The NBA's Stance On Sports Betting
The NBA’s stance on sports betting has been the most open of all leagues since the topic came to the forefront of the mainstream media. The NBA – more than any other sports league – has been actively advocating for the legalization of sports betting ever since the Supreme Court took up New Jersey’s challenge of the Professional and Amateur Sports Protection Act (PASPA, 1992).
However, National Basketball Association commissioner Adam Silver has always made his advocacy plain: This is about “what’s best for the league” and nothing more. While that honesty is refreshing, the NBA – like most other sports leagues involved in the new paradigm of US sports betting now that PASPA has been eliminated – is framing the issue as one of “the integrity of the game.”
To anyone who’s been paying attention, that’s more than a little bit disingenuous, particularly from a league with the most famous, far-reaching example of serial match-fixing in US sports history. Yet somehow, the NBA is leaning on the Tim Donaghy refereeing scandal of 2007 to underscore its need to only now fund some sort of corruption protection agency using money from a legislated “integrity fee” made payable by US sportsbooks to the league itself.
Historically, it is interesting to note that the NBA – via then-commissioner David Stern – was adamantly in favor of banning sports betting during the run-up to PASPA’s inception. From the very beginning, PASPA and the NBA were in bed together, with Stern informing congress that “[t]he interstate ramifications of sports betting are a compelling reason for federal legislation.”
Another non-trivial aspect of PASPA and the NBA is this: The law itself was proposed by New Jersey senator Bill Bradley, himself a former NBA player! Could the NBA’s support of PASPA have been an inside job to secure sports betting rights for New Jersey? It seems plausible, but ultimately, the gambit failed, and NJ, along with the rest of the country (except Nevada) was barred from offering any sports betting services.
Nevertheless, PASPA and the NBA continued to enjoy a close relationship, with former commissioner Stern issuing dire warnings about sports betting as recently as 2012, where he claimed that legalized sports betting would “irreparably injure the NBA in a manner that cannot be adequately calculated in dollars.”
It wasn’t until recently that the NBA’s new commissioner, Adam Silver, finally learned exactly how much cash the league was losing because the US didn’t let fans conveniently and legally bet on its games. Instead, NBA fans were using offshore sportsbooks (Bovada, SportsBetting, etc.), and tens (if not hundreds) of billions of dollars were being sent overseas. The league could not get any of that money as long as sports betting remained illegal in most of the US. Naturally, Silver now fully supports the idea of heavily regulated – but not outlawed – sports betting, and Stern has recently backed his protégé by reversing course on his own doom-and-gloom warnings.
Like other sports leagues, the NBA is asking for federal regulations on sports betting. However, beyond the suggestion of the need for a “federal framework that would provide a uniform approach to sports gambling in states that choose to permit it,” the NBA has remained silent on its motivations for supporting such a position. PASPA, after all, has proved beyond any defense or doubt that the federal government is an inappropriate agency to set sports betting laws for individual states.
Further, each state’s market economies are fundamentally different enough that no one-size-fits-all approach to an industry so potentially lucrative could ever actually work in favor of the states themselves. Why, for example, would a market like Mississippi have the same sports betting regulations (i.e. taxation rates and licensing fees) as markets like California or New York? Scale matters, and there is no scale at the federal level when it comes to the application of law. The states themselves are far better suited to setting taxation and regulatory terms that work for their own economies.
The most important aspect of what the NBA’s stance on sports betting has brought to the forefront of the mainstream debate has been this idea of a so-called “integrity fee.” The argument goes something like this:
“Now that sports betting is legal at the federal level and any state can implement the pastime as they see fit, we must have funding for a league-run agency that works to make sure that match-fixing and point-shaving isn’t going on.”
Why the NBA believes that it will be easier for bad actors to influence a governmentally-regulated sports betting industry than it would be for them to influence that same industry via black market means is illogical at best, and the NBA’s own history – most recently with the Donaghy scandal – proves that this “integrity department,” whatever its function would be, probably should have been in place decades ago if “integrity” is what matters here. Also consider: Las Vegas casinos that offer NBA sports betting – as well as international sportsbooks that offer the same – have never been asked to pay an integrity fee, even though billions of dollars of NBA wagers are changing hands annually through those channels. This “integrity” problem seems conveniently “new.”
Worse, the economics of the NBA’s proposed integrity fee make no sense. While the details are murky at this point, the main thrust is this: The league – working with other leagues – wants this consortium to get a 1% cut of all the action any sportsbook takes in (which would then ostensibly be split up by said leagues based on the wager amounts attributable to each one). That 1% number doesn’t sound like much in an industry as lucrative as sports betting, but that’s the rub: It is in fact such a large number that it amounts to a full 20% of the average sportsbook’s total earnings! That is economically unviable, and if it’s enforced, fans will simply continue using offshore legal sportsbooks instead of risking more to win less at US-based betting shops.
Right now, it is difficult to tell whether or not the NBA’s stance on West Virginia sportsbooks will influence federal law in any meaningful way. On the one hand, PASPA’s overturn was advertised as a huge win for states’ rights and the 10th Amendment, and it seems unlikely that congress – at least during the 2018 session – has much interest in getting involved in sports betting right away.
Perhaps the individual state governments will all be given a chance to make appropriate regulatory decisions for their own sports betting industries before the feds attempt to step in and “fix” the system again. But who knows? For the NBA, it makes sense to want federal regulatory legislation, as it’s easier for their legal team to lobby one group (the US congress) instead of 50 individual groups (the state congresses).
The NBA’s stance on sports betting will influence state law, but only to a point. While some states may embrace that “1% of the handle” nonsense, the bigger likelihood is that the NBA will be able to wield some power – and have some say – mostly in the states that actually have NBA teams or large NBA fan-bases.
What sorts of kickbacks and financial mandates the National Basketball Association is looking for in any of these states remains to be seen, but it’s clear that the league wants more money than the increased viewership, fandom, and ad revenue (all results of legalized sports betting) will provide them in the years to come.