NBA’s Adam Silver On Sports Betting: ‘The Integrity Fee Is Something That We Are Entitled To’

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Adam Silver sports betting NBA Finals

NBA Commissioner Adam Silver went deep on sports betting and data rights at his annual press conference before the league finals.

The finals typically bring with them commissioner news conferences for all the major leagues. Earlier this week, NHL Commissioner Gary Bettman answered a question from Legal Sports Report with his league’s first extended comments on sports betting and integrity fees.

Following is a transcript of Silver’s comments, with some observations weaved in:

Adam Silver on sports betting

“Sports betting is already legal in the United States in the state of Nevada and it’s legal in many other countries (where) we do business around the world. We have several so-called integrity provisions in place already — many of them relate to disclosure, as the media well knows — and other controls we have in place to monitor betting lines and monitor betting information.”

“The real issue as we move to new jurisdictions that are legalizing sports betting is access to information. That’s one of the things we have sought in model legislation that we presented to now the roughly 20 jurisdictions or so in the United States that are looking to legalize sports betting.”

Silver did not expressly discuss the NBA’s preference for Congress to set a national framework for sports betting. Yet this last comment shows why the league long favored federal legislation before softening that language to a “50-state solution” this year.

Information on bettors and action key to NBA

“So what we can do is going to depend in large part on the quality of the information we can get from these states. It doesn’t necessarily mean that we need to know name and social security number for the person placing the bets. But if we can get aggregate information, for example, and we can look at trends, it will put us in yet a better position to detect any aberrational behavior.”

The NBA is not the primary gatekeeper on sports betting integrity, nor will it ever need to be. Nevada sports betting operators and state regulators vigilantly track the betting market for irregular activity. English soccer monitoring works as a partnership among authorities, leagues, and operators — and they recently caught a fixer. The league tracks information related to integrity through its partnership with Sportradar and that needs increases in a national sports betting environment.

The aggregate information Silver wants could also present a valuable trove of data on how basketball bettors act. The NBA could use such information for marketing, advertising, and business development purposes as well.

Three NBA arguments for integrity fees

“As you know, we’ve spent a fair amount of time over the last several months talking directly to states like Delaware, like New Jersey, West Virginia, New York, Illinois and others that are in the process of passing legislation. One of the issues we had on the table and have been seeking is a so-called integrity fee. And the notion of the integrity fee is that as we’re now dealing potentially with 50 different jurisdictions, all with differing permutations of sports betting law, it’s going to dramatically increase the enforcement costs for the league office.”

Let’s get one item out of the way: the integrity fee is not “so-called.” The NBA appeared to help coin the term.

The increased enforcement costs continue a consistent NBA line of argument. It’s one of three Silver threw out for public digestion at the press conference. As for the others …

“We think the integrity fee is something that we are entitled to, one, because we have the additional costs and also — something that as I’ve said before, we’re not hiding from — that we also think we are due a royalty. And that if the intellectual property that is created by this league — and I know all the leagues support this position, but in the case of the NBA, we will spend roughly $7.5 billion creating NBA basketball this season.”

There’s the second one: the NBA is “entitled” to a cut if sports betting relies on the games it puts on. And the third: games are the intellectual property of the league, for which it should receive money. With an enormous media audience at The Finals, Silver tossed out all three lines of logic. How the public and media digest it bears watching.

Play that funky music!

“And to the the extent that product is then used for casinos, betting parlors to make money on, we feel — just in the same way a musician that receives a royalty for the music that’s being played, we should receive some sort of royalty. So call it a royalty, call it an integrity fee, we will have additional expenses and it’s ultimately our intellectual property, and we think we should be compensated for it.”

Most of what Silver said at the presser comes from the NBA’s greatest hits album on sports betting. The musician concept appears to be the league’s hot new single.

How Silver’s idea translates to sports betting is murky: a musician gets paid when his or songs are played. Consumers pay the NBA to watch games in person and on TV, which hues to the royalty idea.

Sports betting requires games on which to wager, of course. Nevada casinos, however, do not pay the NBA simply for the existence of its games. Why other entities now would need to do so requires more explanation from the league.

Will the NBA get integrity fees from anyone?

Asked if he expects to get the integrity fee anywhere:

“It depends. We’ve had better receptions in certain states than others. There are very strong gaming interests we’ve talked directly to in many states that do significant business through their casinos in those states, and again, their position has been very public — their view is that we are not entitled to that integrity fee.

“And my response to those gaming organizations is, if that’s your view, then we will negotiate with you directly because I think many of them desire to get official data feeds from the league. They desire to use our trademarks for placing bets. Some of them desire to have official designations from our league and others, so we will have direct commercial negotiations with those casinos, which to me is not inconsistent in any way with also seeking that integrity fee.”

Silver provided a lot to unpack in that answer. Both casinos and many lawmakers express continued opposition to integrity fees. Delaware sports betting will open next week without one and Mississippi sports betting might not be far behind. Whether they make it into New Jersey sports betting law remains in question, but unlikely. The league’s best efforts to reopen the West Virginia sports betting fee-free law flopped in May.

Direct NBA negotiations with casinos over data always appeared a more likely path to progress than insertion into legislation. If the league goes that route, success could be easier to come by.

Silver, though, wants the fees and the laws, and that could prove a heavy lift. Casino operators agreeing to pay the league twice is as improbable as states agreeing to lessen their revenue without leagues offering value in return.

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