It is time to negotiate with sports leagues
June 01, 2018 10:00 AM
by The Analyst
The sports wagering industry has an interesting opportunity to guide its own fate but as there is no true unifying voice within the industry it is ill prepared to speak or negotiate with the leagues or conferences, both amateur and professional, to come to a mutually beneficial deal. Absent a unified position by this industry the door is wide open for any range of future twists and turns that would make a spaghetti bowl look organized by comparison.
In looking at public statements by the major leagues and noting their power in both Washington and over their own brands and information, it should not be ignored that it looks like the NBA will end up as a part owner of Paddy Power, a powerhouse bookmaking operation from Ireland. It is not hard to guess how the professional leagues will likely play their side of the game.
First off, all the leagues would prefer a national standard rather than each state having its own set of rules, regulations, taxes and acceptable business practices. Second, the leagues would like a unification of information reporting to the leagues to protect the integrity of the leagues – they would certainly like to know if their players, coaches, owners and referees are betting on their own games, particularly if they are betting against their own team.
Third, the leagues want to be paid for their product and view the sportsbooks as getting a free ride on their product. Fourth, the leagues control the broadcast and dissemination of their teams’ games and information and this gives them huge power as the books need quality pre-game, in-game and post-game information as soon as they can get it.
Conversely, what do the sportsbooks have that the leagues want? Bettors’ betting information and money from the wagering activity. Initially important but not over the long string of time.
So, imagine if the leagues were to go to Congress and say, we want you to help us protect the integrity of the leagues as well as the safety of the betting public, and thereby ask that Congress pass a law or laws requiring all sportsbooks to use league information for the establishment of their betting lines, pay fees, and report certain matters or actions to the leagues.
Of course, the leagues could then commit to Congress that all the books would get all the lineup information, injury information and applicable needed statistics at the same time and ahead of public information release, which the books all need. They could request of Congress that the current handle tax of .25% that all books pay to the government be raised to 1%, but allow sportsbooks to deduct the fees paid to the leagues for their information from the handle tax, effectively getting their 1% of the gross wagers.
These are just examples, but examples that could happen.
Sound silly? Not really. Going to Congress would legitimize leagues’ moves and as Congress has the absolute right to create taxes and create laws to govern individuals, under the guise of protecting the public, well intended but league favoring laws could be adopted.
Think a league or the leagues are not in action already to secure their interest? Word has it they have started conversations with Oren Hatch’s (Senator from Utah) office and are also seeking out other religiously motivated congressmen from states not likely to adopt sports wagering to support their legislative causes.
The leagues have so many more ways to get what they want than the sportsbooks have to stop them that it would make real sense for the sportsbook operators to have a real sit-down negotiation with the leagues and cut a long-term deal.
A different opinion
On a separate note, a reader last week took exception with my position that national legal sports wagering would slowly erode fantasy sports wagering, noting the ability of fantasy sports players to have a cheering interest in multiple games and be able to bet a little to potentially win a lot of money.
While I respect his viewpoint, the reality is, for the public, betting a team is easier to bet than betting the players on a derived team. As such, human behavior will naturally and gradually redirect the betting dollars to sports wagering thereby reducing the size of the fantasy sports pools/prize money.
Nice thing about our respective beliefs on the subject though, is over the next ten years we will get to see who is right and it would not bother me at all to be proved wrong.