Ever since the repeal of the PASPA act, it was more than clear that big changes for the betting industry and sports were on the horizon. Even though it seems like sports betting fans would benefit the most, the number of parties who will get their slice of the cake might be higher than you think.
First and foremost, the economy of the U.S will see a significant impact due to the taxes imposed on this business. That being said the height of taxes might have the opposite effect and only result in illegal bookies and websites, trying to get away with tax evasion. Furthermore, these are still the initial steps, so it’s not that easy to prognosticate the exact earnings of each party involved. One thing is certain though, this is uncharted territory, therefore, we can expect that it will be monetized from multiple angles.
You might be thinking how are athletes involved in the whole betting industry when it comes to revenue? Well, if you go on an online version of the betting platform, or an app, or even a physical bet house, what kind of posters/images do you see? That’s right, photos of famous basketball, football, and baseball players are often used as promotional material, and licensing rights to use those images cost money.
Sports Clubs and Leagues
NBA and MLB have both pushed for a so-called “integrity fee” which would entitle them to the percentage of money. What’s the reason behind this? Well, the integrity fee is to ensure that players and clubs are not compromised in the wake of this new change. By receiving a fix portion of funds from betting they will be less likely to be corrupted from third parties. Moreover, this is not a new thing, as it already exists in France and Australia.
The conflict here is that they pushed for the fee to be 1% of the money handled. The reason why 1% is ridiculous is that money handled is a far cry from betting profits. Typically, betting profits are 4 times lower than the money handled, which means that 1% is 25% of the betting profits. For that reason, the integrity fee was reduced to 0.25%.
This is not all, because for betting to work you need quotes, which are derived based on sports data. Sports data is regarded by leagues and clubs as intellectual property as it is gathered throughout the games organized by them. This is exactly the type of taxing system that can result in artificially inflated betting prices, which in term will only result in multiple illegal betting sites and bookies. However, there are independent third-party companies that delve into measuring sports data, so by getting data from them the whole intellectual property dispute can be avoided.
As leagues are unlikely to give up on their share, and as betting operators are not going to get onboard with high taxes, the future of betting industry is still unclear. Wealthy as they may be, leagues, do not have enough funds to fund a court case against every betting operator. So, what if the leagues end up joining forces in order to create a sportsbook based on their own data? If that happens there would be no more disputes regarding the ownership of intellectual property, and bettors would be able to place their bets while making their way through the corridor of the stadium.