Proposed ‘Integrity Fees’ in Indiana Will Undercut Profitability of Legal Sports Betting

If the Supreme Court decides in favor of New Jersey in the pivotal sports betting case Christie vs. NCAA and determines that sports betting should be legal in all states, state governments and all affected organizations want to be ready to cash in on the potential windfall.

In Indiana, however, it appears that the sports leagues are hedging their bets. Although the sports leagues are the parties opposed to the legalization of sports betting in the Supreme Court case, those in Indiana are getting ready to lose the battle but win the war. In an article on Ifrah on iGaming, attorney George Calhoun points out that legislators in Indiana, supported by entities like the NBA and Major League Baseball, are planning to introduce a bill which will impose a one percent “integrity fee” on betting, payable to the governing sports bodies.

Mr. Calhoun declares that “The proposed fees clearly are an effort by the leagues to benefit from sports gaming. The size of the potential fee is staggering.” For example, if the Indiana law had applied to Nevada in 2017, “that would equate to a $50 million fee to be paid to leagues.”

The article argues that the proposed fee is disproportionately large and will prevent sports books from turning a profit. It cites the American Gaming Association’s statement that “handing sports leagues 20 percent of what’s left over after winnings are paid out undercuts [the industry’s] economic viability. Doing so will ensure the illegal market continues to thrive in the state, and gut the tax revenues available to fund essential public services.”

Instead of encouraging the growth of a regulated industry which could bring jobs, tax revenue and other economic benefits to the state, Indiana’s proposed law will likely discourage competition and enable black market sports wagering to continue.

Plus, the so-called “integrity fee” is actually nothing of the sort, as it undermines “its seeming purpose by making the leagues directly interested in the amounts wagered on their sports. The potential for mischief in such a situation is astronomical.”

To read the full Ifrah on iGaming article, click here.