Connecticut: MLB and NBA want a share in sports betting profits

Ahead of the U.S. Supreme Court's decision on whether to lift the federal ban on sports wagering, expected to be issued this year, Connecticut is proactively considering introducing legislation aimed at regulating this activity in the state. According to experts, illegal sports betting currently generates between $100 and $200 billion.

Recent legislation is significantly expanding gambling in Connecticut including a third casino, more OTB locations and laying the groundwork for sports betting.

On Thursday, during an informational forum on sports betting, representatives from Major League Baseball and the National Basketball Association told members of the public safety committee they’d require a 1 percent fee should Connecticut legalize sports betting. That means leagues would get 1 percent of the wager.

Dan Spillane, the NBA's senior vice president and assistant general counsel, and Bryan Seeley, MLB’s senior vice president and deputy general counsel, said they’d no longer be in favor if Connecticut excluded the 1 percent fee from legislation.

“I’m not here today to tell you to legalize sports betting,” Seeley said. “I’m here to tell you that if Connecticut is going to legalize sports betting it should so in a way that protects Connecticut consumers and protects the integrity of baseball so that Connecticut and the fans of our game can continue to enjoy our game for decades to come.”

Spillane and Seeley addressed five points:

• The 1 percent fee, meaning 1 percent of the money bet (not winnings) would go to the sports league.
• Data collected from bookmakers should be shared “so we can spot suspicious betting patterns.”
• Bookmakers must report fraud and use sports league data to settle bets.
• Pro sports leagues should have a say in the types of bets made.
• Betting should be made available on mobile devices to combat and compete with illegal betting and overseas gambling.

The reason for the 1 percent fee, Spillane said: “Sports leagues invest billions of dollars into staging these competitions. ... The leagues also stand to bear risk of sports betting. … If something goes wrong — there’s a scandal, or something that tarnishes the image of the game — that’s going to be a cost that’s borne by a sports leagues and less of a cost borne by the operators of the sports bets.”

They both said sports leagues will be forced to spend money on hiring investigators, outside monitoring firms and purchasing analytical tools.

Legislators have said sports betting could raise $40 to $80 million per year in Connecticut and although it could be months before the court even rules whether states can regulate sports betting to begin with, House Speaker Joe Aresimowicz said sport’s betting “is too big of an issue to leave sitting on the table. … We need to have everything in place.”

Aresimowicz said, “I feel it could happen pretty quickly and in a bipartisan way.”

Experts said Connecticut would see about $2 billion in wagers. The state would have the option of taxing the wagers, which would be at a much lower tax rate than if it the state taxed just the winnings.

Dan Shapiro, vice president of strategy and business for William Hill Sports Book — which is the leading sports betting company in the country and operates 100 sports books in Nevada — said Nevada’s current tax on sports betting is 6.75 percent, which allows the sports betting business to compete and thrive.

“When you get into the double digits, that really eats in on the margins and your ability to offer a competitive product,” Shapiro said.

Of the seven invitees to the informational forum, only one had strong opposing views.

"You have an ever-increasing number of your constituents who are suffering from life-changing financial circumstances because of state-sanctioned gambling. It's a serious problem that will be far worse if you allow sports betting," said Les Bernal, national director of the nonprofit Stop Predatory Gambling.

Bernal said a recent Economist article stated Americans lost $117 billion in 2016 through state-sanctioned gambling.

The preparation comes ahead of the court’s expected ruling on Christie v. National Collegiate Athletic Association, in which New Jersey challenges a federal law that bars states from authorizing gambling in most professional and college sports.

More than a dozen states are supporting New Jersey, which argues that Congress exceeded its authority when it passed a 1992 law that keeps states from authorizing sports betting. The state says that the Constitution allows Congress to make wagering on sports illegal but that it can't require states to keep sports gambling prohibitions in place.