Legalized sports betting means big business for leagues, states, casinos
Americans wager $150 billion on sports each year — illegally, according to the American Gaming Association.
While the scope of that figure is difficult to comprehend and disputed by some experts, there is no doubt that legalizing betting on sporting events will quickly become big business now that the Supreme Court put it in the hands of individual states.
New Jersey racetracks and casinos are primed to start taking bets — Monmouth Park has targeted Memorial Day and most others will be operational by July 4, said Daniel Wallach, a nationally known gaming and sports attorney.
Pennsylvania, West Virginia, Delaware and Mississippi also passed bills long before the Supreme Court ruled.
But what does it mean to the pro sports leagues and colleges whose games provide the meat for America's gambling appetite?
More money? Of course.
More eyeballs on the games? Possibly, given the NFL's recent five-year, $1.5 billion-plus deal with Verizon and the widespread use of tablets, smartphones and apps. Believe it or not, some people still watch games the old-fashioned way: on TV.
A recent Neilsen study found that bettors watch an average of 19 more NFL games than non-bettors — more than an extra season of football.
"I think everyone who owns a top four professional sports team just basically saw the value of their team double," said Dallas Mavericks owner Mark Cuban, a Mt. Lebanon native. "It can finally become fun to go to a baseball game again."
Nonetheless, pro leagues publicly have concerns. NBA Commissioner Adam Silver told USA Today he would like to see "a federal framework" for sports betting that will provide consistency from state to state.
Without such a framework, the Supreme Court left the issue up to each state.
Pennsylvania has seven major professional sports teams in Pittsburgh and Philadelphia as well as major college programs at Pitt and Penn State.
John S. Clark, a professor of sport management at Robert Morris University, said that betting action "could easily trickle down to the Mid-American Conference schools or a school like Robert Morris." Even high schools, he suggested.
"I don't know if it necessarily means it will create more gamblers," he said, "but it brings some of that money that's underground to a legitimate, taxable place. It could be a boon for the states."
But there are hurdles to be cleared.
The NBA wants to collect 1 percent of the total amount wagered as an "integrity fee." That money would compensate leagues for providing policing services, such as the NBA's six-year, $250 million agreement with sports analytics companies Sportradar and Second Spectrum to monitor statistics and watch for match fixing or other betting irregularities.
But any integrity fee would come from the sports books' profit margins.
"A legal sports book realizes 3.5 to 5 percent in revenue," American Gaming Association president and CEO Geoff Freeman said. "A 1 percent 'integrity fee' on all money wagered legally by Americans, as proposed by the NBA, amounts to 20 to 29 percent of total revenue.
"If states enact these integrity fees based on the handle, all of sudden you're starting to stack up all these extra fees," he said. "It may not be profitable for whoever is going to run the sports book. That may drive people back to the black market again."
And there may be a problem already in Pennsylvania.
The state's call for a 36 percent tax on sports wagers — the highest in the nation — could be problematic and pass costs on to consumers.
"It's absolutely ludicrous. Bookies in Philly are probably laughing," Brett Smiley, co-founder of SportsHandle, a news site covering the business of sports betting, told BillyPenn.com. "I would be shocked if there aren't conversations happening right now between casino operators and the state to lower that tax."
Regardless of who gets their pockets filled, the sports leagues are focused on the ever-present threat of game fixing.
ESPN sports gambling analyst Doug Kezerian, who has covered the gaming business for 15 years, doesn't see that as a problem.
"This has been going on for a long time," he said on the "Breakfast With Benz" podcast that posted Wednesday on TribLIVE.com. "If people are worried about college kids throwing a basketball game, that threat was always there.
"People need to realize the more regulated something is, the less funny business there is."
Jerry DiPaola is a Tribune-Review staff writer. Reach him at email@example.com or via Twitter @JDiPaola_Trib.