No Pay-Off on Sports Betting Bill

The Association and The Show oppose Iowa House propositionJay Mehta The Santa Clara February 8, 2018The NBA and MLB have officially registered against the Iowa House bill legalizing sports betting in the event that the federal government repeals the law banning it in most states.The reason why the NBA and MLB are against the bill seems to be more focused around personal gain rather than the actual impact on the people of Iowa. The NBA and MLB want to be guaranteed a slice of the profits, or what they refer to as an “integrity fee.”Iowa’s casino industry says that this fee would be unrealistic and make sports books unprofitable.“It would kill sports betting in any state,” Wes Ehrecke said, president and CEO of the Iowa Gaming Association.The legislation was scheduled for consideration on Wednesday, Feb 7. It proposes a framework that allows betting on college and professional sports that will be regulated by the Iowa Racing and Gaming commission.This would allow people to place bets by visiting registered casinos or through their online websites. The NBA and MLB claim that the proposed legislation falls short of what is needed to protect the integrity of sports betting. Neither specifically mentioned the integrity fee even though it’s part of model state legislation proposed by the NBA.“We support legislation that includes comprehensive protections for the integrity of our sport,” NBA spokesman Mike Bass said. “We look forward to working with legislators in Iowa and elsewhere to ensure that sports betting laws include these protections.”MLB spokesman Pat Courtney has similar feelings: “Sports betting legislation must include certain protections to mitigate risk to our game. We will continue to work with Iowa legislators to make sure these protections are incorporated into sports betting legislation.”It is not clear what MLB and NBA spokesmen are implying when they suggest that a one percent fee would “mitigate risk to the game” and protect the integrity of the sport. Until they clarify how a fee would actually benefit the game, it seems like another money grab by the sports organizations.Spokesmen for the NBA and MLB want the House to recognize that they provide the foundation for sports betting and bear the risks that betting imposes.They claim that the fee will be needed to invest more in compliance and enforcement, including bet monitoring, investigations and education.The reason this is skeptical is because enforcement, compliance and education are generally handled by the sports books and the state, like we have seen with horse race betting in the past.Ehrecke said the one percent fee on the total amount of money gambled wouldn’t be profitable enough for sports betting to be sustainable casinos, because for every $1,000 wagered, around 95 percent is returned to gamblers, while the remaining five percent is needed to pay state and federal taxes, overhead expenses and a small share of profits for casinos and community groups.This five percent is used to pay taxes and expenses is the money that would fulfill the duties such as enforcement and compliance that the NBA and MLB claim they need. In fact, paying the sports organizations one percent essentially cuts out 20 percent of the casinos left over money.“It is unfortunate there wouldn’t be a good partnership with all the leagues, because they will benefit from people watching games and betting on games,” Ehrecke said. “But there certainly doesn’t need to be an integrity fee.”Contact Jay Mehta at jmehta1@scu.edu or call (408) 554-4852.