That’s one thin tightrope Dan Spillane will attempt to walk in executing the NBA sports betting plan in 2019.
The league’s senior vice president of governance and policy detailed in a Gambling Compliance article ($) how the NBA will simultaneously handle private agreements and public legislation. The NBA plans more deals like its $25 million agreement with MGM Resorts, but also will keep pushing the integrity fee and required official data purchase.
The strategy requires a bit of cognitive dissonance on how the MGM deal shifts the paradigm on integrity fees, but the NBA appears ready to try it.
Integrity fee backers rapidly disappearing
Since introducing the integrity fee in Indiana this year, the NBA and MLB found little legislative support for a legally mandated profit share. None of the six states that passed sports betting laws included it.
The two leagues lost more support for the integrity fee this month. The NCAA flatly rejected the idea in laying out its preferred sports betting principles. This week, NHL Commissioner Gary Bettman stiff-armed the concept during the announcement of his own private contract with MGM.
The NBA and MLB opened with a hefty ask of 1 percent of handle, which equates to roughly 20 percent of profits. That went over as well as Crystal Pepsi, so the leagues now will push for 0.25 percent of handle.
According to GC, “Spillane said he thinks he could still make a persuasive argument for the original request but has moved on.” Again, no state found that argument persuasive enough to buy it last year, but let’s move on.
One for me, what for you?
What Spillane failed to do both then and now is explain what the leagues will offer in return for that cut of profits. They cite increased costs because of more wagering, but the NBA already partners with Sportradar, a global company that monitors betting markets.
The NBA and MLB work both that approach and a related one painting themselves as victims of an unwanted sports betting invasion. The risk of a threat to integrity falls squarely on them, Spillane contends in the article:
“If we have a sports-betting scandal, then that is an existential threat to our business,” Spillane said.
Spillane disagrees with sports-betting operators who claim they will suffer more damage than the leagues from a scandal. Bookmakers claim bettors will focus their anger on them because they took their wagers.
“Your typical sports-betting operator is a casino. A casino has an enormous amount of other revenue sources besides sports betting,” Spillane argued. “No single sport makes up the majority of sports betting. So, if a sport were to have a scandal, then that would represent a very small portion of revenue to the typical sports-betting operator.”
Back to the commercial deals …
The MGM deal represents a concrete example of what that chart suggests: plenty of private companies want to do business with the post-Donaghy NBA. Spillane said the league is “engaging with the gaming industry” and more private deals will arrive soon.
The gaming industry and many state legislators will welcome those arrivals. Still, Spillane contends the NBA cannot do deals with everyone and it’s not the league’s fault:
The gambling industry is not monolithic, Spillane said, and many casinos are reluctant to work with the leagues.
“So that’s why we will keep pursuing the legislative solution as well to make sure that we have these minimum safeguards in place that cover all the [sports-betting] operators,” Spillane said.
Distilled: buy our data from us on our terms now or else we’ll get your state to require it anyway.
That friendly negotiating strategy establishes the NBA’s position for 2019: pay us now or pay us later, but you will pay. How operators and legislators respond to that approach will make for an interesting 2019.