MGM Resorts CEO ‘Offended By The Concept’ Of Integrity Fees, Lauds Data Deals

MGM sports betting deals

NEW YORK — MGM Resorts is “offended by the concept” of an integrity fee being included in state sports betting regulations as proposed by the major sports leagues, according to chief executive Jim Murren.

Speaking in New York, Murren said proposals for a mandated percentage of turnover to go to the leagues was “disturbing to us.”

“I like the word integrity, but I believe we are paying for that already, in the relationships we have, the money we are paying for data and the money we are paying for sponsorship.”

MGM doing deals with leagues already

The comments came on the same day MGM announced a data and league sponsorship with the MLB that will see MGM become the MLB’s first-ever gaming partner.

This deal means that MGM now has sponsorship and data deals with three of the four major US sports leagues.

“We have evaluated — the MLB deal is a good example — we sat down for over a year with the MLB and evaluated what kind of deal we would bring to the table.”

He said that MGM, which has partnered with European online giant GVC Interactive, was more than willing to pay for official data as part of his businesses attempt to add a differentiator to its sports-betting product.

“That is particularly because in-play data will be so vital,” he added. “Latency will be important.”

You’ve got to be in it to win it

Murren was keen to emphasize how MGM intended to use sports betting as a lever to further engage with its current database of 31 million customers.

“The emphasis is on the interactive business and how that will enhance our land-based business,” he said. “That’s the bigger picture for us, something the traditional sports betting operator doesn’t have.”

Murren was keen to emphasize that MGM had been a supporter of the push to overturn PASPA and to further regulated online gambling within the US, suggesting it was very much in favor of the opportunities brought by the utilization of technology.

“We had been hoping for the PASPA ruling for a number of years. We were like a horse waiting at the gate,” he said. “We’re trying to create a holistic experience: We see sports betting as (the) portal to a total interactive experience including social, poker, casino gaming and sports.”

Murren was speaking at the ICE Sports Betting USA Conference where the day before he spoke, Dan Spillane, at the NBA, has reiterated the call for an integrity or data fee of 0.25 percent of handle to be included within state legislation.

More on official data

Noting the deal also announced this week between the NBA and Sportradar and Genius Sports to distribute official NBA data to US operators, Spillane said that such deals were not a “substitute” for a mandated data fee.

“We still think as a parallel track we need (integrity) in legislation,” said Spillane.

“We’re still active in legislative discussion. We have a package of things that we think need to be included in regulated gaming legislation. We’ll be very active in the new year. And we’re working with MLB and PGA Tour.”

However, there were cautionary words from one of the NBA’s partners in its US distribution deal regarding the potential for accumulating costs being loaded onto the sports betting bandwagon.

Matteo Monteverdi, president of Sportradar US, said it was important that the “economic and business case” was in place.

“If we overload the costs of doing business and create a significant burden to enter the market, either through licensing fees, state taxes, federal taxes, regulatory and compliance costs and other requirements and obligations, we might risk killing the business and giving the advantage to illegal operators,” he said.

“It’s a delicate balance. It’s a process and the entire industry including the leagues, legislators, regulators and the operators need to work together.”

Is the tipping point for sports betting costs?

Here’s how the sports betting costs stack up:

  • Licensing fees
  • State taxes
  • Federal taxes
  • Regulatory and compliance costs
  • Date integrity/royalty fee?

The nonexclusive deal between the NBA and Sportradar and its rival Genius Sports would appear to point to a future of cooperation between the sport and the betting operators with the supply of in-game data central to the proposition.

But speaking on another panel at the New York event, Sharon Otterman, chief marketing officer for William Hill US, pointed to the operators’ argument that with licensed operators necessarily operating on slim margins, it was important that there should be “other options” when it comes to the use of data.

“We think there is value in official league data but it is important there are other options,” she said. “There is very little margin in sports betting. The more we take out of that because there is pricing pressure, then the consumer gets hurt. It’s competitive right now.”

The drive for a federal solution

Similarly tacking the twin-track approach of commercially exploiting the betting operators’ desire for data while also arguing for an integrity fee is the PGA Tour. It recently announced a deal with IMG Arena to further exploit game data for betting purposes. But Andy Levinson, senior vice president for tournament administration at the PGA Tour, insisted this week that the PGA was still hoping for a federal integrity solution.

“We think the best solution for protecting the integrity is a central repository of information with all operators obliged to provide bettor-level information. We want complete transparency and a holistic view.”

Scott Longley
- Scott Longley has been a journalist since the early noughties covering personal finance, sport and gambling. He has worked for a number of publications including Investor's Week, Bloomberg Money, Football First, eGaming Review and Gambling Compliance. He now runs his own editorial consultancy Clear Concise Media and writes for a number of online and print titles.