Stop us if you’ve heard any of this before from NBA Commissioner Adam Silver.
Last week, Bloomberg posted an interview with Silver that took place at the Economic Club in Washington, D.C., to its YouTube channel.
As with virtually any discussion surrounding professional sports in the United States these days, the conversation with David Rubenstein naturally forayed into sports betting.
A piece of the pie?
Asked by Rubenstein if the NBA would like to own a piece of the betting profits, Silver said no. But Silver then went on to reintroduce the integrity fee/royalty argument claiming that the NBA has a right to a payment from bookmakers. Silver says they will spend $8 billion creating the NBA product this year, and argues that because you can bet on it, they should be paid.
But spending money to create something does not automatically entitle you to an integrity fee. As was noted when the NFL made a related claim in 1977, the car repair shop that advertises they fix Volkswagens does not cut a check to Volkswagen every time they change a timing belt.
Likewise, “the manufacturer of a razor blade may advertise the brand names of the razors they will fit.” The NBA’s argument that they should receive a royalty simply is not based in American law.
Creators of intellectual property?
Silver argued that they are due this royalty as “creators of intellectual property.” But the basketball game itself is not protected intellectual property.
Neither are its scores. In fact:
- When the NFL argued that they had intellectual property rights associated with the listing of games by the Delaware Lottery, they lost.
- When a Major League Baseball subsidiary claimed it had intellectual property rights in player names and statistics, they lost.
- When the NBA claimed they had intellectual property rights in statistics and scores, they lost.
The information bookmakers need does not require payment of a royalty to the NBA, according to existing precedent. The continued use of the terms intellectual property and royalty are misleading because they imply that bookmakers are misappropriating something that the NBA owns.
NBA always worried about integrity issues
In response to a question Rubenstein about whether he was worried about a point-shaving scandal in the NBA, Silver responded that he is “worried about a scandal of any kind.”
A point-shaving scandal could happen in the NBA, but the chances are remote. Of course, in college, where schools and the NCAA have insisted on athletes not being paid, the chances of a point-shaving scandal are likely much greater.
In many ways, one of the NBA’s greatest integrity problems involves the intentional losing associated with tanking. Despite taking minor steps to change the incentive system around awarding high draft picks, the practice remains an issue for the league.
Talk of a federal framework … again
Silver touched on regulatory models in saying, “We are better off with a regulated betting framework.”
The commissioner expressed a preference for a federal framework without a real justification beyond the oft-repeated argument of the need for consistency.
Of course, this is an odd request as US sports betting laws impose few if any affirmative obligations on the NBA or any other league. So it is unclear exactly what burden the league sees from 50 different regulatory frameworks versus a singular federal model.
Hit me or bust … or both
The commissioner doubled down, arguing that 50 different regulatory models become “becomes a huge burden on the business.” This point, however, is not supported by any evidence.
The NBA has previously voiced concerns about increased costs associated with monitoring for integrity violations. It remains unclear why they believe a regulated market will increase these risks from those experienced in the unregulated markets that have taken wagers on NBA games for decades. Even these costs appear likely to be more than offset by increased interest in NBA games.
In his push for a federal framework, Silver again threw some shade at state lawmakers arguing that state regulation would lead to a regulatory “race to the bottom” among the states.
Are states racing to the bottom? No. Some states have issues for sure, but no state is drafting, debating, and passing sports betting legislation with reckless disregard for the consequences of the legislation they are passing.
No state lawmaker wants to pass a bill that puts the underlying sporting events at risk. Despite this repeated line about states racing to the bottom, no state is ever specifically mentioned.
Monitoring for illegal activity
Silver articulated the benefits of an integrated monitoring system like those used by NASDAQ and New York Stock Exchange to ferret out illegal activity via algorithms, stating that “when everything is illegal, other than having tipping services and relationships, we can’t know those things.”
Silver is, of course, correct here: the monitoring of regulated markets is one of the best tools to identify and target corrupt activity. Indeed, mobile betting provides an even greater digital footprint for identifying nefarious activity, which makes its exclusion in some states all the more puzzling.
A learning experience for Silver?
The commissioner went on to say that he has learned a lot from counterpart soccer leagues and they have much better controls.
Though he did not elaborate, Silver is likely referencing the fact that the league has not been able to dictate the terms of gaming regulation at the state level, though most (if not all) states do allow leagues to petition to have events taken down.
The leagues have not been awarded the privilege of constructing gaming regulations.
What to make of this
There was not much new in Silver’s interview with Rubenstein from a sports wagering perspective. In fact, much of it seemed to focus on topics that do not seem even remotely close on the horizon like federal regulation and mandated royalties.
The interview primarily served as an opportunity for the commissioner to express his wish list. The reality is that the NBA is still making arguments for compensation that are not supported by the case-law of the United States.