New Jersey’s Fight With Major Sports Leagues Is Just Getting Started
With PASPA’s overturn (Murphy vs. NCAA), it would seem that New Jersey has finally defeated the major sports leagues, vindicating its stance that the Professional and Amateur Sports Protection Act of 1992 – a law supported by the NFL, NBA, MLB, NHL, and NCAA – was patently unconstitutional, as it limited legal land-based gambling exclusively to Nevada. However, while many think that this is the final straw in the major sports leagues’ attack on legal sports betting, New Jersey’s fight with these clowns is just getting started.
See, during the run-up to the PASPA overturn (which was anticipated by practically everyone, with the only surprise being that two justices somehow dissented from the majority decision), the sports leagues – led by the NBA – took a more supportive stance, but a stance with a significant caveat. Even though the SCOTUS ruling could not give the leagues the “concessions” they seek, the rub is the same: The sports leagues are seeking concessions, and they’ve been doing it at both the state and federal levels.
Naturally, these concessions – or, more aptly, extortions – are not reasonable, have not been crafted or presented in good faith, and are economically unviable. What the major American leagues want from legalized sports betting (and they want this preferably in the form of federal law, though they are also lobbying all the states on the sports betting docket) is a big, fat cut of the money. That’s understandable on the surface, because they’re the product that generates the interest in sports betting. However, their argument for why they deserve this money – and how much of it they should get – is baffling.
Consider their logic: The major sports leagues have – in some sort of unison or collective – announced that they are entitled to at least 1% of the legal sports betting handle in the US. That is unrealistic, as the handle is the total amount bet, not the house take (or juice, or vig). Because sportsbooks operate on the lowest margins of any of the major gambling amusements, what the leagues are asking for here amounts to roughly 20% of the money that a sportsbook makes.
That essentially equates to very high protection fees, reminiscent of the days of yore when the casa nostra was running the show. If you take any business that operates at a profit margin of 5-7% and demand 20% of that as a requirement to continue operating your business, that is a huge loss from which you’d have tremendous difficulty recovering.
Additionally, there is no such model in place in Las Vegas and other Nevada casinos, where legal sports betting has been going on since the middle of the twentieth century. That the leagues now find it “worth their while” to get involved in the revenue stream of sports betting reeks of greed and little more. This is not about trademark rights to team and player names. This is about money.
Of course, the leagues are oddly silent when the subject of increased ratings and revenue as the result of increased interest and viewership are brought up. Sports betting is empirically proven to grow audiences of all sports, and not trivially. Legalized sports betting will literally raise league revenues (via increased audience participation and ad expenditures) by billions of dollars annually. Why this isn’t enough for the leagues, nobody knows. Or, perhaps, everybody knows. Again, the leagues just want more money, and they want it from every avenue they can guilt-trip or pay off a politician into agreeing with.
According to the leagues, there’s also the “integrity of the game” to consider, with the major leagues all taking the opinion that legalized sports betting – regulated by states themselves – will somehow open the door to corruption and match-fixing wider than forcing hundreds of billions of dollars in action to the black market, where avenues for corruption thrive under the radar of government regulation.
Indeed, this argument is fallacious on many levels, and it addresses an imaginary problem that history has proven (in other industries) to be self-correcting. That is, with governmental oversight and increased attention to betting trends, it will be infinitely easier for bookmakers and their regulators to identify questionable, irregular wagers and trace them accordingly. Bookmakers already do this as a matter of course, because match-fixing costs them money! Why the leagues believe that it would be easier to fix matches under the strict surveillance of government is baffling. Of course, the leagues don’t really think this – they merely believe that an “integrity fee” is warranted. Well, it isn’t.
Make no mistake: New Jersey’s fight with the major sports leagues for sports betting in New Jersey is just getting started. The state is trying desperately to rebuild Atlantic City and to grow its cachet and clout in an industry that can literally save the state. Will they want to acquiesce to losing out on all the money the leagues wish to siphon off the top? This seems like a nonstarter. Here’s hoping NJ sticks to its guns and escorts the “league fee” directly off the premises.
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