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February 25, 2018

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Why the NBA’s legalized sports betting proposal is preposterous

An “integrity fee” would change the face of sports betting — and not for the better

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Christopher DeVargas

Super Bowl prop bets are posted at the Westgate Superbook, Thursday Jan 24, 2018.

Much like the public reaction to its superstars LeBron James and Kevin Durant when they joined super teams, the NBA itself has gone from hero to villain in Las Vegas circles over the past week.

The gaming industry had widely praised the league in the three-plus years since NBA Commissioner Adam Silver came out in support of legalized sports betting. Those salutes turned to scorns Wednesday after a New York State Senate committee meeting where the NBA proposed its plan for nationwide sports betting, which included the league pulling in a 1 percent “integrity fee” from the total handle.

For industry outsiders, the ensuing fallout has been difficult to comprehend. Some have even questioned whether a 1 percent cut is all that unreasonable considering Nevada sports books reportedly pulled in around $5 billion of wagers last year.

Make no mistake; it’s not at all reasonable. Here’s why: It would defeat the entire purpose of the NBA’s originally stated reason for seeking legalized sports betting.

Instead of driving bettors away from an illegal sports betting market that the American Gaming Association estimates pulls in $150 million from Americans, it would push them towards it.

That’s because stateside sports books would not be able to compete with the odds offshore shops offer if they’re beholden a percentage to the sports leagues. The other major professional sports would no doubt follow with their own requests if the NBA is successful.

That 1 percent quickly becomes at least 4 percent, which is right in the window of the sports betting industry’s typical profit margin according to the gaming association. The $5 billion total can be a misleading figure, because of how little of that sports books hold.

A 5 percent hold is typically the ceiling for a shop that posts the traditional minus-110 (risking $1.10 to win $1) lines on both sides of a game with a point spread like the NBA and NFL. Those lines would have to creep around minus-130 for sports books to stay functional under the NBA’s proposal.

Even the most clueless of gamblers could realize that’s a price that’s impossible to beat, especially juxtaposed with the enticing minus-105 or minus-108 lines available at illegal books.

A common refrain heard in local sports books when a bettor loses a bet goes something like, “that’s why they have all these resorts.” It might be a comforting thought, but it’s mostly untrue.

For the vast majority of properties, sports betting is an amenity to its customers and not a primary source of gambling income like slot machines or table games.

Put it this way — No one is making a living spinning the Wheel of Fortune machine, but there are a professional NBA bettors.

Nevada sports books have become expert at managing the small profit margins. The idea of an “integrity fee” is preposterous when our state has proven for decades that it’s capable of providing a safe, regulated venue for bettors.

The good news is, the fee will probably never happen. It’s possible the NBA didn’t even fully understand how much its request would inhibit the ultimate goal.

There’s still time to reverse course. Until then, the NBA stands as the heel of the sports betting community.

Case Keefer can be reached at 702-948-2790 or [email protected]. Follow Case on Twitter at twitter.com/casekeefer.

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