Kobritz: MLB, other leagues may want ‘integrity fee’ from sports gambling
Column: Beyond the Lines
Sports gambling is on the cusp of becoming a reality in the U.S. and professional sports leagues are intent on reaping a piece of the financial windfall.
A bit of history. Thanks to the Professional and Amateur Sports Protection Act (PASPA), which protects only the state of Nevada and illegal gaming interests, sports gambling is prohibited in 49 out of 50 states. Nevada benefits from the prohibition because it allowed sports books prior to the act’s passage in 1992. The state of New Jersey, like most government bodies desperate for cash, sued to overturn PASPA. The Supreme Court will render a decision in the case within the next few months.
Until recently, sports leagues were vehemently opposed to sports gambling for fear it could embolden gamblers and tempt athletes to “fix” games. The 1919 Black Sox scandal in baseball and the 2007 gambling case involving former NBA referee Tim Donaghy, are prime examples of why leagues have taken a dim view of sports gambling.
However, sports leagues see a future where sports books and government agencies will rake in billions of dollars per year - and they want in. The NBA, led by Commissioner Adam Silver, was the first league to publicly embrace legalized gambling.
MLB, which had consistently taken a contrary view, recently become a convert. Commissioner Rob Manfred supports legalized sports gambling, albeit with a caveat. His support is contingent on including an “integrity fee” in any new law that permits gambling on sports.
Specifically, Manfred insists that leagues should receive 1 percent of the action, money he claims is necessary to protect them from the threat of game fixing and to assure the public that the games are on the up-and-up. The proposed fee represents approximately 20 percent of sports book revenues, or a cool $2 billion per year. Split equally among the four major league team sports that would represent a new revenue stream of $500 million annually. For doing exactly what, is unknown.
In anticipation of a New Jersey victory, West Virginia recently passed legislation to implement sports gambling. However, the statute failed to include Manfred’s beloved integrity fee, which infuriated the commissioner. He issued a seething rebuke of state legislators, accusing them of failing to “protect young people…and people with gambling problems.” Manfred failed to elaborate on how acceding to leagues’ demands for an “integrity fee” would accomplish those objectives.
Manfred added, “All (the statute) does is maximize the opportunity for the gaming industry to make money.” Well, yes, of course the gambling interests will benefit financially from the new world order. That’s why the industry has lobbied long and hard in favor of legalized sports gambling. The question is should leagues, Johnny-come-latelies to the cause, benefit as well?
After lobbying against legalizing sports gambling for so long, it seems disingenuous for Manfred to now say, ‘give us a cut of the action and we won’t oppose your efforts.’ Rather than a concern for the integrity of the game, Manfred’s position appears to be a blatant attempt at a cash grab.
Jordan Kobritz is a former attorney, CPA, Minor League Baseball team owner and current investor in MiLB teams. He is a Professor in and Chair of the Sport Management Department at SUNY Cortland and maintains the blog: http://sportsbeyondthelines.com. The opinions contained in this column are the author’s. Kobritz can be reached at firstname.lastname@example.org.