West Virginia’s Battle With The Sports Leagues Is Not Over Yet

Prognosticating a Supreme Court decision? Many would term it a fool’s errand. Or perhaps “sucker’s bet” would be the more proper term in this particular case.

Yet an ever-increasing number of states apparently envision a trip to the pay window when the dust settles in Murphy vs. NCAA (formerly Christie vs. NCAA). The landmark Supreme Court case could culminate in the Professional and Amateur Sports Protection Act (PASPA) of 1992 being struck down.

Such a decision would allow states outside of Nevada to at least consider the implementation of legalized sports betting. For states that have already passed legislation, it would enable them to act on it as soon as they deemed fit

West Virginia bill passes the finish line

West Virginia became the sixth state overall to successfully pass a sports betting bill when S 415, which had been sitting on Gov. Jim Justice’s desk for five days, automatically became law on March 9.

The development is the culmination of a years-long history of the state’s support of both legalized sports betting and New Jersey in its ongoing case. West Virginia filed amicus briefs with the Third Circuit Court and State Supreme Court in 2013 supporting the Garden State’s position in its initial legal quest. It did the same with the U.S. Supreme Court in 2016 in the current case.

Some of the principal provisions of the West Virginia Sports Lottery Wagering Act are the following:

• Residents must be 21 years of age or older to place wagers on collegiate and professionals sporting events.
• There is a $100,000 licensing fee that applies to any of the state’s five gaming facilities that wish to offer sports betting.
• Tax on gross gaming revenue is 10 percent
• Online and/or mobile wagering is authorized via the bill
• No integrity fee for the professional sports leagues
• The state’s Lottery Commission will oversee the implementation of all sports betting regulations.

Leagues bristle at absence of integrity fee

Unsurprisingly, the absence of an integrity fee is a point of contention for the sports leagues. Such a fee has been defined by the leagues as one percent of sports betting handle to fund an ongoing system that ostensibly ensures the sport’s games are not compromised by wagering. It’s been further labeled as a royalty for the value that the leagues’ games provide.

Major League Baseball commissioner Rob Manfred levied an array of criticisms at the bill pre-passage. Among them was that the legislation was one-sided. He expressed that it only took the gaming industry’s interest into account, as opposed to that of “all parties”.

Manfred served as the voice of opposition on the sports league’s side of the equation in the case of West Virginia. He actively lobbied through the local media for the inclusion of the integrity fee. He did the same with Gov. Justice, albeit without success.

However, his efforts may ultimately not have been for naught. This, despite the bill already becoming law. Gov. Justice issued a press release last Friday evening in which he clearly extended an olive branch to the major professional sports leagues by coming out in favor of further dialogue regarding the Mountain State working “in partnership” with them.

“After the U.S. Supreme Court issues its decision on sports wagering, to address any provisions of the legislation that might be in conflict, I will ask the Legislature to look at the advantages of partnering with the major sports leagues,” Gov. Justice said. “I believe there could be real value to this partnership. I expect the Supreme Court to rule on this issue in the next few months.

“This approach will allow us to develop a relationship with all the major sports leagues so that it is beneficial to everyone.”

Independent perspective reveals reasonable legislation

Looking through a lens slightly less biased than Manfred’s, the West Virginia Sports Lottery Wagering Act seems level-headed in its pertinent aspects. Its aforementioned 10 percent tax on gross revenue certainly compares favorably to Pennsylvania’s 36 percent. Its $100,000 licensing fee is also dwarfed by the Keystone State’s $10 million point of entry.

The West Virginia Sports Lottery Wagering Act’s seemingly solid foundation and relative ease of passage through both chambers aren’t accidents. In fact, it seems largely a byproduct of the state’s years-long engagement with the subject of legalized sports betting. Moreover, it’s worth noting that the state took an extra – and pertinent – step in its due diligence.

Lottery Commission Director Alan Larrick commissioned renowned industry research firm Eilers and Krejick Gaming last September for a $160,000 study on the potential economic impact of legalized sports betting. That study revealed an eventual $34-$78 million potential windfall from sports betting tax revenues.

Notably, first-year estimates have placed the number at a much more conservative $5 million. The consensus seems to be that the 10 percent tax rate that would yield that figure is equitable. However, the math for gaming operators would change dramatically were the law eventually amended to require an additional payout to the sports leagues.

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