New Jersey Fights Back Against Leagues’ Proposed ‘Integrity Fee’

As integrity fees gain traction among sports leagues, New Jersey is looking for a compromise that would allow the state to keep more of its sports betting income for itself.

Leagues like the National Basketball Association (NBA) and Major League Baseball (MLB) would like to receive a 1 percent “integrity fee,” where part of the money would go toward keeping sports betting fair. More importantly, it would help such leagues profit significantly from the proliferation of legal US sports betting.

Now, New Jersey lawmakers have released a new bill that incorporates a proposed integrity fee. According to NJ Online Gambling, the bill’s twist requires operators to pay the league 2.5 percent of gross gaming revenue, with an upper limit not to exceed $7.5 million.

Additionally, the bill has a unique twist that requires leagues to prove that this money really is going toward sports betting regulation to receive their integrity fee. According to the bill:

“[A] sports governing body whose sports events are wagered upon in New Jersey casinos or racetracks may seek reimbursement for expenses incurred relative to ensuring the integrity of its sports events with respect to sports wagering operations in New Jersey by submitting a claim for such compensation to the Attorney General. Such claims shall be paid exclusively from available funds in the Sports Wagering Integrity Fund.”

Leagues like the NBA have been sending lobbyists to state legislatures around the country, including New Jersey’s, to argue that as the organizers of the games people would be betting on, they deserve a cut of the proceeds. They may be unsatisfied by New Jersey’s effort to give them a smaller piece of the pie.

Even though sports leagues are increasingly enthusiastic about the financial implications of an integrity fee, they have historically been the most vocal opponents of legal sports betting. The NFL and MLB are amongst the leagues asking the Supreme Court to uphold the ban against sports betting in the soon-to-be-decided case Murphy v. NCAA. Both the NBA and MLB are opposing a legal sports betting bill in Iowa because it lacks an integrity fee, while at the same time they are sending lobbyists to states like New Jersey. This behavior has caused them to earn some detractors, some of whom have strong influence in the sports betting sector.

Dennis Drazin, CEO of Monmouth Park, New Jersey’s premiere horse-racing track, said sports leagues “have some nerve” to try to influence the way states regulate sports betting.

“The leagues have many self-inflicted integrity concerns, but NJ should not provide them an opportunity to receive revenue in the form of an integrity fee to police their games when they have the same obligation given the enormous illegal market which already exists,” Drazin told Legal Sports Report in an interview.