and the economic benefits it will bring to Atlantic City, we are cognizant that sports leagues like the NBA need the necessary resources to protect the integrity and fairness of games.
Whelan and Mazzeo said they plan to propose a 0.25 percent fee on every bet that would go to the sports leagues for the purposes of enforcing the integrity of games and preventing any games from being fixed.
The story goes on to say that they did not plan to address this topic legislatively. The idea apparently was borne of the idea that a fee might get the leagues to back down on challenging New Jersey’s law under PASPA, the federal law that bans wagering outside of Nevada.
Integrity fees a hot topic in lots of states
While rights fees exist in limited forms in some international sports betting markets, they are not commonplace. Nevada, the only place with legal wagering in the US, has no such fee.
Many had assumed that the rights/integrity/royalty fee was the invention of the leagues, but it appears they lifted the idea from these two lawmakers.
The NBA and MLB created “model legislation” that includes a fee payable from sportsbooks directly to the leagues on which wagers take place:
(3) At least once per calendar quarter, a sports wagering operator shall remit to the relevant sports governing body a sport betting right and integrity fee of one percent of the amount wagered on its sporting events
In their model bill, the leagues had asked for a one percent fee on all wagers (aka handle) — an amount roughly equivalent to 20 percent of revenue, if it were applied in the Nevada sports betting market. They have been willing to drop that number to the .25 percent of handle floated in New Jersey in some states, a much more reasonable figure.