New Jersey Sports Betting Bill Features An Integrity Fee

New Jersey’s quest for legalized sports betting seemingly has an inexhaustible supply of twists, turns, and surprises.

The latest example comes courtesy of a trio of the state’s own legislators. These lawmakers are Assemblyman Eric Houghtaling, Assemblywoman Joann Downey, and Assembly Appropriations Chair John Burzichelli.

The three Democrats are co-sponsoring a new sports betting bill that actually includes a provision for an integrity fee. That’s particularly surprising, considering the resistance to the idea from New Jersey lawmakers.

Recent reports indicate representatives from the NBA and MLB met with New Jersey lawmakers about that very issue on multiple occasions and were firmly rebuffed. After years of doing battle with the leagues in court and reportedly racking up almost $9 million in legal bills, the Garden State understandably isn’t in a very giving mood when it comes to potential future sports betting revenue.

Creative compromises in legislation draft

The new bill actually takes more of a compromising position. However, it still avoids giving in to the leagues’ ideal scenario of a 1.0 percent integrity fee on all handle. In fact, the authors of the proposed legislation deserve some style points for creativity. While the bill proposes an “integrity fund”, it won’t automatically serve as a till for the leagues to dip into.

Rather, the state will control the purse strings, so to speak. Each league can seek reimbursement (via a claim form) for costs associated with “ensuring the integrity of its sports events with respect to sports wagering operations in New Jersey.” The final arbiter of whether any funds are disbursed will be New Jersey’s Attorney General.

No shortage of fees for prospective licensees

There are plenty of fees for sportsbook licensees enumerated in the bill. A portion of these fees will keep the aforementioned integrity fund flush. These include:

• Gross revenue from sports wagering at casinos and tracks will be taxed at a rate of 8.0 percent.
• Online sports betting revenue will be taxed at a rate of 12.5 percent.
• An initial $100,000 non-refundable deposit is required with each application for a sports wagering permit. That money is then credited towards the initial issuance fee if application is approved.
• Initial issuance fees for sports wagering permits of no less than $500,000.
• Annual renewal fees for said permits of no less than $250,000.
• Annual “integrity fund” fees equal to the lesser of $7.5 million or 2.5 percent of gross gaming revenue.
• An annual fee of $500,000 to the State General Fund for appropriation by the Legislature to the Department of Human Services.Of that, $250,000 will go to the Council on Compulsive Gambling of New Jersey and $250,000 shall be used for compulsive gambling treatment programs in the state.

Other components fairly standard

The non-financial aspects of the legislation appear to be fairly standard. They include:

• New Jersey’s Division of Gaming Enforcement would be the intrastate regulatory body for sports betting.
• Any Atlantic City casino or racetrack can apply for a sports wagering permit. With that, they can offer the activity via a physical sportsbook and through mobile devices. However, another provision sets forth the requirement that sports wagering permit holders must have a brick-and-mortar “sports wagering lounge” within their facility to also be able to offer online betting.
• The New Jersey Racing Commission would be involved in approving the operation of a sportsbook at a track or “any agreement between a casino and a racetrack to jointly operate a sports pool.”
• Any college sports that take place within the boundaries of the state — as well as any games involving New Jersey-based schools that take place outside the state — are off-limits to wagers.

The bill undeniably has some surprising aspects. However, it does plant the seed for a potential compromise between New Jerseyand the leagues. Naturally, as with any other piece of proposed legislation, there will likely to be plenty of modifications if it’s to make a serious push for passage.

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