Lawmaker Who Pushed Back On Sports Betting Integrity Fee Tried To Add It To Dead Connecticut Bill

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Connecticut sports betting bill 2018

The effort to regulate Connecticut sports betting has run up against its deadline.

The General Assembly adjourned last night, leaving sports betting bills on the shelf in both chambers. Although the state already legalized the activity as part of a 2017 gaming package, lawmakers have yet to approve regulations.

After months of chatter, it became clear that any further work will have to wait. Overarching issues related to tribal compacts and casino expansion are stuck in a holding pattern, and those must be resolved first. Lawmakers have taken their books home from Hartford, so both sports betting and online gambling are on hold until next year.

The eleventh hour wasn’t without some intrigue, though. Amendments were filed with the House bill (that were not adopted) by Representatives Joe Verrengia and Jeff Berger.

We haven’t written much about Berger, but Verrengia’s name can be found throughout these pages. He’s the chair of the committee on Public Safety and Security, and he’s put a lot of work into sports betting. Given the backstory, his proposed amendments giving consideration to sports leagues are a little surprising.

Verrengia sets the tone for CT sports betting

Verrengia’s efforts on predate recent developments in the New Jersey sports betting case. His committee has held public hearings for two years running, including a pair of them early in 2018.

In advance of this year’s meetings, stakeholders from every corner of the industry submitted testimony to the committee. That includes Major League Baseball and the NBA, the two professional leagues who have been lobbying Connecticut lawmakers.

The chairman did his homework, too. Back in February, Verrengia provided some preliminary thoughts to capitol reporters.

“What I’ve learned in following their testimony is that they certainly want to be in at the ground level and have an input on legislation,” he said. “As states like Connecticut consider legislation, they’re asking for integrity fees. So, we’re talking about an issue that’s all about money. And a lot of money.”

Integrity fees didn’t go over well at start

Fast forward a couple weeks to the March 1 hearing, where league lawyers testified in person. It didn’t go particularly well. Over the course of almost four hours, lawmakers pushed back especially hard on the aforementioned integrity fees.

Verrengia led the counterarguments. He indicated that he understands the concerns the leagues cite, and he’s keen to help address them. “I’m all for an integrity fee,” he said, “but as long as it’s limited to… protecting the integrity of the leagues, protecting the integrity of the industry.”

He seemed to have some suspicion about league motives: “What I am not for, quite frankly, is legislation that in some way, shape, or form would line the pockets of… major league sports owners.”

Whether his proposed amendment walks that line is in the eye of the beholder. In his amendment, it’s called a “sports betting right and integrity fee.” The legislation does not seem to prescribe how the fee must be used by leagues.

NBA counsel later likened the integrity fee to a “royalty” as compensation for the value the leagues provide to betting markets. The words “intellectual property right” were used. That didn’t play well, either.

“And that’s where it becomes sticky,” Verengia said.

Amendments would give leagues consideration

Based on the tone of those hearings, it seemed pretty unlikely the leagues would get their way in Connecticut.

It’s certainly surprising to see amendments which include an integrity fee, and even more surprising that they originate with Verrengia. He’s proposed three amendments to the bill, and the two newest each include payments to the leagues. It’s not the one percent of handle being sought, but rather the 0.25 percent that has become a commonly proposed compromise.

Perhaps the lobbying efforts are paying some dividends, after all. The longer the issue lingers, the more chance the leagues have to craft arguments and position stakeholders for battle.  It’s certainly telling that the leagues brought a key lawmaker on board who didn’t seem terribly sympathetic to their arguments.

Not that it caught the leagues by surprise, but the push for legalization is escalating quickly. New sports betting bills have popped up in almost 20 states, and league lobbyists predict passage for as many as six in 2018.

The leagues now have the rest of the year to formulate their Connecticut strategy for 2019, and it appears they’ve found a new ally in the House. The legislature won’t return to work until Jan. 9.