With nationwide sports betting on the horizon it's important both sides work together

Jan 30, 2018 3:00 AM

Last week’s New York State Senate testimony by National Basketball Association (NBA) attorney Dan Spillane suggesting the league receive a one percent share of all wagers on its games should sports betting be legalized in this country has met with various reactions in the sports wagering world, all of it negative.

There are two schools of thought at work here. First, is the NBA cleverly suggesting something so outrageous in an effort to establish a high benchmark for negotiations that can be lowered to a more reasonable figure at a future date? Or, are league owners exceedingly naïve as to how sports betting actually operates?

Remember all the stupid and inaccurate things about Las Vegas reported by many media outlets when the NFL’s Oakland Raiders announced last year the team would relocate to Southern Nevada? The eastern-centric national media has a systemic disregard and lack of understanding of all things Las Vegas. They just don’t get it and neither does the NBA if its leaders believe this first proposal could or would ever be adopted.

I have heard both of these responses to the NBA’s first definitive statement on what the league would like out of legalized wagering on its games. The feeling here is it’s counter productive to suggest something that is so outrageous and so significantly beyond any reasonable assessment of what might actually happen.

It has been pointed out to the four major U.S. sports leagues, the NBA, NFL, MLB and NHL, that the actual win for sports betting operations is about five to seven percent. For the NBA to take a one percent cut off the top all bets while taking no risk itself results is a roughly 20 percent tax on winnings.

Doesn’t the NBA know that?

Nevada sports betting operations are regarded as an adjunct to basic casino operations. The sportsbooks along with the racebooks and poker to some degree are at the tail end of the horse that pulls the profit wagon for Nevada casinos. Nevada sportsbook operators have time and time again invited the top officials from all the leagues to view sports betting from behind the counter. The South Point’s Jimmy Vaccaro, the dean of Las Vegas bookmakers, repeatedly issues that invitation weekly during media appearances and even made the offer in person to some lawmakers on a visit to Washington, D.C. about two years ago.

A few have come, most have not and those that did come must not have been paying attention.

It is hard to fathom the NBA doesn’t understand by taking one percent of the handle they become bookmakers themselves. Isn’t that a conflict of interest of the highest order?

Another key element in this discussion is the one percent proposal, should it somehow become reality, would cripple the U.S. sports betting market before it starts by continuing to make offshore bookmaking operations an attractive alternative for players. Doesn’t the NBA know how much more money is bet on sports offshore than in Nevada? Don’t they know the legal market has to be competitive with the illegal sports wagering market?

In most other countries, sports wagering is monetized by the leagues through sponsorship deals with bookmakers, including jersey advertisements (practice and game), increased television ratings and contracts allowing a bookmaker exclusive betting kiosks in the home stadiums. A better plan might be to access some of these new revenue streams and fortify the old ones, such as media rights. There’s certainly a significant amount of money available by doing that.

The U.S. Supreme Court is expected to rule in June on New Jerseys’ challenge to the federal law banning single-team sports wagering in every state except Nevada. The NBA’s demands make the establishment of legal sports wagering, should it be legalized, an even more difficult task.

Today (Tuesday), American Gaming Association (AGA) President and CEO Geoff Freeman is hosting a conference call with reporters, concentrating on answering questions regarding the NBA’s recent proposal. The AGA is the national trade group representing the $240 billion U.S. casino industry and it will be interesting to see if Freeman floats any kind of new ideas or proposals that might appease the various professional sports leagues. In this case, a public negotiation might be preferable to a closed-door one.

Additionally, Freeman will also officially announce the AGA’s estimate of the amount that will be wagered illegally on Super Bowl LII. It’s always a startling revelation pinpointing the scope of sports betting in this country.

If national sports betting in the U.S. is ever to become a reality, more than just a few compromises will be necessary. The time is right to begin that process.