Folks in Pennsylvania have one last chance to offer input on sports betting in their state.
The Gaming Control Board published preliminary regulations for PA sports betting last month, and the 30-day public comment period is drawing a passionate response. Pretty much every stakeholder has taken the opportunity to weigh in.
That includes the NFL, which hasn’t been especially vocal about sports betting in the past. The letter from league counsel is cosigned by the state’s two football teams — the Pittsburgh Steelers and the Philadelphia Eagles.
Here’s the full document, dated June 15:
There is a lot to break down here, so let’s run through the Xs and Os.
NFL’s four core standards
The letter opens by asking regulators to consider the NFL’s “four core standards” for sports betting.
Commissioner Roger Goodell has laid out these points in the past, but this marks the first time PA regulators have seen the framework on paper. In fact, it’s the first time the NFL has offered direct input at the state level.
NFL fans, our players, our coaches, and all League personnel deserve to know that we are doing everything possible to ensure no improper influences impact how our game is played on the field.
Here’s the list of wants:
- A legal, regulated sports betting environment with substantial consumer protections
- Protection of our content and intellectual property, including from those who attempt to steal or misuse it
- Fan access to official, reliable league data
- Adequate resources, monitoring and enforcement tools necessary for law enforcement to protect our fans by eliminating the illegal sports betting marketplace and penalizing bad actors here at home and abroad
The NFL’s blueprint is pretty similar to that of the NBA and MLB, with the notable omission of an integrity fee.
What does NFL want from PA sports betting?
Those pillars are presented as the foundation for a long list of more specific requests. Although the fee isn’t included, the word “integrity” features prominently over the pages that follow.
Because of the significant potential impact of widespread, legalized sports betting on the integrity of our games, we are hopeful that the Board and state elected officials will consider the following additional, enforceable policy changes to regulate sports betting in the Commonwealth:
‘Integrity of sporting contests’
The bullet points in this section are aimed at the wagering process itself:
- Prohibit insider and other high-risk sports betting
- Enforce age limits on sports betting
- Preclude risky betting fixtures
- Protect consumers by requiring the use of official data
The first two points are pretty easy to get on board with.
Regulations should prevent coaches and referees and such from betting on their own sport. Fair enough. Age limits are already in place, with PA sports betting restricted to those 21 and older. The NFL commends regulators for this control.
Eliminate ‘risky betting fixtures’
Then comes the “risky betting fixtures” clause, which is similar to an item in MLB/NBA’s preferred framework. The leagues want to limit (or possibly eliminate) in-play and propositional wagers — that is, betting on things other than the final outcome.
More from this section:
These types of bets are significantly more susceptible to match-fixing efforts, and are therefore a source of concern to sports leagues, individual teams, and the athletes who compete.
To address concerns regarding risky betting fixtures, we encourage the Board to allow professional and amateur sports organizations to identify which types of bets simply pose too significant a risk to the integrity of sports and work with regulators to eliminate them.
Use of official data
And then there’s a request to mandate the use of “official league data,” which has become the new battleground for league lobbyists. Move over, integrity fees.
The NFL contends that betting outcomes are being increasingly determined by “granular details” like yardage gained by a rusher or strikes thrown by a pitcher. Agreed, prop betting is all the rage these days.
Therefore, an essential component of consumer protection is a requirement that the information used to settle these wagers is correct and timely, something that can only come from official data provided by the sports leagues themselves.
Two things stand out about this request: The NFL intends to license this data to sportsbooks at cost, and granting this power would allow the league to control in-play betting simply by restricting the flow of data.
The NBA and MLB have asked for something similar, albeit with a few compromises. State lawmakers have mostly resisted the mandate, pointing out that it would create a “data monopoly” for the leagues.
‘Integrity in the marketplace’
We’ll gloss over most of this section to get to the last point, but here’s the list:
- Require operator licensure and auditing
- Facilitate ease of information-sharing between sports leagues, operators and law enforcement
- Provide responsible gaming resources
- Eliminate the illegal sports betting market
Again, mostly agreeable. Regulations already include requirements for licensure and auditing, but the NFL would like to see a few additions. They want a bit more burden placed on the operators, including data retention for five years and cooperation with league investigations.
That idea carries over into the next point, in which the NFL asks for more communication between operators and leagues.
The GCB also earns another commendation for directing sports betting revenue toward the treatment of problem gambling and substance abuse.
PA taxes and fees counterproductive
The last point speaks to a common goal of leagues, operators and regulators alike. Everyone seems to understand that the primary point of legalization is to dent the illegal market and encourage bettors to do so through regulated channels. States can then capture some of that tax revenue that’s escaping their borders.
The NFL is exactly right when it begins the section like this:
It is unclear whether the mere existence of a legal market will, on its own, minimize the illegal sports betting market because participants in the illegal market have become comfortable participating in such markets, may receive better odds from illegal bookmakers, and may be able to avoid paying taxes altogether.
Indeed, legal sports betting is fighting an uphill battle against illegal betting — both offshore and through personal bookmakers. That’s especially true in Pennsylvania, where the fees and taxes present a substantial hurdle for operators.
The NFL seems to understand this, as it took the opportunity to ask the GCB to reconsider:
Finally, we would like to share our concerns that the statutory operator licensing fees of $10 million and the 34 percent tax rate on gaming revenue may render legal market participants unable to effectively compete with those in the illegal market. As the Board works with state policymakers, we respectfully ask that you reconsider state laws and regulations that could have the unintended consequence of advancing illegal sports betting.
(Note the effective tax rate in PA is actually 36 percent, once you add in the two percent local share assessment.)
Takeaways from NFL letter
Compared to its counterparts, the NFL has been pretty quiet about sports betting.
The NBA and MLB, for example, have been traveling from state to state all year to pitch their proposed framework to lawmakers. The PGA Tour joined their lobbying efforts more recently, and those three leagues also penned their own letter to the GCB.
This public comment seems to represent a new willingness from the NFL to chime in on at the state level. Like his fellow league commissioners, however, Goodell still maintains a strong preference for federal sports betting regulation.
Major credit also goes to the NFL for raising the issue of taxes and fees with regulators. Some operators did the same in their public comments, and these numbers really represent the primary problem with the PA sports betting law. The effective tax is actually 36 percent, and both that rate and the $10 million licensing fee are just shocking numbers in comparison to other states.
As the league highlights, the burden of these fees will have a direct, negative impact on the PA marketplace. Operators will be forced to either post unfavorable lines or forego sports betting entirely, and neither of those would produce the desired effect of addressing the illegal market.
What the NFL doesn’t seem to realize is that some of its own requests would create a similar deterrence.
That official league data clause, for example, continues to be a major sticking point. If the NFL is serious about giving bettors access to good data, why would it hold that information ransom? Legal precedent raises some questions about how much data the leagues can even protect as intellectual property.
And further to that “uphill battle” sentiment, restricting the options for bettors will only serve to keep them offshore — where props and in-play platforms are easy to find.
