NBA Intends To Take A 1% Cut, Or 'Integrity Fee,' If Sports Betting Is Legalized

Legalized sports betting in the United States has been talked about for quite some time, but the reality of it coming to fruition took one step closer Wednesday.

At a testimony in front of the New York State Senate committee, an attorney for the NBA said the league wants more widespread access to gambling for its fans under a legalized framework, including smartphones and kiosks outside of casinos and racetracks.

The league representative said the NBA wants to take 1 percent rake of every bet made involving its teams, dubbed an aptly named "integrity fee." The NBA was the only major professional league present at the hearing.

Understandably, the issue sparked some strong reactions.

Small Price To Pay

"It is interesting that the NBA seeks a 1 percent fee, labeling it as an ‘integrity fee,’ whereas the NBA currently takes no such fee for bets involving its teams where such bets are legalized in Nevada," Darren Heitner, founder Heitner Legal and Dynasty Dealings told Benzinga. "As such, it is a rather blatant effort by the NBA to justify what is in essence a mere windfall it hopes to receive from a legalized, regulated sports betting environment. Ultimately, it would be a small price to pay by advocates for legalized sports betting if it means having the league's support."

Short Sighted?

Zack Ward, co-founder of All-Sports Market, is an advocate of using professional sports teams as an investment tool instead of for gambling. Ward was behind the Sports Integrity Protection Amendment, a Constitutional amendment initiative to create legal alternatives to sports gambling through regulated sports financial markets.

"It is unfortunate that the NBA is so short-sighted," Ward told Benzinga. "The mere presence of an ‘integrity fee’ admits unsolvable serious issues with expanded gambling. This is not a solution -- This is a payoff to justify the damage done to the integrity of the game and the fans."

Others have praised the league for taking advantage and capitalizing on what some have seen as an inevitable progression towards of regulated sports betting now that Nevada will soon have two professional sports franchises. Mix in the relative apathy towards long-perceived vices and it's a matter of time until professional leagues facilitate gambling.

A poll conducted by the Washington Post in 2017 showed that for the first time ever, a majority of Americans approve of legalized sports betting.

Piece Of The Action

"Smart move by the NBA taking the lead on creating a profit center from gambling," Danny Turek, a California-based attorney, said. "The Supreme Court decision in Christie v. NCAA could have a big impact on the NBA's ability to do so. There is no doubt that the legal teams of the MLB, NFL, and others are keeping a close eye on the NBA's posture and the Christie decision."

Andrew Zatlin, Editor of MoneyBallEconomics, believes this is an opportunistic move to capitalize on an untapped market at a time when the casual fan experience is getting far too costly.

“The value proposition is maxed from a consumer standpoint," Zatlin said. "I think you are seeing that in the form that most seats at games are now paid by corporations, because individuals can no longer really afford them. There is a price sensitivity that’s been hit. Ultimately it’s about 'we can't grow the pie anymore, but we have a base of people who we haven’t tapped into who are spending the money and that is the gambling.'"

"You got to love the spin by the NBA, calling it an ‘integrity fee.' It's low hanging fruit and they want a piece of the action,” he said.

The Supreme Court decision is expected no later than June.

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