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where are the boys?
Leagues and States Make Grab for
Claude Solnik
Long Island Business News
2150 Smithtown Ave.
Ronkonkoma, NY 11779-7348
Home > LI Confidential > Stop scratching on holidays
Claude Solnik
Long Island Business News
2150 Smithtown Ave.
Ronkonkoma, NY 11779-7348
Home > LI Confidential > Stop scratching on holidays
Stop scratching on holidays
Published: June 1, 2012
Off Track Betting in New York State has been racing into a crisis called shrinking revenue. Some people have spitballed a solution: Don’t close on holidays.
New York State Racing Law bars racing on Christmas, Easter and Palm Sunday, and the state has ruled OTBs can’t handle action on those days, even though they could easily broadcast races from out of state.
“You should be able to bet whenever you want,” said Jackson Leeds, a Nassau OTB employee who makes an occasional bet. He added some irrefutable logic: “How is the business going to make money if you’re not open to take people’s bets?”
Elias Tsekerides, president of the Federation of Hellenic Societies of Greater New York, said OTB is open on Greek Orthodox Easter and Palm Sunday.
“I don’t want discrimination,” Tsekerides said. “They close for the Catholics, but open for the Greek Orthodox? It’s either open for all or not open.”
OTB officials have said they lose millions by closing on Palm Sunday alone, with tracks such as Gulfstream, Santa Anita, Turf Paradise and Hawthorne running.
One option: OTBs could just stay open and face the consequences. New York City OTB did just that back in 2003. The handle was about $1.5 million – and OTB was fined $5,000.
Easy money.
Off Track Betting in New York State has been racing into a crisis called shrinking revenue. Some people have spitballed a solution: Don’t close on holidays.
New York State Racing Law bars racing on Christmas, Easter and Palm Sunday, and the state has ruled OTBs can’t handle action on those days, even though they could easily broadcast races from out of state.
“You should be able to bet whenever you want,” said Jackson Leeds, a Nassau OTB employee who makes an occasional bet. He added some irrefutable logic: “How is the business going to make money if you’re not open to take people’s bets?”
Elias Tsekerides, president of the Federation of Hellenic Societies of Greater New York, said OTB is open on Greek Orthodox Easter and Palm Sunday.
“I don’t want discrimination,” Tsekerides said. “They close for the Catholics, but open for the Greek Orthodox? It’s either open for all or not open.”
OTB officials have said they lose millions by closing on Palm Sunday alone, with tracks such as Gulfstream, Santa Anita, Turf Paradise and Hawthorne running.
One option: OTBs could just stay open and face the consequences. New York City OTB did just that back in 2003. The handle was about $1.5 million – and OTB was fined $5,000.
Easy money.
New Sports-Betting Cash
Supreme Court ruling on sports gambling is expected to lead to a frenzy of negotiations on tax rates and possible ‘integrity fees’ by leagues
The National Basketball Association and other leagues have proposed their own taxes related to gambling to some state legislatures that could be as high as 20% of revenue. PHOTO: MADDIE MEYER/GETTY IMAGES
Now that the U.S. Supreme Court has paved the way for states to allow sports betting, professional sports leagues, gambling operators and state governments are vying for their share of potentially billions of dollars of new revenue.
Monday’s ruling is expected to set the stage for a frenzy of negotiations in statehouses across the U.S. on tax rates and possible charges by leagues, all of which could determine how quickly sports betting takes off in newly regulated markets. Even before the Supreme Court decision, betting operators had been warning that some states and sports leagues have proposed tax structures that would make it difficult for legal sports betting to compete with offshore, black-market operators that don’t pay any taxes.
Pennsylvania last year passed legislation to allow sports betting, but proposed a 36% tax on revenue from sports betting in the state, far higher than a state rate of 6.75% in Nevada, one of the few legal sports betting markets until Monday’s decision.
In addition, the National Basketball Association and Major League Baseball have discussed fees with some state legislatures that could be as high as 20% of revenue.
A Piece of the Action
Higher tax rates on sports betting revenue could lead to lower overall economic impact.
Source: Oxford Economics, commissioned by the American Gaming Association
The NBA, for example, has discussed what it calls an “integrity fee” with Connecticut legislators and others for 1% of all money wagered, which would amount to about 20% of what sports betting operations typically get back in revenue. The league also said it would support bills with a fee of 0.25% of wagers.
“It seems like everybody wants to take a piece of the thin-margin business we’re already in,” said Vic Salerno, a veteran Nevada sports book operator who is chief executive of US Fantasy Sports, a daily fantasy and sports betting operation.
State lawmakers are naturally trying to get the best deals for taxpayers. Sports leagues are calling their proposals integrity fees because they say they are designed to help ensure gambling doesn’t lead to improprieties in the games.
Speaking at The Wall Street Journal’s “Future of Everything” festival last week, NBA Commissioner Adam Silver said the proposal is a fair exchange for allowing casinos or other betting outfits to profit from the league’s games.
Related Video
NBA's Adam Silver on Why He Supports Legal Sports Betting
The Supreme Court overturned a federal ban on sports betting in a decision announced Monday. NBA Commissioner Adam Silver explains why that could bring greater transparency and integrity as well as business opportunities. He spoke with WSJ's Jason Gay at the Future of Everything Festival in New York on May 8.
“We are the producers of this intellectual property. The NBA will spend $7.5 billion this year creating this product,” he said. “We should be compensated in some way for the use of our property.”
Bryan Seeley, MLB’s senior vice president and deputy general counsel, said the league has spoken with a dozen state legislatures to request that a fee be included in any potential legislation. MLB has lowered its request to 0.25% of the money wagered from 1%, Mr. Seeley said.
He likens the fee to a royalty payment but said it also reflects increased costs for tracking betting activity and accounts for the possibility of reputational risk to the league.
“The bookmaker who’s on a losing side of a bet on an event that has been fixed could lose thousands, tens of thousands, hundreds of thousands,” Mr. Seeley said. “The hit to our brand and our product is millions or tens of millions.”
Ted Leonsis, owner of the NBA’s Washington Wizards and the National Hockey League’s Washington Capitals, said he believes there should be a “more equitable” way for leagues and teams to benefit from money made off sports betting.
“It’s our content that we’ve sold to ESPN and Turner, who’s now delivering it into the casino, and someone’s betting $1 million based on watching all these games on television,” he said. “The players aren’t sharing in that, the league isn’t sharing in that, the cable providers aren’t.”
Daniel Etna, who has represented teams including the New York Yankees and Mets for law firm Herrick Feinstein LLP, said he understands why sports leagues expect a cut of revenue. But he said it is “first and foremost another revenue spigot for ownership,” rather than a way to cover costs associated with potential integrity issues.
Outside observers say proposed fees from leagues, along with high tax rates in some states, could leave legal bookmakers at a disadvantage to the black market. Chris Grove, managing director at gambling industry consultant Eilers & Krejcik Gaming LLC, said that could show up in the form of worse odds on certain contests, or additional fees that make the product less competitive.
“The money is going to come from somewhere; bookmakers aren’t going to operate at a loss,” he said.
Such an approach could restrict the legal sports betting market before it can get off the ground in some states, said Laila Mintas, deputy president of Sportradar, a Swiss sports data provider that has been working with the NBA and other leagues in anticipation of the Supreme Court decision.
“Everyone is fighting for their piece of the pie,” she said. “But at the end of the day, there’s the risk that the legalized market could be really small.”
Joe Asher, chief executive of William Hill US, part of a major British sports betting operation, said “it’s not going to be easy to move customers from the black market into the legal market,” and that tax rates or league fees could add to the complexities.
“There’s plenty of money to be made by the leagues; we want them to make a lot of money,” Mr. Asher said. “We just need to make sure there’s a healthy ecosystem in place.”
Appeared in the May 16, 2018, print edition as 'Leagues, States Make Sports-Betting Play.'
