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By Ryan Prete
New York is the latest state to introduce sports-betting legislation that offers professional sports leagues a piece of the profits.
S. 7900, introduced by Sen. John J. Bonacic (R) March 7, would legalize and regulate sports betting and mobile sports wagering in the four upstate casino gaming resorts.
The bill proposes an 8.5 percent tax on gross revenue from wagers and an integrity fee of 0.25 percent of wagers, paid to governing bodies of the leagues whose events are being wagered upon.
New York is the latest state scrabbling to enact sports betting legislation before the U.S. Supreme Court releases a decision in Murphy v. NCAA— New Jersey’s attempt to repeal part of its state ban on sports betting in an effort to revive the struggling Atlantic City region. The high court agreed to review the case after a lower court ruled that the partial repeal violated the federal Professional and Amateur Sports Protection Act of 1992 (PASPA), which prohibits states from “authorizing” gambling related to professional and amateur sports leagues.
The Supreme Court could issue a ruling as early as March 19.
New York is just one of 18 states that have introduced 48 proposals to legalize sports betting. New Jersey, Connecticut, Pennsylvania, and Mississippi have already passed sports betting legislation. West Virginia lawmakers sent a proposal to Gov. Jim Justice (R) March 3.
The integrity fee has remained a controversial topic. While the National Basketball Association and Major League Baseball have lobbied for the fee, the American Gaming Association (AGA) has denounced the proposal.
“The primary goal of legalizing sports betting should be to destroy the illegal market, since a legal, regulated framework definitionally provides consumers protections and revenue for state and tribal governments that don’t exist today,” Casey Clark, vice president of strategic communications at the AGA, told Bloomberg Tax. “Unfortunately, New York’s bill won’t achieve these goals. Rather, it creates a monopoly that would allow data providers to charge sportsbooks exorbitant fees to offer betting, and would compromise private customer information.”
New York is just the fourth state to propose an integrity fee, after Indiana, Kansas, and Missouri. However, New York is the first state to offer an integrity fee at any rate other than 1 percent.
New York’s bill sets an additional cap on the fee, stating that “in no case shall the integrity fee be greater than two percent of the casino’s sports wagering gross revenue.”
“These provisions will continue to drive customers to the already thriving illegal market where they’ll be offered no protections, and where states or tribes see no revenue,” Clark said.
“Sports betting is built on our games, and the leagues also bear the risks that come with sports betting,” Dan Spillane, the NBA’s senior vice president and assistant general counsel for league governance and policy, said during a hearing before the Connecticut General Assembly’s Public Safety and Security Committee March 1.
He called the 1 percent figure a “reasonable amount” to be paid back to the leagues. “It makes sense for leagues to get a percentage of the amount bet on our games,” he said.
NBA and MLB representatives have argued the integrity fee would provide funds for the leagues to ramp up their investigatory and data analysis divisions to analyze and investigate allegations of impropriety.
Geoff Freeman, president and CEO of the American Gaming Association, previously told Bloomberg Tax the fee would hurt the integrity of the NBA and MLB and would dwarf any revenue returned to state governments.
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Text of S. 7900 is at http://src.bna.com/wVn.
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