Since PASPA got overturned in May this year, more and more betting businesses are trying to hop on the lucrative train ride that is online sports betting. Apart from betting businesses, local governments will also see a substantial increase in income from betting activities. However, not everyone is satisfied with the new arrangement.
In the past year, there has been increasing pressure on legislators and betting companies alike to include professional leagues and give them a slice of the ever-growing betting revenue cake. The proposed measure is called the Integrity Fee, and not everyone is satisfied with it.
Basically, the Integrity Fee is a tax on sports betting. It has been introduced in Montana right after the legalization of betting. Professional leagues like the MLB or NBA are trying to push for it because they see their sports data as intellectual property. Another, probably, far more important reason is the fact that sports betting has the capacity to influence professional sports, especially if there’s so much money involved. Such a tax already exists in countries that have a long betting tradition such as Australia and France where a small percentage of betting money goes on to finance professional sports.
How Would It Work
As this NJ Games’ infographic explains, professional leagues’ representatives propose a 1% tax on sportsbook handles. That would mean that 1% of all money that goes through betting companies would end up financing the sports wagered on. When translated into revenue, leagues would actually rake in 20% of sportsbook profits, since the hold money is always five times bigger than the revenue. It is clear why the integrity fee is unacceptable for betting companies.
The Integrity Fee has been a subject of thorough criticism since it was first proposed. Apart from being labeled as extortion, the Integrity Fee might actually have an opposite effect. Critics state that it might open up countless possibilities for fraud since it would mean that sports participants would have a conflict of interest or be influenced by the stakes. Others state that, although providing contests, there’s nothing else that leagues do for the industry. In the end, bettors will be the ones most affected since the tax increase would mean more expensive betting.