Chaos Erupts In West Virginia Over Sports Betting After Governor Issues Statement On Integrity Fee

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WV sports betting integrity fee

A meeting held yesterday about the West Virginia sports betting law and an ensuing statement from the state’s governor today have created chaos among government officials and WV casinos.

What happened to WV sports betting on Thursday

Gov. Jim Justice announced an agreement this morning after a Wednesday meeting of government officials, casino executives and sports league representatives. Justice said in a press release that West Virginia would not pay an integrity fee to the leagues, but that an integrity fee going from the state’s gaming interests to leagues would take place.

“I insisted from day one that no part of an integrity fee for sports betting would be paid by the state,” Justice said. “I demanded that the entire fee be paid by the casinos.”

How that’s going to happen — and indeed if it will — remains in question. There are several possible mechanisms, including:

The last of those scenarios would not really amount to an “integrity fee,” however. More on that in a bit.

ESPN reports that West Virginia and Marshall universities, who sent representatives to yesterday’s meeting, could be the first schools to get a slice of sports betting revenue.

It’s not at all clear how that would be handled, either. Asked about the ESPN report, a representative for Justice said specifics remain in flux.

“As for the sports betting tentative agreement, the process is still in the very early stages and many details still need to be worked out. There is no other comment and no other information available at this time,” said Butch Antolini, the governor’s director of communications.

Tom McMillen of Lead1, the association representing collegiate athletic directors, attended the meeting with Mike Hamrick of Marshall and Shane Lyons of West Virginia.

“Throughout this process in West Virginia, two of the major stakeholders, Marshall and West Virginia, their voices were never heard,” McMillen said. “The AD’s came in (yesterday) and eloquently talked about the costs of what was going to happen to them if legalized betting occurred.”

Hamrick came to Marshall from UNLV, where he dealt with compliance in a state with legalized betting.

“In his experience, when you have an open and transparent legal market, you’re going to have more costs,” McMillen said of Hamrick.

McMillen declined to say what compliance measures Hamrick discussed, but he said the anticipated costs for West Virginia and Marshall could be “hundreds and hundreds of thousands of dollars.”

More on the whole story from WV Metro News.

Governor’s announcement catches his own people off-guard

Clearly John Cavacini, head of the state’s gaming and racing association, heard a different tune than others in the Wednesday meeting.

Cavacini did not stop there. He provided the clearest picture yet into the negotiations: the leagues and casinos discussed contracts outside the sports betting law.

You cannot pay a fee that does not exist though

Of course, the state law passed in March that authorizes sports betting if PASPA is repealed did not feature an integrity fee. Justice allowed the law to go into effect without his signature because of a family connection to a casino at The Greenbrier. MLB Commissioner Rob Manfred asked Justice to veto the legislation.

Justice did leave open the possibility of reconfiguring the law following the Supreme Court’s decision in the New Jersey case.

“After the U.S. Supreme Court issues its decision on sports wagering, to address any provisions of the legislation that might be in conflict, I will ask the Legislature to look at the advantages of partnering with the major sports leagues,” Justice said. “I believe there could be real value to this partnership. I expect the Supreme Court to rule on this issue in the next few months.

“This approach will allow us to develop a relationship with all the major sports leagues so that it is beneficial to everyone.”

Some kind of an integrity fee remains on the table

Justice’s press release strongly hints that an integrity fee could still revive via an upcoming special session. This line provides the clearest signal:

Lottery director Alan Larrick and his staff will be working on ways to implement the integrity fee and will determine what, if any, legislation is needed for codification.​

The state’s lottery will administer sports betting. The new law lets the state’s five gaming facilities offer sports betting. Each will pay $100,000 for the right to do so. At least $5 million can be expected in first-year tax revenue.

Gamers say there is no fee to discuss

Penn National had a seat at the table yesterday and Eric Schippers, its senior vice president of public affairs, said no deal is set.

That brings us back into the data debate over the West Virginia bill before it passed. The leagues want their data to be the only source for settling bets. The comments from Schippers suggest they might make more headway with the casinos than they did with legislators.

The WV legislature still would need to approve the fee

West Virginia legislators did not buy the leagues’ argument for an integrity fee in passing the law in March. The only change since then is yesterday’s inclusion of athletic directors from West Virginia and Marshall to present collegiate concerns.

An informed member of the West Virginia House of Delegates made it clear his side did not sign off on any negotiation:

Hanshaw gave a measured version of surprise. Fellow Delegate Shawn Fluharty went on a long thread about the potential for a state Open Meetings Law violation at yesterday’s summit. He also called out the so-called deal for short-changing taxpayers:

Why the legislators would change the law absent any compelling new reason or evidence remains an open question. Justice presented yesterday’s agreement as the path for moving forward, but much discussion remains before the law is changed.

“This was a difficult negotiation between many different parties, but the outcome will be very good for the State of West Virginia as well as the sports leagues,” Justice said. “Additional dollars received by the state from sports betting will be utilized for the benefit of many of our residents.

“However, all of this is a moot issue until the U.S. Supreme Court rules on the legality of sports gaming across the country.”

What are the colleges and the NCAA up to?

If WVU and Marshall are taking money directly from the state’s casinos, that would be quite the revelation.

The NCAA insists that it supports neither illegal or legal sports gambling. The organization discusses its ban on NCAA championship events being held in states with legal sports wagering. That includes Nevada, New Jersey (despite the fact that its law is not in effect) and Oregon, which could only host events once it shuttered its sports lottery product.

The idea that the NCAA would allow its member institutions to directly take money from legal wagering would be a huge departure from anything the organization has said to date. The state increasing operational funds to help with investigations and monitoring for game integrity would make sense, however. The state legislature could appropriate more money to the universities’ general funds or perhaps the universities could receive money via sponsorship.