In the wake of a landmark Supreme Court ruling that gives states the green light to legalize gambling, the NBA on Tuesday became the first major U.S. sports league to ink a deal linking it with an official betting partner.
In an announcement made this afternoon at the St. Regis New York, NBA commissioner Adam Silver said the pro hoops league has signed a multi-year pact with MGM Resorts International that gives the Las Vegas-based casino colossus the right to use use official NBA data and branding across its brick-and-mortar and digital sportsbook operations.
The MGM deal also includes the use of data and team logos culled from the WNBA.
"This is an industry and an area that we've been discussing a lot over the last several years, and of course, with the Supreme Court's repeal of PASPA [the Professional and Amateur Sports Protection Act of 1992], it's all come to a head," Silver said. The NBA's top exec has long been an advocate for legalized sports betting; back in 2014, Silver wrote an editorial in the New York Times in which he encouraged the federal government to allow states to offer a highly regulated form of legitimate wagering, one that would include minimum-age verification and the monitoring of any unusual activity in the betting lines that might indicate the outcome of a game was being manipulated by outside interests.
While the Supreme Court ruling is unlikely to give rise to a federal gambling bill, the state-by-state approach should help Silver and other league commissioners develop an entirely new revenue stream that acknowledges (and capitalizes on) Americans' very real interest in betting on sports. (Some $1.4 billion to $1.5 billion in wagers were placed on NBA games last year in Nevada casinos alone.) That said, the MGM deal is not constructed around a per-wager payout system, so in this case the NBA will not be receiving a percentage on each bet made, or a "vig." In other words, rather than wetting its beak with a cut of the gambling action, the league will be compensated for its data and intellectual property.
Future gambling partnerships may include a 1 percent vig on each wager, which the NBA characterizes as an "integrity fee." The money the league looks to siphon off from future gambling transactions would in part be used to invest in additional compliance and enforcement measures designed to mitigate the risk of any extracurricular funny business. The NBA cannot be careful enough about ensuring that its games are all on the level; in 2008, former referee Tim Donaghy was sentenced to a 15-month prison sentence after being found guilty of manipulating point spreads in order that he might cash in on his own bets.
In a tacit acknowledgment of the concerns a rogue element like Donaghy can stir up among fans and law enforcement alike, Silver and MGM Resorts International Chairman-CEO Jim Murren combined to utter the word "integrity" no fewer than a dozen times over the course of the 15-minute press conference.
As much as a federal push to legalize sports betting would likely help the NBA advance its plans to exact a commission on each wager, Silver acknowledged that the league will steer by the state-by-state road map at its disposal. "We decided here, rather than sort of re-litigating the integrity fee, which is still being hotly discussed state by state, let's find an approach which is unique to us and where we both feel we're being fairly treated," Silver said of the league's proposed compensation structure.
To mix a sports metaphor, it's early innings for the NBA, and its first gambling deal (the pact with MGM is non-exclusive) reflects the pioneer spirit of the partnership. "I do think we are being adequately compensated," Silver said. "There's a recognition here that it's a leap of faith on both sides. It's a deal moderate in length where I think we can both step back and assess as we go and say, 'Is this working? Is this deal fair? Are we providing the consumers with the right type of experience?'"
That MGM patrons will have access to officially-sourced NBA data is of particular interest to the millions of fans who bet beyond the parameters of point spreads and the over/under. Citing data the NBA receives from bookmakers that take action on its games in Europe, Silver last year revealed that 85 percent of NBA bets are "in-play." In other words, rather than simply betting before the tipoff and then sitting back to watch the game unfold, European bettors are wagering during games on a constant stream of variables: free throws, quarter scores, three-point shots and every other data point you can think of. If their American cousins are just as hopped-up on dynamic wagering, MGM is going to enjoy a huge advantage over its rivals.
Terms of the deal were not disclosed, although ESPN's gambling vertical, Chalk, has reported that its worth upwards of $25 million and extends through summer 2021.
In the near term, MGM will be allowed the unprecedented luxury of posting NBA team logos on the boards in its sportsbooks in casinos throughout the U.S. as well as on its PlayMGM app, which is available in states where online sports wagering is legal. At present, Nevada and New Jersey are the only states where placing a digital bet on the outcome of a sporting event may be done on the up and up.
While this first step in legitimizing wagering on NBA games is currently limited to the two legacy gambling destinations and Delaware—the sleepy desert oasis of Las Vegas became a magnet for suckers and degenerates of all stripes back in 1931 when Nevada elected to legalize gambling as a means for the state to stay solvent in the midst of the Great Depression, and Jersey followed suit with the far-fewer-frills Atlantic City offerings in 1974—the business of betting on basketball is likely to grow at an exponential rate as more states rubber-stamp the practice. Legislatures in five states, including New York and Pennsylvania, have bills in place that could allow for the fairly rapid adoption of legal sports wagering, and 14 other states are in various stages of framing formal proposals.
New Jersey's first legal sportsbooks threw open their doors on July 14, exactly one month after the highest court in the land issued its 6-3 ruling to allow the states to legalize sports wagering at their discretion. Since then, four brick-and-mortar sportsbooks have begun servicing gambling enthusiasts in the Garden State, a roster that includes the newly upgraded facility inside MGM's Borgata Hotel & Casino in Atlantic City.
Toward the tail end of today's press conference, MGM's Murren said the company would begin accepting mobile sports wagers in New Jersey via its PlayMGM app starting this week. This makes MGM the first operator to roll out online sports betting in the state since the practice was made legal, a move that is expected to entice other in-state facilities to fire up their own mobile gambling services in the coming weeks.