MLB pushes ‘royalty fee’ agenda at G2E

The MLB’s Kenny Gersh told delegates at G2E this week that he was surprised by the gambling industry’s “pushback” to the fee. Scott Longley reports.

The case for a “royalty fee” for the US sports leagues was promoted by an executive representative from Major League Baseball (MLB) as the subject of integrity and data fees was once again discussed at this week’s G2E in Las Vegas.

The attitude of the major sports leagues to the advent of the new era of regulated sports betting in the US has been a hot topic all week.

Kenny Gersh, executive vice president with the responsibility for gaming at the MLB, said he was surprised by the vehemence of the “pushback” on the issue of integrity and data fees on the part of the gaming sector, particularly with regard to in-play betting data.

He also suggested the leagues’ position has been misrepresented over exactly what they are asking for. “There is a lot of misinformation,” Gersh said. “We don’t call it an integrity fee. We call it a royalty. We’re talking about a quarter point (0.25 percent).”

Yesterday on the same stage, David Rebuck, director at the New Jersey Division of Gaming Enforcement attacked the leagues over their continued efforts to get integrity fees included in state legislation.

He said the integrity fee issue as “losing steam.”

Getting their due
However, Gersh made the argument for why he believed the leagues should get some financial recompense for the betting that will take place on their games in regulated jurisdictions in the US.

“You guys (the gaming operators) get the right to make money from sports-betting and everyone then thinks that will have an effect on MLB,” he said. “We’re given no choice in that whatsoever, and we have to deal with it. So to grant someone the opportunity to make money off our sport, we think we should be involved in that.”

Sharing the stage, Sara Slane, said the leagues were effectively asking for a cut of the profits “without any of the risk” of running a sportsbook. “This is the sticking point right now,” she added.

One potential route out of the impasse cold come via the already in place federal tax structure that applies to sports betting.

Slane said a federal tax was “already there and is in place. “Maybe that is something we can work on together.”

Earlier in the session, Gersh said that the MLB had been preparing for the day that PASPA was struck down for some years and that the sports saw opportunities from encouraging in-play betting. “We’re focusing on our data feeds, to capture what is happening on the field of play and to create new ways to bet,” he said. “Mostly that is in game.”

Stephen Master, now a consultant and previously an executive at consumer research company Neilsen Sports with a stint at the NFL, said that surveys he had conducted on behalf of the AGA showed the degree to which in-play betting would be seen as an attractive product to the key 18-34 audience.

“For gaming to really take off you are going to need really good mobile apps,” he said. “The 18-34 audience are sports gamblers – 41%. That’s a really valuable audience. This is a great opportunity to engage that younger audience. For the first time, this demographic spends more time on the phone than watching TV.”

Gersh agreed. “Baseball is perfectly set up for an in-play betting sport,” he said. “It’s set up as a series of discrete events. Each one will have an outcome, a betting opportunity.”

He pointed out that the royalty fee as proposed by the MLB would effectively compensate the sport for the money it has invested in data tracking and collection systems. “We’ve spent millions of dollars installing cameras and radar to track everything that’s happening on the field of play,” he said. “That was done to tell stories about what was happening.”

“As you are making the in-game bets, you want that one true source of data and we’re only going to provide that the legal regulated operators. The offshore books will have to watch that on TV. We will be delivering that data in nearly real-time for the people to create the odds. It is a regulated industry.”

In response, Slane repeated the AGA’s position that the leagues would be recompensed for their investment in data via commercial partnerships. “We just don’t think that the data usage should be mandated by the statute when it can be done by sponsorship,” she said.