Professional sports organizations want a piece of the action if Kentucky allows sports betting.
In recent weeks, Major League Baseball, National Basketball Association, Professional Golf Association Tour and National Football League have hired lobbyists in an attempt to influence Kentucky lawmakers on the issue of sports betting, according to the Kentucky Legislative Ethics Commission.
The leagues are doing the same in many other states following a U.S. Supreme Court decision in May that cleared the way for states to legalize sports betting.
Top among the pro leagues’ concern is reaping a royalty — often politely called an “integrity fee” — from the betting of millions of dollars on games they play.
Sign Up and Save
Get six months of free digital access to the Lexington Herald-Leader
The NBA, MLB and PGA Tour have joined efforts in fighting for a royalty if Kentucky lawmakers approve sports betting. Each of the three has hired the same 10 lobbyists in Kentucky.
The MLB, in a statement to the Herald-Leader, said the Supreme Court decision will have “profound effects” on the league.
“As each state considers whether to allow sports betting, we will continue to seek the proper protections for our sport, in partnership with other sports,” said MLB. “Our most important priority is protecting the integrity of our games. We will continue to support legislation that creates airtight coordination and partnerships between the state, the casino operators and the governing bodies in sports toward that goal.”
Calls to the NFL and one of its leading Kentucky lobbyists for comment were not returned. NBC Sports reported in May that the NFL will try to get money out of states that allow sports betting but will be phrasing its efforts using terms like “intellectual property” and “content creation.”
The professional leagues basically are seeking from sports betting operators a fee of 0.25 percent of the amount wagered in each state on games played by each league.
They justify the fee by saying the sports betting business is made possible by the multimillion-dollar investments they have made staging the competitions on which betting occurs. They say they should be compensated for the risk that sports betting poses to the leagues’ businesses and reimbursed for direct costs to the leagues, including education, training and monitoring of betting data across the country to detect suspicious activity.
State Sen. Julian Carroll, D-Frankfort, said it is estimated wagering in Kentucky on all sports games would run between $50 million to $100 million a year.
It is not clear how much each pro league would get in Kentucky from an integrity fee, Carroll said, “but they don’t have to worry about that because I see no sentiment in Kentucky for including in any Kentucky sports betting law a ‘skim-off’ to pro leagues.
“It’s not our position to finance professional sports,” Carroll said. “Our goal is to finance state government and properly regulate a gaming system. They are going to need all the lobbyists they can get.”
Sports betting could provide a new revenue stream for the state, estimated by the state Legislative Research Commission to be between $5.5 million and nearly $26 million per year.
The Legal Sports Report estimates that about about $2 billion a year could be paid out to pro leagues if every state adopts sports betting and includes an integrity fee. According to the Nevada sports betting industry, the handle for betting on pro leagues from December 2016 through December 2017 in Nevada included $1.7 billion on football and $1.1 billion on baseball.
Carroll introduced a sports betting bill in this year’s legislative session, before the Supreme Court made its ruling, that did not include an integrity fee. The measure did not go anywhere, with leading lawmakers saying the issue needed more study.
Carroll is hopeful the issue’s chances are better in the 2019 General Assembly that begins Jan. 8. He is one of nine lawmakers on a bipartisan panel formed in June by Reps. Jason Nemes, R-Louisville and John Sims, D-Flemingsburg and Sens. Julie Raque Adams, R-Louisville, and Morgan McGarvey, D-Louisville, to draft and file legislation to implement legal sports betting in Kentucky.
The panel’s efforts are aimed at professional sports, and possibly some limited college sports, but not wagering on high school or sports below high school level, Carroll said.
The panel’s work thus far has not drawn much publicity, and concern has been expressed that it has not made the public aware of its meetings.
Nemes said the panel is considering various facets of sports betting.
He rejects integrity fees.
“If we provides sports leagues with that fee, what will Kentucky get in return?” he asked. “Can you say ‘nothing’?”
Nemes said states that already have adopted sports betting have not accepted integrity fees. According to PlayUSA, five states have started offering sports betting since the Supreme Court decision.
New Jersey launched sports betting June 14 and Mississippi on Aug. 1. West Virginia started Aug. 30 and Pennsylvania and Rhode Island have approved it and are working on regulations. Four states — Nevada, Delaware, Oregon and Montana — already had permission from a 1992 federal law to conduct sports betting within their borders.
Fourteen states, including Kentucky, are considering sports betting legislation.
Nemes said sports leagues might get a better reception to their proposal in the U.S. Congress, which is considering setting a national framework for sports betting.
Nemes also said the Kentucky legislative panel is trying to meet with “all sides” on the sports betting issue. He criticized a question about whether the panel has been meeting in secret, even though none of its meetings has been listed on the legislature’s public calendar since it was formed in June.
The Family Foundation, which opposes any expansion of gambling in the state, has not been notified of the panel’s meetings, said Martin Cothran.
“It’s a public policy,” he said. “Legislative meetings about it should be in public.”
Nemes said there will be “plenty of public hearings on the legislation once it is drafted.”
“We are doing nothing in private,” he said. “There’s been no need for public meetings because we are only discussing, researching the issue, as other issues have been done.”
He said the panel has been provided no staff by the Legislative Research Commission except for a bill drafter.
“It’s not unusual for a group of legislators to get together informally to talk about drafting legislation. That’s all we’re doing,” he said.
Carroll also said there is no effort to exclude the public on drafting sports betting legislation. “We publicized who would be doing this,” he said. “If anyone is interested, we would be glad to hear from them.”
Rob Weber, a spokesman for the LRC, said the panel is “an informal working group.” He said each member does get daily pay of $188.82 when the panel meets.
Constitutional amendment needed?
The Family Foundation also contends that Kentucky’s Constitution will have to be amended to legalize sports betting. That would require approval by the state House and Senate and voters at the polls.
Both Nemes and Carroll said they disagree with the foundation’s conclusion.
The two lawmakers also said they are reviewing proposals released recently by the Kentucky Equine Education Project regarding sports betting in Kentucky.
The organization said sports wagering should be made available at Kentucky’s racetracks and the Kentucky Horse Racing Commission should oversee the betting. It contends that a portion of any revenue on sports wagering should benefit the horse industry.
Nemes said some of KEEP’s issues have been considered, but noted that the Kentucky Lottery Corp. also may be considered to oversee sports betting.
He also said any draft legislation likely will address funding for the problem of compulsive gambling.