Can NBA, Vegas Casinos Reach Partnership With Millions At Stake Through Integrity Fees?


Over the last year, few measures related to the legalization of sports betting have received as much attention or garnered more controversy than a so-called integrity fee proposed by several pro sports leagues, particularly the NBA.

Introduced by NBA senior vice president Dan Spillane at a New York Senate hearing in January, the league’s proposal would require gaming operators to pay the league 1% of their total handle on legal wagers involving NBA teams in a given jurisdiction. The fee, which NBA commissioner Adam Silver later dubbed a royalty, would essentially compensate the league for the intellectual property of its official data, as well as added enforcement and compliance expenses brought about by an expansion in sports gambling.

Without softening his stance on integrity fees, Silver indicated this month that the league could explore commercial relationships with a host of Nevada-based gaming establishments, home to some of the largest sports books in the world. Ironically, Silver delivered the comments from a ballroom inside the Wynn Hotel and Casino less than four miles from the site of the 2018 NBA Summer League. At the start of the 12-day showcase, Silver held amicable discussions in Las Vegas with Jim Murren, the chairman and CEO of MGM Resorts International.

For the second consecutive summer, MGM Resorts served as the title sponsor of the NBA Summer League, an event that drew appearances from LeBron James, Magic Johnson and Jerry West, among others. In December, the NBA and the WNBA approved the company’s purchase and relocation of the San Antonio Stars to Las Vegas. Then, on Saturday, the WNBA announced that the new franchise, the Las Vegas Aces, would host the 2019 WNBA All-Star Game at the Mandalay Bay Events Center.

Given the NBA’s extensive partnerships with MGM on multiple fronts, Silver’s willingness to broaden its relationship with gaming operators seems logical. At the Wynn, the NBA’s Board of Governors heard a presentation on the legal developments surrounding the expansion of sports gambling along with another on the potential commercial opportunities that could ensue in the years to come. In entertaining such options, Silver is mindful of the delicate balance the league must strike if gambling regularly becomes integrated into NBA broadcasts — in many cases before teenage and family audiences.

“It’s more of us saying as an ownership group, let’s step back and really study these issues and try to understand them and see what the best ultimate consumer experience can be, and at the same time balanced against protecting the integrity of the league,” Silver said.

Over the course of the event, the summer league set a new record for attendance of 139,972 spectators, accounting for approximately 27,000 hotel rooms night in Las Vegas, Silver said.

Although Silver emphasized that the NBA has achieved a modicum of success in ironing out complicated issues pertaining to the league’s official data, he admitted there has been less progress on developments regarding integrity fees. At present, there are several roadblocks impeding its efforts. On Capitol Hill, legislators have yet to formally propose a federal framework for sports gambling. With nearly one-third of the U.S. Senate up for re-election in November, any meaningful legislation focused on sports betting will likely remain on hold until after the midterm election. On the state level, an early rush by legislators to capitalize on the Court’s decision has slowed noticeably during the summer recess period.

Four states, including New York, are considering proposals that would provide various pro sports league with royalties of 0.2 percent to 1 percent of the total handle on legalized wagers from their contests.

During Silver’s appearance in Las Vegas, he noted that the topic of jersey sponsorship deals with casinos was not brought up when he met with several gaming operators. A keen observer of global trends among major international leagues, Silver has kept a close eye on the prevalence of jersey deals between clubs in the English Premier League and betting shops in the U.K. At this point, though, the NBA may be hesitant to strike a deal with a gaming establishment when sports betting remains illegal in the majority of U.S. states.

“I think it’s inevitable that it’s a business that we’ll be in one day, but I don’t think it’s mature enough yet to be there,” Silver said.

Silver also made a distinction between major international corporations such as MGM that are diversified across numerous industries and smaller companies that concentrate solely on sports gambling.

“As we think about the right way to proceed, there may be differences between a larger entertainment company and a brand that is specifically focused on sports betting,” he said.