Latest New Jersey Sports Betting Bill Includes Integrity Fee

Latest New Jersey Sports Betting Bill Includes Integrity FeeThe Supreme Court may be set to rule on Murphy vs NCAA in the upcoming months, but it has not stopped New Jersey lawmakers from moving forward with new legislation. Recently, a bill surfaced that outlines sports betting licensure and regulation at Atlantic City gaming facilities.

Inside The New Sports Betting Bill

Last week, Assemblyman Eric Houghtaling and Assemblywoman Joann Downey introduced the comprehensive piece of sports gambling legislation.

Similar to bills of the past, the proposed legislation permits online and mobile sports wagering. Where it differs is that it specifically states that a physical sportsbook is required before an online license can be acquired:

“No casino or racetrack permitholder shall be permitted to operate or accept wagers via an online sports pool unless a sports wagering lounge is established and has commenced operation in its facility;”

You may recall that the NCAA is vehemently against collegiate events being wagered on, an issue that has even led to fantasy sports operators excluding their events altogether.

The NCAA has expressed the same opposition when it comes to sports gambling, but the new bill only partially addresses their concerns:

“A ‘prohibited sports event’ does not include the other games of [an]… athletic tournament in which a New Jersey college team participates, nor does it include any games of a collegiate tournament that occurs outside New Jersey even though some of the individual games or events are held in New Jersey.”

This means that wagering on NJ collegiate events would be illegal for the sake of integrity, but it still leaves room for residents to legally wager on tournaments like March Madness.

The Controversial Integrity Fee

While the bill contains standard language regarding tax revenue distribution, it also includes an “integrity fee”, an insertion that has been highly debated since its introduction.

Despite being plaintiffs in the case against New Jersey, Major League Baseball and the NBA have been lobbying to shape sports betting legislation. Within their proposed model, sports leagues would receive a 1% payout from sportsbooks on the total amount wagered on their sporting events.

Those in the gaming industry have argued against the fee due to the negative impact it would have on the operation’s profits, but the newly proposed bill seems to find a middle ground.

Rather than giving the fee directly to the leagues as they have proposed, the integrity fee would go in the “Sports Wagering Integrity Fund” and the total amount would be capped.

“There is hereby imposed on all casinos and racetracks in which a sports pool is operated an annual integrity fee equal to the lesser of $7.5 million or 2.5% of that portion of gross gaming revenue attributable to wagers on sports events…”

New Jersey’s Attorney General would delegate the funds to go toward integrity expenses that include monitoring, public relations, and personnel costs for the integrity unit. Sports leagues would then be able to submit a claim to the AG in order to receive a portion of the remaining funds for their own integrity-related expenses.

“a sports governing body whose sports events are wagered upon… may seek reimbursement for expenses incurred relative to ensuring the integrity of its sports events… by submitting a claim for such compensation to the Attorney General. Such claims shall be paid exclusively from available funds in the Sports Wagering Integrity Fund…”

Lawmakers Expect Favorable Ruling From SCOTUS

As with all sports betting legislation up to this point, even if the proposed bill is passed it cannot go into effect until SCOTUS decides the outcome of the New Jersey sports betting case.

Twelve states and counting have proposed sports betting regulations contingent upon the Supreme Court striking down the Professional and Amateur Sports Protection Act (PASPA).

In battleground zero, the Borgata and the Ocean Resort Casino have already openly announced their plans to construct sportsbooks in the near future.

The Court has until June 25 to rule on Murphy vs. NCAA, though at this point the decision for sports betting states could come as early as May 14th.