The NBA and MLB have changed course on sports betting, and Americans don’t like it.
After the two leagues announced that they’d be willing to lobby for sports betting if, among other requirements, they got a 1 percent cut of sports bets placed in New York, the Sharkey Institute at Seton Hall University did a survey about the 1 percent demand and found that nearly seven out of 10 people opposed it.
In addition to their request for 1 percent of bets placed, the leagues want the state to:
- Detect and prevent improper betting conduct
- Allow leagues to restrict wagering on their events
- Include consumer protections for bettors
- Include internet and mobile betting
Sportsbooks won’t be happy about 1 percent
Greg Gemignani, a Las Vegas-based lawyer with Dickinson Wright, said the 1 percent take may not seem like a lot but, considering that Las Vegas books cleared a 0.7 percent profit off Super Bowl betting this year, that 1 percent is harsh.
“If you’re paying one percent of handle that far exceeds what the books actually earned off the Super Bowl,” Gemignani said. “Whether 1 percent is doable or difficult would depend on a book-to-book basis.”
On average, he said that Las Vegas books earn about 4.8 percent from standard betting but have to pay state and federal taxes on that amount.
What the NBA and MLB are asking, he said, doesn’t make sense for books from a business perspective.
“I think there’s a role for major league sports to participate, but I think taking a percent of handle is huge. If you don’t win when your income is relatively low, you’re going to end up losing money and, in the end, these are businesses,” Gemignani said. “They still have to pay taxes, payroll, technology and licensing fees, and information service fees.”
He went on to note that the federal government could do books a favor by removing the government’s 0.25 percent excise tax on gambling revenue.
SCOTUS ruling is not really about NJ sports betting
The main reason the NBA and MLB have proposed their terms is that there’s a prevailing notion that the Supreme Court of the United States (SCOTUS) will rule in favor of New Jersey as it pertains to the state’s appeal that the Professional and Amateur Sports Protection Act (PASPA) is unconstitutional.
A mix of public opinion and expert insight seem to indicate that SCOTUS will overturn PASPA and give states the right to legalize sports betting. NJ gambling sites would surely love the chance to launch sportsbooks in the near future, especially as NJ is already accepting applications ahead of a ruling.
Gemignani pointed out, though, that polls and shifting opinions about sports betting and NJ sports betting won’t affect the SCOTUS decision because the court could care less about sports betting.
“I don’t think they took this because of sports betting. I think they took it to provide an analysis of the intersection of boundaries between state and federal power,” he said. “I honestly don’t think they think too much about sports betting. It’s really [a] constitutional thing for them.”
Gemignani’s theory doesn’t necessarily diminish the chances that SCOTUS will rule in favor of NJ sports betting. PASPA essentially restricted states from passing their own gambling laws.
The act, some argue, overstepped Congress’s authority and violated the anti-commandeering doctrine. That principle is based on the 10th Amendment that says the states can make their own laws in matters not specifically set forth by the US Constitution.
“Congress can legislate that the sun rises in the West and sets in the East,” Gemignani said, “but that doesn’t mean it’s going to happen.”