Vegas league moves to bring ‘sports betting out of the shadows’

The news surrounding the possibility of two major sports leagues’ franchises soon being based out of Las Vegas has thrown the spotlight on official attitudes towards sports betting not just in Nevada, says Scott Longley, but across the US.

It was the National Hockey League (NHL) which signalled the first definite breach in the wall when it announced in June that an expansion franchise would be based in Las Vegas as of the 2017-18 season.

Yet this news has been eclipsed by the continuing speculation regarding the potential move of the National Football League (NFL) Raiders franchise from its current base in Oakland.

Each move has a symbolic value that is more important than the potential revenue-enhancing effect either franchise will have on the major casinos.

Even as Vegas lays out the red carpet for the NHL, analysts at Fitch Ratings were quick to dismiss the likelihood of the new franchise significantly moving the dial in terms of spending on the strip from visitors or the local market.

“We don’t feel the NHL expansion team will drive material growth in visitation or spending for the strip,” says Michael Paladino, managing director of corporates at Fitch.

“The team’s aggregate season home attendance of 717,500 is about 2% of total annual visitation to Las Vegas; however, some of the attendance will come from locals or will displace other events such as concerts.”

The Raiders move would plausibly be more of a big deal in terms of headlines, although with only eight home games visitation would likely be lower than the NHL figure.

Moreover, the proposed visitor tax that would be levied to part-fund any stadium development will be a drag on the bottom lines of the casino operators.

As a marker for the potential expansion of sports betting in the US, though, these major league moves are much more significant.

“It signals a growing shift in acceptance for a legal, regulated sports betting market,” says Steve Doty, director of media relations at the American Gaming Association (AGA), who points out that Major League Baseball’s commissioner Rob Manfred has gone on record suggesting Vegas could be a viable option for a baseball franchise in the future.

“There is positive momentum building for a regulated market that will bring fans closer to the game,” Doty adds. “The AGA believes it’s time for a fresh look at sports betting that recognises fans’ desire for greater engagement with the sports.”

The AGA recently organised a law enforcement summit in Washington DC, which involved, among others, sports data and integrity company Genius Sports. Mark Locke, its chief executive, suggests there has been a softening in the tone of the debate in the US, largely as a result of the sports leagues embracing Vegas as a franchise destination.

“This does present a unique opportunity for the US leagues to revisit the issue and consider some of the unintended consequences of the current sports betting laws such as the size, scope and the dangerous ramifications of the illegal betting market in the US,” he says.

PASPA control
The AGA has been much more vocal in recent months on the dangers posed by allowing an illegal sports betting market to continue to flourish. The talk now is of a black market worth upwards of US$150bn and of how a ‘rational’ approach to sports betting can protect the integrity of the sports and provide protections for consumers.

To this end, the AGA has been researching options at both state and federal level and promoting its case publicly in tandem with other stakeholders including gaming leaders, law enforcement officials, regulators, legislators and the professional sports leagues.

However, even the AGA admits it is not strictly its own efforts – or indeed the news from Nevada – that are pushing the issue of sports betting to the top of the agenda.

Rather, it is the ongoing debate over the status of daily fantasy sports (DFS) which has unexpectedly promoted the issue of the status of sports betting in many state legislatures.

While sports betting is outlawed at a federal level and only legal in some form in four states (Nevada, Delaware, Oregon and Montana), fantasy sports received a carve-out from the UIGEA legislation in 2006.

Its sudden rise to prominence under its daily guise has caused much confusion, not only among the regulators and legislators but also among the sports bodies which are heavy promoters of (and in some cases investors in) the leading DFS providers.

The high-profile nature of DFS — in terms of advertising spend operators such as FanDuel and DraftKings have made quite a splash in the past two years or more – has seen the debate over the legality of sports betting become a mainstream issue.

“It’s been a gift for advancing the issue of sports betting,” says Doty. “Clearly, fans want to engage more closely with players and teams.” 

More than that, though, the arguments regarding whether DFS represents a game of chance or a game of skill – a key debate when it comes to the legality of betting in the US – has seen regulators wrestling over definitions and come up with a variety of answers.

As Locke says, DFS has “helped muddy the waters”, particularly with regard to the key piece of relevant federal legislation, the Professional and Amateur Sports Protection Act (PASPA) of 1992.

This is the law that specifically bans sports betting in all but the aforementioned states and it is currently being challenged in a lengthy court battle between the state of New Jersey and the major sports bodies.

The final decision of the Third Circuit of Court of Appeals in Philadelphia is eagerly anticipated (and way overdue) but could open up not just New Jersey but also other states, which might look to follow in its wake.

Doty says whatever the decision in Philadelphia, the AGA will “assess the implications and determine the best path forward for the industry”. But he is clear that the arguments about regulated markets are getting across.

“Nothing threatens the integrity of sports more than a shady, illegal and growing sports betting market,” he says. “In contrast, as we’ve seen work effectively in Nevada and in Europe, a transparent, regulated market helps to detect suspicious activity, and report it to law enforcement and leagues.

“It’s clear that momentum is building among key stakeholders, including law enforcement (more than 30 gathered at our Law Enforcement Summit in June), sports leagues and elected officials.

In June, the US Conference of Mayors adopted a resolution that advocates for a fresh look at sports betting in the US.”

Back in Vegas, Joe Asher, the chief executive at William Hill, is champing at the bit to welcome the Raiders in particular. “If they move here, it will be a home run for the Raiders and for the city,” he says. “What’s good for Las Vegas is good for William Hill, so we hope it happens.”

But at a wider level, he also hopes the sports bodies will now also consider lobbying Congress to consider repealing PASPA, a law which has “clearly failed”.

“It's their product, and they, like we, have an overriding need to protect the integrity of the games,” he says. “That can be done only through bringing sports betting out of the shadows and into the sunlight, and properly regulating it as is done in Nevada.”