The leading US sports leagues are split on how to earn fees from the growing number of fans that using sports betting as a way to add a layer of extra excitement to the games.
May 2018 saw the US Supreme Court strike down the federal statute that had made sports gambling illegal across the US, and over the succeeding nine months the legal betting market has exploded. For years US consumers had been making use of so-called “grey market” sites that have catered to a US audience without any footprint in the US, but with one decision the Supreme Court has created a new legal market and that could have dramatic consequences for professional sports leagues.
Traditionally, the major US leagues – the National Football League (NFL), Major League Baseball (MLB), National Basketball Association (NBA) and the National Hockey League (NHL) – have worked together to prevent the spread of sports betting. However, after the Supreme Court’s decision and the move by a number of states to actively approve such practices, the leagues have started to change their position and try and get in on the action.
Now they have a financial motive, the leagues are following a dual-pronged approach to getting a cut on this new and lucrative market, by lobbying state legislators to grant them “royalty fees” of around 0.25% on sportsbook revenues, as well as targeting individual gambling firms directly in free-market deals for access to their in-depth live and historical data.
The arguments for these payments seem obvious – the leagues are the ones creating the content and excitement, and the gambling firms are profiting from their games. But it remains unclear whether the multi-million dollar sports-betting firms will agree to share in their profits, and of the eight state legislators that have already approved sports betting none have included royalty fees as part of the legislation. So far this year, six states have introduced bills that would give between 0.2% and 1% of sportsbook revenues to the leagues.
A third option for the leagues has been to find willing gaming partners to pay for the rights to become the “official gaming partner” of their tournament. And for this, the MLB, NBA, and NHL have all turned to Las Vegas’ MGM, which would give the casino giant even more proprietary data and analytics as well as the title.
Online gambling has been around nearly as long as the internet, with the first online casino launched back in 1994, long before Google, Facebook, and Amazon, but countries are still struggling with how to police them and protect their citizens from unscrupulous operators. In the UK, authorities make clear that gaming firms offering services to UK citizens must acquire a UK license and follow the requisite rules, while others require all gambling firms offering services to their citizens must be based there, as such a New Zealand online casino must be fully based in the country and pay its taxes there as well as following their rules. The US has traditionally stood alone in western democracies with its ban on sports-betting and strict rules against various forms of gambling, but it appears that the lucrative business has finally convinced lawmakers there too that the future means legalisation and taxation rather than prohibition.
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