Professional sports leagues long resisted sports gambling in the United States. However, certain leagues eventually softened their position when individual states began pushing for sports betting.
The MLB, NBA, and NHL even came to support New Jersey and other states in their quest to get PASPA repealed. The Supreme Court finally repealed PASPA in May 2018, thus lifting a federal ban on sports wagering.
But support from pro leagues doesn’t come without a price. Sports organizations now want a cut of bookmakers’ profits.
Their latest angle is to charge sportsbooks for using “official league data.” I’ll cover more on this term along with the battle between bookmakers and leagues over the matter.
Sports Leagues Initially Sought an Integrity Fee
The US sports gambling market is expected to be a huge boon. Projections show the market earning $5.7 billion by 2024.
Some states are already capitalizing on the opportunity. New Jersey bookmakers collectively pulled in $300 million in 2019.
Professional sports leagues are more welcoming of the betting industry now. Outside of the NFL and NCAA, leagues no longer fear gambling corruption like they once did.
But again, these same organizations want to profit from the wagering action too. Their initial angle was to receive an “integrity fee.”
An integrity fee amounts to bookmakers giving each major sports league a percentage of their profits. These payouts would help leagues monitor for corruption and prevent point-shaving scandals.
The NBA was especially enamored with the prospect of an integrity fees. They wanted to receive 1% of the total betting handle in each state.
Perhaps league officials were ignorant on how handle doesn’t represent sportsbooks’ revenue. Instead, it only refers to the total betting action that bookmakers handle.
Assuming each major pro sports league (MLB, NBA, NFL, NHL) and the NCAA took 1% of the handle, they’d quickly bankrupt sportsbooks. The latter would be giving away all of the juice they earn.
Sports leagues eventually realized how ridiculous this notion was and gave up on integrity fees. They’ve since shifted their focus towards getting paid for the use of official league data.
What Is Official League Data?
Official league data refers to all statistics, outcomes, results, and other data obtained by sports leagues and their approved partners.
Any company can compile stats and results related to a particular sports league or contest. However, not all such companies have obtained approval from the league(s) in question.
Official league data doesn’t concern standard moneyline, point spread, and totals (over/under) wagers placed before a contest begins. Instead, it only applies to live wagering and prop bets.
That said, certain states have specifically distinguished the two types of bets in their sports gambling laws. They include Tier 1 and Tier 2 wagers:
- Tier 1 – A bet that revolves around the final score of a sporting event and is made before the match begins.
- Tier 2 – Any wager that doesn’t fall into the Tier 1 category.
Illinois and Tennessee are the only states so far to make the distinction between Tier 1 and 2 wagers. They require bookmakers to use official league data when offering Tier 2 bets.
Sports Leagues Want Bookmakers to Use Official League Data for Everything
Tennessee and Illinois sportsbooks must agree to deals with sports leagues if they want to use official data. Lawmakers in both states want to ensure that bookmakers are basing live and prop bets on completely legitimate statistics.
However, these mandates don’t quite satisfy professional leagues. Sports organizations want bookmakers to use official data on both Tier 1 and Tier 2 wagers.
The leagues see an all-encompassing mandate as the best way to benefit financial from gambling. However, they may not see any benefits from most states.
Nevada, which was grandfathered into PASPA, has been offering sports betting for decades. They’ve never required sportsbooks to use official data in any capacity.
Plenty of other states are following Nevada’s lead. They don’t see the need to force their operators to use the league’s data.
What Does Official League Data Cost?
Sports organizations don’t have a set price for their data. Instead, they negotiate with sportsbooks for what they deem to be a reasonable price.
Both Illinois and Tennessee demand that such data be made available at “commercially reasonable terms.” Their sportsbooks can avoid using official league data if they prove that leagues are charging too much.
No bookmaker offering Tier 2 bets in either state has reportedly gotten out of paying for data. Therefore, the term commercially reasonable terms may hold little-to-no weight.
Leagues’ asking prices for official data isn’t available either. Rumors suggest that they may be asking for 0.25% of the handle on their individual league.
If true, a bookmaker that handles $100,000 worth of NBA bets in a day would need to pay $250 to the NBA. Assuming they earned $5,000 worth of juice, they’d be giving the league 5% of their basketball-related profits.
Such payments would add up over time. However, these rumored costs sound much more reasonable than the integrity fees worth 1% of the handle.
Does Official Data Offer Benefits Over Unofficial Data?
Sports organizations have yet to prove that official league data offers marked improvements over the unofficial variety.
Leagues claim that they’re able to provide faster data thanks to the time and financial investments they’ve put into collecting stats. As the MLB and NBA once argued, their official numbers provide the only way to guarantee a fair and accurate gambling market for fans.
Again, though, Nevada has run sports wagering for years without requiring authentic league data. So far, their markets haven’t come under any major scrutiny when doing so.
States that want the absolute most-accurate data regarding live wagering and/or prop betting may favor official numbers. But most states so far don’t see the value in making such requirements.
Do Any Betting Companies Actually Use Official Stats?
As explained above, official sports data hasn’t proven tremendously valuable. Nevertheless, some well-funded companies have chosen to use it across one or more sports.
These bookmakers must agree to partnerships with bookmakers in order to offer such data. Here are some of the companies that have agreed to such deals and are using official numbers:
- Caesars – NFL
- DraftKings – MLB, NFL
- FanDuel – MLB, NBA, NHL
- MGM Resorts – MLB, NBA, NHL
- William Hill – NBA, NHL
These are essentially the biggest operators in the US market so far. They have funds to spare when it comes to paying leagues.
However, smaller operators will be much less likely to work out such deals unless legally obligated to do so.
Are Sports Leagues Fighting a Losing Battle?
The main argument for official league data is that it provides a fairer and more-accurate betting market. Leagues claim that their statistics and outcomes are the only reliable numbers.
Most lawmakers aren’t quite so convinced. Only two states have mandated that sportsbooks use official data for Tier 2 offerings (live and prop betting).
Politicians don’t seem in a hurry to force their operators into deals with pro sports leagues. They may see such mandates as ultimately hurting bookmakers.
The latter aspect becomes a problem for state coffers. Sportsbooks that must share revenue with states may eventually struggle to cover taxes and licensing fees.
In the end, most don’t see a need for sports organizations to share in the betting pie. They already earn enough money through television deals and merchandising.
They’ve tried desperately to find a way that they can profit off sports gambling. The 1% integrity fee was a foolish way to go about the matter.
After the integrity fee failure, they’ve pivoted with a more-realistic idea. But leagues have yet to show that official league data offers the value they propose.
Many want to share in the inevitable rise of sports gambling in America. Leagues have proven no different by requesting integrity fees and, more recently, official data deals.
They claim that official stats, results, and outcomes will create a fair wagering market. As a result, leagues want to get paid for offering this data.
Tennessee and Illinois have seen value with official league data when it comes to prop bets and live wagering. But these mandates aren’t good enough for sports leagues—they want official numbers used in every type of bet.
No state appears ready to require league data to be used for all wagers. Most are simply following Nevada’s path and making no official league data mandates at all.