The NBA announced Tuesday that it has entered a multi-year partnership with MGM Resorts to be the league’s first official gambling partner.
This is interesting, to say the least. With sports gambling recently becoming more accepted in the United States, to the extent that the Supreme Court recently struck down a federal law banning sports betting in most states, the NBA has been fairly proactive in positioning itself to take advantage and, to hear them tell it, insure the integrity of the game amid a likely spike in betting volume. Commissioner Adam Silver has been fairly outspoken about the league’s intention to have a voice in the process, and their partnership with MGM here is the first of its kind for any major U.S. sports league.
In a release, the NBA revealed that MGM will use official NBA data and logos on their betting platform and will work with the NBA to prevent fraud and game-fixing. There are also plans for a coordinated marketing plan, and MGM will share real-time data with the NBA. The agreement is not exclusive, however, and the NBA could look to sign deals for its data and other properties with other betting operations. That makes sense from both a financial perspective and a manipulation-prevention perspective.
“As the landscape for sports betting in the U.S. continues to evolve at a rapid pace, MGM Resorts is a proven gaming leader for us to work with on this groundbreaking partnership,” said Silver. “Our collaboration will result in the best possible gaming and entertainment experience for consumers through the use of accurate, real-time NBA and WNBA data, and our collective efforts to maintain and enhance the integrity of our games.”
Silver admits that the integrity fee is an uphill battle at the state level. This deal accomplishes a lot of the other things the league wants: data sharing between operator and the league, sets a precedent, and of course, the money @darrenrovell reported.
— Hardwood Paroxysm (@HPbasketball) July 31, 2018
The league is still pursuing the integrity fee at the state level (including a 0.25 percent level vs. the one-percent first discussed). This seems more like another pathway pursuit of what they want.
— Hardwood Paroxysm (@HPbasketball) July 31, 2018
The financial side is of far more interest here, as the NBA is seeking an integrity fee for each bet placed on its games. How, exactly, that would work remains very unclear, especially with no federal laws regulating betting at present. That might leave the NBA to work at the state level and piece together a framework on the fly as more states legalize sports betting (there are currently only four; New York’s framework didn’t come to pass in June but was probably the closest to an ideal framework for the league, as evidenced by their lobbying). NJ sports betting is one area where there’s already been rapid expansion, with the Toronto Raptors’ championship odds jumping to +1200 since their big trade.
Should the NBA succeed in creating an income stream from legalized sports betting, it would stand to be a fairly significant source of Basketball Related Income, which could introduce another spike to the salary cap in the coming years. There was no mention of the NBPA in the statement released from the league, and the union figures to want to be a partner as the NBA determines the rules, regulations, and definitions of revenue from the expansion into sports betting.
Adam Silver says NBA betting handle was estimated to make deal with MGM, but NBA won't get cut of handle on games
— Ben Fawkes (@BFawkes22) July 31, 2018
The speed with which all of this unfolds and how quickly the NBA can begin claiming actual revenue from sports betting figures to have a profound impact on the short- and medium-term future of the Raptors, who project to be well into the luxury tax again next year if they’re able to retain Kawhi Leonard. The 2019-20 salary cap might be too close a target for sports betting revenue to have bumped the cap higher and aid the Raptors, but if the competitive window remains open, with a Leonard re-up or otherwise, a higher cap would figure to benefit them. (In the shorter-term, Darren Rovell reports that the deal as currently constructed – for data, names, logos, etc – is worth more than $25 million over three years, which even as a small sum should help a bit.)
