NBA’s Silver On Sports Betting Integrity Fees: ‘Not a Place Where We’ve Made A Lot Of Progress’

Written By

Updated on

NBA sports betting Adam Silver

Welcome back to “Adam Silver Theater,” where we catch up with the NBA commissioner on legal sports betting.

When last we heard from Silver at the NBA Finals, he said the league is “entitled” to integrity fees. Silver also continued a long push to shift the argument to one about intellectual property and advocated for more access to legal sports betting data.

Silver held a press conference Tuesday at the NBA Summer League in Las Vegas, where he fielded a gambling question. What follows is a transcript of a reflective Silver with our observations mixed in …

Integrity fees gain little traction

Silver talked about what NBA owners discussed during a league meeting, including a multifaceted presentation.

“There was a dual presentation. One was on the state of the law and what’s happening across the country. There’s roughly 20 states in some stage of passing legalized sports betting, so there was a state-by-state update on where those things stand and what the particular law will mean to the NBA.

“Related to that is the so-called integrity fee or royalty that the league has talked about. Frankly it’s not a place where we’ve made a lot of progress. It’s one of the issues we’re talking to states about.”

Silver shifted from an aggressive posture to a tone of uncertainty on integrity fees in a month’s time. He might as well have said, “Thanks for nothing, New York.”

The NBA (and MLB) successfully inserted an integrity fee of a fifth of a percent of handle into the final New York sports betting bill. Having home-state legislators listening apparently made a difference.

Legislators ultimately did not advance the bill to the floor before the Empire State ended its session June 20. New York plans to bring the integrity fee back for consideration in 2019, but the landscape will include more laws without it in another year.

That effort represented Silver’s best hope in 2018. New Jersey told the leagues to pound sand. West Virginia discussed reopening its passed law to insert integrity fees before scrapping the plan. Delaware and Rhode Island never seriously considered the idea.

Sports betting data

The league’s other battlefront involves acquiring aggregate data on legal sports betting and licensing its own data feed to casinos.

“We’re also very focused on how the data will be used and how we can protect the integrity of the league, and we’ve made more progress on some of those other issues.

“I said this during the Finals: In addition to working with the state legislatures, we’re also talking directly to the gaming establishments about entering into commercial deals.”

Start with the data collection piece because it is going to come into play later in Silver’s comments. As with any business endeavor in 2018, access to consumer data ranks atop the NBA’s wish list. Hold that thought until Silver’s last few paragraphs.

Potential direct business transactions between the leagues and casinos always appeared more plausible than legislating integrity fees. This could include legal sports betting operators acquiring league data to power in-play betting, although basketball statistics are fairly straightforward. It also could cover integrity monitoring protocols, although data companies like Sportradar and Genius Sports already do the heavy lifting there.

In any case, the challenge of convincing state legislators across the country to hand over a cut of sports betting revenue appears to be sinking in for the NBA.

That’s one way to look at it …

“We were asked our view on that legislation — it wasn’t something we were promoting. My preference all along has been to have consistent federal framework, but to the extent states were asking us our opinion, we were offering it.”

“My view is we should be compensated for our intellectual property, but we can do that directly with commercial relationships with gaming establishments. In fact, even while I’ve been in town the last few days, I’ve had some discussions with some of the operators here about that. So that’s where things stand.”

The NBA might not have started off as an active participant in state-level legislation in the months before PASPA fell. It certainly ended up as one, though, with lobbyists actively pushing integrity fees in multiple states.

Silver’s intellectual property tack makes sense on the surface, at least until you ask what Nevada previously had to do to use that property. The answer, of course, is nothing.

The last nugget in there bears watching because MGM Resorts and Caesars soon will operate sports betting across the nation. Any potential deal between the NBA and either company could create far-reaching effects.

Getting down to business

“In addition to the legal presentation, we had a presentation on what we see are the commercial opportunities. When we look out into the future in terms of how our broadcast will look, I think it open up a lot of possibilities in terms of potentially how gaming opportunities will be integrated into telecasts.

“But there’s a lot of issues around that — how exactly our broadcasters will present that information. We need to be mindful again of who our audience is — young people watching games — how directly we as a league should be involved in that business. There’s a lot of issues on the table, I’d say, but we have a lot of business talent in the room with our governors.

“Whether it’s Tilman Fertitta who’s in the casino business himself, or Dan Gilbert or Steve Ballmer, based on his background in terms of technology, Ted Leonsis — I could go on and on. Jim Dolan, there’s people who are in the media business who also understand how big data works, understand how gaming relationships work.

“And given that we have our long-term television relationships, it’s more us saying as an ownership group, let’s step back and really study these issues and try to understand them, and see what the best ultimate consumer experience can be and at the same time, balance protecting the integrity of the league.

Now we’re getting to some new meat and potatoes. This reads like Silver went into the old MTV Real World confessional and started spilling.

Legal sports betting massively shifts the sports media landscape. We do not need to add a lot to Silver’s stream of consciousness here because he lays out the possibilities well. Just keep in mind that when Silver discusses that aggregate data we covered above, it likely goes toward developing these business opportunities.