Four top regulators push back on the idea of integrity fees for sports betting
Legal Sports Report

Group Of Gaming Regulators Slam Leagues’ Plan To Get Fees From US Sports Betting

Regulators dunk on leagues sports betting
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Top gaming officials from four ideologically different states combined forces to push for a set of sports betting priorities.

Leaders from Nevada, MichiganMassachusetts and Louisiana issued a statement criticizing integrity fees and advocating “reasonable” tax structures. They also back allowing states and tribes to set their own rules without federal intervention.

As experienced gaming regulators who are part of the U.S. State Gaming Regulators Forum, we would encourage jurisdictions to establish and implement regulatory models that are not only adaptive and successful, but that remain flexible enough to be sturdy, yet encourage innovation.

Five priorities highlighted by state regulators

The media statement was authored jointly by:

  • Becky Harris, Nevada Gaming Control Board chairwoman
  • Rick Kalm, Michigan Gaming Control Board executive director
  • Stephen P. Crosby, Massachusetts Gaming Commission chairman
  • Ronnie Jones, Louisiana Gaming Control Board chairman

Here’s a look at what they wrote:

Talk to each other to catch the bad guys

Coordinated action among jurisdictions offering sports betting against illegal bookmaking, illegal gambling activities, and any unsuitable and unlawful associations, along with strong support from federal-level enforcement agencies, is the best way to eradicate illegal activities.

Different states will enact different rules for sports betting in the next few years. They still need to have systems in place to identify problems that would affect some or all of them.

Share data that can help spot cheaters

Another critical element of legalized sports betting is the establishment of structures and processes that will ensure a high level of integrity in all sports. Therefore, all of our jurisdictions and others that legalize and regulate sports wagering should aim to share real-time betting information, in an effort to detect, prevent, and eliminate match fixing.

This lines up with a push for a national sports betting data repository from the American Gaming Association. Data companies like Genius Sports and Sportradar amass and share volumes of information that can identify unusual activity.

Help people help themselves

Measures for responsible gambling in sports betting are important to help protect and maintain the credibility of the activity.

Here is another tenet that meshes with the AGA’s letter to federal lawmakers. The National Council on Problem Gambling is advocating for every state that legalizes sports betting to set aside dedicated funds for this purpose.

Smart taxation to encourage growth

The history of legalized sports betting in both Nevada and the United Kingdom indicates that it is a very low-margin business compared to other forms of gambling. Reasonable tax rates and fees are essential for legal sports betting to be competitive until illegal providers can be eradicated.

Little will go farther toward determining whether casinos offer competitive prices than the tax structure their state enacts. Nevada’s 6.75 percent gross gaming tax ranks as one of the lowest in the country. The modest profit margins for Nevada sports betting rely on volume.

Anything that looks like the structure in Pennsylvania sports betting, where sports betting will be taxed at 36 percent, will chill growth.

Acting with integrity, or actually without it

Additional fees, including the so-called “integrity fee,” increase the costs of legal sports betting, siphon much needed tax revenues away from state coffers, and increase state regulatory burdens.

The NBA, PGA Tour and Major League Baseball head the push for a cut of sports betting revenue that they termed an integrity fee. No matter how hard they try to change the term to “royalty” or something similar now, the name stuck. The idea gains very little traction among lawmakers who want to protect tax revenue and operators who want competitive pricing.

The regulators — who note they are speaking individually and not for their states — expounded on the integrity idea:

Sports betting in Nevada has already been regulated with integrity and success, and gaming jurisdictions across the United States, including tribal jurisdictions, have demonstrated their ability to oversee gaming of all sorts while adhering to the highest standards.

Adam Candee
- Adam Candee is the managing editor of Legal Sports Report. He covers sports business and news from Las Vegas, where he works as a sports radio host for ESPN and VSiN. Adam is a former editor and reporter at the Las Vegas Sun, Arizona Daily Sun, and KLAS-TV. He can be reached at [email protected]
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