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Sports Betting Moves Forward In The U.S. — With or Without ‘Integrity Fees’

The U.S. sports betting wave could become one of the hottest payments and commerce trends of 2018, with lawmakers and gamblers bringing the activity to more states, and league officials pushing for their cut. Kentucky is one of the latest jurisdictions that could welcome the wagering.

Reports out of the Bluegrass State say Damon Thayer, the Republican who serves as majority floor leader for the Kentucky State Senate, anticipates that lawmakers from both parties want to introduce pro-gambling legislation during the 30-day legislative session that starts January 8, 2019.

“I think we can put together a group of Democrats and Republicans to pass this bill,” Thayer told a gambling publication. “I don’t want us to be one of the last states to pass sports wagering. I want us to be one of the first 10 states to pass sports wagering, and I want it to support the horse industry.”

Sports Betting Expansion

Since the U.S. Supreme Court ruled in May that states may legalize sports betting — it was already allowed in Nevada — four other states have approved such wagering: Delaware, Mississippi, New Jersey and West Virginia. Three other states are ready to do so, according to one analysis: Pennsylvania, New York and Rhode Island — all of which have some form of pre-fabricated legislation paving the way for sports betting.

Meanwhile, states such as Kentucky, Connecticut, Illinois, Michigan, Indiana, Massachusetts, Maryland and others are making moves toward legalization, and via different methods. Iowa, for instance, is considering letting casinos and racetracks offer on-site and online wagering. Missouri seems to be focusing on riverboat casinos and sports fantasy leagues.

In Kentucky, a proposal that dates back to 2017 would allow betting on college and professional sports, but prohibit wagering involving high school athletics. The state reportedly would impose a $250,000 licensing fee on betting providers, along with a 3 percent tax.

Integrity Fees

You can bet that sports leagues want their own cut, too.

According to one report, “Major League Baseball, the National Basketball Association, the Professional Golf Association Tour and the National Football League have hired lobbyists in an attempt to influence Kentucky lawmakers on the issue of sports betting … Top among the pro leagues’ concerns is reaping a royalty — often politely called an ‘integrity fee’ — from the betting of millions of dollars on games they play.”

Those integrity fees are money transfers from sports betting providers to the sports leagues. A bill introduced earlier this year in Indiana — before the Supreme Court ruling — sought a 1 percent integrity fee, payable quarterly to the governing body for the sport being bet on. The bill also called for a 9.25 percent state tax on sports wagers. Lawmakers have yet to vote on that bill.

In West Virginia, one of the states with newly legal sports betting, lawmakers rejected an integrity fee that was supported by the state’s governor. The state allows both online and offline sports betting, with regulation oversight provided by the West Virginia Lottery Commission.

In Mississippi, there is also no integrity fee, but no online or mobile wagering — at least not yet, which means consumers place bets at casino sports books.

Casinos are making major moves in this new world of sports betting — including MGM. Over the summer, it announced a deal to become the first sports gambling partner of the NBA. The deal, reportedly worth no less than $25 million and running for three years, provides proof that major sports leagues have overcome their reluctance to being officially associated with gambling, lest they lose the trust of consumers.

League officials will continue to push for their fees and states craft their own measures and responses to the Supreme Court’s decision on sports betting. Digital technology and online commerce may not play a role in all of those state moves — at least not initially — but the odds are good that innovation will emerge from this new world of sports betting.

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