The Sham of Integrity Fees in Sports Betting

30 Pages Posted: 25 Apr 2019 Last revised: 2 Dec 2019

See all articles by John T. Holden

John T. Holden

Oklahoma State University

W. Michael Schuster

University of Georgia - C. Herman and Mary Virginia Terry College of Business

Date Written: March 26, 2019

Abstract

Following the Supreme Court’s decision in Murphy v. National Collegiate Athletic Association, states can legalize sports gambling for the first time in more than 25 years. The advent of legalized gambling has sports leagues clamoring for compensation from states that authorize wagers on the particular leagues’ games. Legal sports gambling promises to be one of the largest growth industries in the United States for years to come. Americans spent upwards of $150 billion gambling illegally in 2017. The opportunity to convert some of that money to legal markets has state legislators salivating, gambling operators lining up, and sports leagues abandoning policy positions they have maintained for the better part of the last century. Derivative industries are also popping up, including companies that traffic in public information (e.g., scores) through partnerships with major sports organizations. There has be a collective push of the false narrative that sports leagues own the information generated by sporting events and that the leagues should be compensated when sportsbooks use this information. On this basis, the sports leagues seek compensation from state legislatures voting to legalize sports betting. Acceptance of the position pushed by the sports leagues could generate a windfall of upwards of $2 billion for the leagues, while preventing that same $2 billion from funding state programs. This Article examines the legal foundations of the sports leagues’ quest for mandated fees and the monetization of information in the public domain by the integrity monitoring industry. It concludes that the quest for compensation by the sports leagues is baseless rent-seeking.

Keywords: sports betting, intellectual property, integrity fee, First Amendment, Constitutional law, gambling

JEL Classification: K0, K00, K11, K14, K19, K22, K23, K3, K4, K40, K42, K49, L83 O3, O30, O33, O38

Suggested Citation

Holden, John and Schuster, W. Michael, The Sham of Integrity Fees in Sports Betting (March 26, 2019). New York University Journal of Law and Business, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3360659

John Holden (Contact Author)

Oklahoma State University ( email )

201 Business Building
Stillwater, OK 74078-0555
United States

W. Michael Schuster

University of Georgia - C. Herman and Mary Virginia Terry College of Business ( email )

Brooks Hall
Athens, GA 30602-6254
United States

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