AUTHOR UPDATE (MAY 14, 2018): The United States Supreme Court has reversed PASPA prohibitions on statewide sports betting, which means states are now free to choose whether or not it is in their best interests to license/regulate live and/or online sports betting activity.

This guide — originally published as a study tool for iGaming stakeholder interests — focuses exclusively on recent testimony provided by the NBA and MLB on the topics of “Integrity Fees” and “Data Rights.” The May 2018 SCOTUS ruling brings the statewide regulated sports betting debate into a mainstream, nationwide focus — resulting in this article’s publication date being modified so that the information will be viewed by all interested parties who may not have followed along with sports betting news previously.

Original Article – Published March 2nd, 2018:

This is a timestamps study guide for the Connecticut sports betting legislative hearing conducted on March 1st, 2018 by Public Safety & Security Committee chairman Joe Verrengia and fellow Committee members.

* WATCH FULL VIDEO HERE *

The hearing included testimony from the following individuals (in order of appearance):

  • Dan Spillane, Senior VP & Asst. General Counsel for the National Basketball Association (NBA)
  • Bryan Seeley, Senior VP & Deputy General Counsel for Major League Baseball (MLB)
  • Dan Shapiro, VP of Strategy & Business for William Hill Sports Book
  • Quinton Singleton, VP of Corporate Strategy & Government Affairs for Scientific Games
  • Adam Steinberg, Executive Vice President for Spectrum Gaming
  • Sarah Koch, Assistant Director of Government Affairs for DraftKings
  • Les Bernal, National Director for Stop Predatory Gambling

* The timestamps cover testimony provided by representatives of the NBA and MLB.

The aim of this content is to inform all interested parties on — and provide convenient access to — arguments that pertain to legalized Connecticut sports betting, which could become a reality if an upcoming United States Supreme Court (SCOTUS) decision repeals PASPA (1992 Professional and Amateur Sports Protection Act) prohibitions.

Although the 200-minute hearing focused mainly on sports betting, the discussion is relevant to both regulated online poker and iGaming, with some element of formally legalized internet gambling brought up as a topic in nearly every segment.

Finally, this is not an opinion piece, but rather an outline summary of preliminary legislative discussion as it relates to the Constitution State’s legislative communication on gambling topics. Please refer to relevant media outlets for analysis and editorial material on Connecticut sports betting.

Connecticut Sports Betting Hearing Timestamps (March 1st, 2018)

State Representative Joe Verrengia – D – House District 20 (West Hartford)
Connecticut Public Safety & Security Committee Chairman

Joe Verrengia Connecticut Sports Betting

(0:10) Intro, Welcome & Opening Remarks
(2:20) List of speakers for March 1st informational hearing
(3:27) Format of March 1st Connecticut sports betting hearing

Dan Spillane – Senior VP & Asst. General Counsel – Legal Governance & Policy
NBA (National Basketball Association)

Dan Spillane - Connecticut Sports Betting

(4:27) Intro, Dan Spillane (NBA)
(4:45) Why the NBA’s position on formally regulated sports betting has shifted
(5:23) The NBA has witnessed sports successfully coexist with regulated betting internationally
(5:39) Proliferation of illegal/unregulated sports betting options in the United States
(5:50) Hundreds of millions USD illegal wagered on sports in the U.S. each year
(6:03) NBA Commissioner Adam Silver‘s Nov 2014 op-ed for the New York Times
(6:18) NBA prefers a “federal framework” for regulated sports betting, pending Christie vs. NCAA SCOTUS decision
(7:07) NBA and MLB have collaborated on drawing up legislative framework for regulated Connecticut sports betting that maintains the”integrity” of league games and “protects consumers”

Bryan Seeley – Senior VP & Deputy General Counsel – Investigations, Compliance & Security
MLB (Major League Baseball)

Bryan Seeley Connecticut Sports Betting

(7:59) Intro, Bryan Seeley (MLB)
(8:21) Seeley supervises MLB Department of Investigations (game integrity issues arise from sports betting, cheating, prohibited drug use and club violations)
(8:45) MLB is neutral on sports betting legalization, but urges lawmakers to pass legislation that protects MLB consumers and the integrity of MLB games
(9:07) 5 key areas that MLB wishes to influence Connecticut sports betting legislation
(9:18) (#1) MLB believes bookmakers should share/aggregate wagering data with leagues (Montoring & Investigations)
(10:24) MLB believes bookmakers should be obligated to cooperate in sports league investigations – casino/bookmaker would be responsible for notifying MLB if league player bets on his own team
(10:41) How sports betting regulation differs from regulating casino table games, challenges
(11:28) (#2) MLB wants control of “one truth” data for “in-play” and all wagers, cites maturing int’l market tendencies
(12:31) (#3) MLB wants “opt-out” discretion for certain wagers or contests (cites Minor League Baseball, single-action wagers such as “next pitch” or “first pitch” bets)

Dan Spillane (NBA)…

(13:59) (#4) Leagues favor regulating online sports betting
(13:59) (#5) NBA/MLB want to receive “Integrity Fees” for all Connecticut sports betting wagers – states that sports betting is “built” on professional sports leagues
(15:41) Spillane states that leagues bear a significant reputation/integrity risk from real money wagering on their games, and that those risks are borne mostly be the leagues – NBA representative outlines justifications for Integrity Fees, citing: (a) increased investigative costs, (b) preemptive monitoring to minimize risk of scandals, (c)associated costs with developing proprietary analytical tools, (d)
Spillane says leagues should be “compensated” for such costs
(16:29) Spillane says proposed Integrity Fees are less about being compensated, and more about major professional U.S. sports leagues being the “backbone” product of future business relationships with sports betting operators – reminds Committee members that leagues should be “compensated” in such a partnership due to the strength of its Intellectual Property, capability to license and monetize usage of NBA media assets, cites significant investment
(17:04) NBA representative states that leagues aren’t seeking to place “undue burdens” onto the regulated Connecticut sports betting market – says leagues are sensitive to regulated operators’ plight of competition versus illegal gambling services
(17:24) Spillane says leagues are willing to consider difficulties operators’ will face in potential negotiations, but the NBA/MLB remain adamant that they should receive some amount of compensation (Integrity Fees)
(17:49) Committee chairman Joe Verrengia clarifies that proposed Connecticut sports betting Integrity Fees paid by operators to leagues would equal 1% of “handle” (total money wagered) on league games.
(19:23) Verrengia explains that 1% of “handle” would actually equal roughly 20% of operators’ revenue on most wagers (since operators generate approximately 5% revenue from total money wagered on league games)
(20:01) Spillane confirms that the math is accurate, but believes margins for regulated sports betting (pending potential PASPA repeal by SCOTUS) would increase, cites publicly-available information that international operator profit margins tend to increase in a regulated environment, and says 1% “handle” could equal 10-15% of revenues for legalized U.S. operators in such a scenario
(21:32) Verrengia cites estimates that legalized U.S. sports betting could attract $200 billion USD in yearly “handle,” meaning leagues would be taking in approximately $2B annually in “Integrity Fees” as a result if current proposal became law – Spillane confirms estimates
(22:20) Other statewide sports betting legalization efforts are underway, Verrengia says he favors Integrity Fees, as long as those fees are allocated toward initiatives that uphold said integrity and protections – suggests Integrity Fees could be disbursed to leagues through legislative fund as opposed to direct operator-to-league payment
(23:33) Verrengia states, “What I’m not for, quite frankly, is legislation that — in some way, shape or form — would line the pockets of… whether it’s Major League Baseball, the NBA, or any other major league sports owners.” Verrengia then cites added monetization opportunities leagues would have in a regulated environment. Verrengia nforms that major networks NBC Sports and ESPN were invited to participate in the March 1st Informational Hearing, but that those leagues declined.
(24:36) Verrengia asks whether leagues have identified such additional revenue opportunities that may occur as a result of regulated statewide sports betting – Spillane (NBA) cites potential fan engagement boost, then says the sports betting industry would also receive additional revenue opportunities, which Spillane states ties back to the justification for Integrity Fees

Bryan Seeley (MLB)…

(27:20) Seeley says the reason sports betting operator profit margins are only 5% in Nevada is because “Nevada’s not trying to make money off of sports books. They’re making money on ancillary benefits.” States that bookmakers establish profit-based percentage of “handle.”

(27:43) Verrengia informs that NCAA was invited to Connecticut sports betting informational hearing, but declined – says he has received “pushback” from statewise colleges and asks if NBA/MLB legislative proposal includes provisions for Connecticut to prohibit wagers for games that involve NCAA teams within the state — Seeley confirms that those provisions are included in leagues’ proposed legislative model

State Representative J.P. Sredzinski – R – House District 112 (Monroe, Newton)
Connecticut Public Safety & Security Committee Ranking Member

JP Sredzinski Connecticut Sports Betting

(29:29) Sredzinski asks for clarification regarding impact of illegal sports betting operators on regulated market and if legalization would positively impact leagues
(30:12) Seeley states that leagues would overall benefit from legalized sports betting in Connecticut, repeats need for complete data and the costs associated with analyzing more data – Seeley then says leagues will need to spend more educational resources on talent and officials to combat increased exposure to game integrity issues associated with sports betting

(32:00) Representative Sredzinski informs that he’s “cautious” about any Connecticut gambling expansion, but that getting sports betting “out from under the shadows” could be the right move – suggests regulation will aid in identifying and providing services to “problem gamblers”

(33:11) Sredzinski asks leagues for more justification on the five points outlined in their legislative proposal

Bryan Seeley (MLB)…

(33:11) MLB states that games are highly marketable and engaging to fans, says there is risk to public perception in a regulated sports betting market and that a lack of confidence from fans could negatively affect the League’s bottom line — cites “brand protection” issue created by legalized sports betting and uses these reasons to justify the MLB’s need for wagering data, reinforces that operators should have a “duty” to contact leagues when wagering data irregularities occur

Dan Spillane (NBA)…

(33:11) Spillane says the five points in leagues’ legislative proposal protect the integrity of games and offer a “state of the art” option to regulated sports betting in the United States – repeats need for access to real-time bookmaker data

State Senator Tony Guglielmo – R – Senate District 35 (Ashford)
Connecticut Public Safety & Security Committee Ranking Member

Tony Guglielmo Connecticut Sports Betting

(36:49) State Senator Guglielmo asks leagues if they have stipulated potential restrictions on NCAA sports betting in their legislative proposals – Seeley explains that such restrictions are the responsibility of lawmakers
(37:34) Guglielmo asks if leagues have projected potential impact of new sports betting business that could occur if current non-wagerers are enticed by regulation – Spillane states that leagues do not have those projection numbers and that other speakers in the hearing would likely be able to provide more informed statistics on the topic – Spillane concurs with operators and lawmakers that legislation should include measures to ensure “responsible gaming”

State Representative Jeffrey Berger – D – House District 73 (Waterbury)
Connecticut Public Safety & Security Committee Member

Jeffrey Berger Connecticut Sports Betting

(39:44) Representative Berger likens leagues’ proposal to demand operators share wagering data to the U.S. stock market SEC (Security & Exchanges Commission) – Seeley confirms
(41:01) Berger implies state will need to establish a separate “gaming commission” to oversee/coordinate sports betting activities (Berger suggests the commission would be under the authority of the Public Safety & Homeland Security Committee) — Berger asks if sports betting operators in Nevada pay leagues an “Integrity Fee” – Spillane confirms that they don’t, but adds that — in hindsight — leagues would have proposed such a fee
(42:20) Berger asks if creating a law in which operators much pay an Integrity Fee to leagues would put Connecticut sports betting at a disadvantage compared to Vegas services – Seeley references how 1961 Federal Wire Act prohibits sports betting across state lines, and states that online sports betting market would be ring-fenced from other states, therefore Seeley does not perceive increased cost to Connecticut consumers (as a result of Integrity Fees) to place the state at a disadvantage
(43:36) Berger believes future Connecticut legislative discussion regarding Integrity Fees will be “interesting” – points out distinction between house edges on even-money wagers
(44:27) Berger asks if potential sports betting restrictions on in-state NCAA teams would limit revenue — Spillane (NBA) points out that the leagues do not have a particular stance either way on NCAA/amateur sports wagering in Connecticut, then refers back to leagues’ desire for the ability to potentially “opt-out” of wagers placed on “minor league” sports games — says those subsidiary leagues do not currently have a large “illegal” betting market and leagues are not eager to create such a demand

State Representative Craig Fishbein – R – House District 90 (Wallingford)
Connecticut Public Safety & Security Committee Member

Craig Fishbein Connecticut Sports Betting

(47:27) Representative Craig Fishbeing asks for clarification on leagues’ request that operators share sports wagering data – Seeley responds that data sharing needs stem from real-time results/odds information in First Pitch Ball/Strike scenarios
(49:09) Seeley confirms that leagues would be “sole provider” of such information (according to proposed legislation) — Fishbein then asks if such legislation would grant leagues a “private monopoly” of such data, Seeley confirms while stating that bookmakers in certain states also hold practical monopolies
(50:03) Fishbein asks if third-party data clarification services couldn’t be created in lieu of granting MLB/NBA exclusivity over results data control, Seeley suggests third-party data providers could manipulate outcomes in such a scenario – Fishbein then asks if legislation should feature “opt-in” clauses to include other sports such as wrestling, Spillane believes that “opt-in” or “opt-out” legislative clauses would ultimately achieve same goal
(52:54) Fishbein wonders if future federal sports betting laws could potentially grant leagues an additional, or better Integrity Fee percentage and if that would benefit leagues – Spillane confirms that NBA/MLB specifically prefer federal regulation, but that would depend on the pending SCOTUS decision relating to Christie vs. NCAA
(54:13) Fishbein asks if risk to game integrity declines once a previously illegal sports betting market becomes regulated – Spillane says that would depend on whether total sports betting activities increase as a result
(55:16) Representative Fishbein expresses familiarity with MLB and lack of veteran knowledge about the NBA – Spillane confirms NBA’s stance is similar to that of MLB’s in regards to proposed Connecticut sports betting legislation and that league representatives are barred from making certain wagers — Spillane then cites 2007 NBA referee scandal that resulted in lifetime ban and federal conviction of Tim Donaghy
(56:40) Fishbein believes legalized sports betting benefits leagues, shares personal DFS (Daily Fantasy Sports) involvement

State Representative Kurt Vail – R – House District 52 (Stafford, Sommers)
Connecticut Public Safety & Security Committee Member

Kurt Vail Connecticut Sports Betting

(57:58) Representative Vail asks how bookmaker odds payouts to customers might be affected by Integrity Fees – Spillane defers to operators — Vail seeks further clarification on how bookmakers may adjust their rates to accommodate Integrity Fees, Spillane again defers to operators for this information — Spillane then clarifies that Integrity Fee percentages would be taken from operator “handle,” or total amount wagered on corresponding games, regardless of bet type (according to NBA/MLB legislative proposals)
(1:02:00) Spillane states that advanced sports bets typically provide a much larger profit margin to operators, and that proposed 1% Integrity Fees would represent a lower profit percentage that operators would have to pay leagues for those types of wagers
(1:02:15) More about how 1961 Federal Wire Act prohibits sports betting across state lines, and how Connecticut sports betting would not compete against Las Vegas when it comes to online sports wagers — Seeley reminds lawmakers that illegal operators will not disappear as a result of regulation, and that seasoned sports bettors may seek out illegal bookmakers to make their wagers
(1:03:36) Vain asks, “If we were to exclude that 1% [Integrity] Fee from this potential legislation, would you stil be in favor of this?” – Seeley replies, “No.”
(1:03:47) Vain requests clarification on leagues’ partnerships with Daily Fantasy Sports services — Spillane states that DFS is viewed by leagues as a “separate industry,” and that DFS does not pose the same level of “integrity issues” threat that regulated sports betting does. Spillane cites this as the reason why NBA/MLB have not tacked on Integrity Fees to DFS operators who accept real money wagers on league games. Vain believes DFS websites have brought in new engagement for leagues
(1:05:56) Representative Verrengia gets confirmation that both the NBA and MLB would not support Connecticut sports betting legislation that doesn’t include Integrity Fee clauses — NBA suggests that the percentage is open for negotiation with operators
(1:06:40) Verrengia asks if leagues would support legislation that designates a separate fund to reimburse NBA/MLB for all expenses related to game integrity and customer protections that are a result of sports betting regulation, leagues say they would not support such legislation, and that submitting receipts for said expenses would risk leaking confidential league info
(1:07:47) Spillane clarifies that Integrity Fees would act as both a means of covering incurred expenses while at the same time serving as a royalty fee — Verrengia states, “And that’s where it becomes sticky.”

State Representative Kevin Skulczyck – R – House District 45 (Griswold)
Connecticut Public Safety & Security Committee Member

(1:08:56) Representative Skulczyck confirms that state, league and operator interests are all “chasing money” — Spillane confirms that illegal U.S. gambling total wager estimates range between $150B-$200B annually — Skulczyck asks leagues if they are aware of crime statistics for illegal placement of sports bets on the federal level, leagues state that they do not have this information, but are aware of some cases such as the 2016 Brooklyn betting ring that received roughly $1B in wagers
(1:09:58) Skulczyck asks leagues if regulated sports betting will create jobs in Connecticut, leagues defer to operators — leagues also do not possess concrete information related to government regulatory jobs that might be created as a result of legalized sports betting
(1:10:39) Skulczyck brings up Connecticut’s 25-year compact with existing tribal casinos (Mohegan Sun and Foxwoods) — such deals do not involve sports leagues and are exclusively the responsibility of the parties involved in those agreements
(1:11:07) MLB reaffirms its position that it is not specifically in favor of regulated Connecticut sports betting, just that it desires influence on legislation if the Constitution State decides to go that route
(1:11:40) Skulczyck asks MLB/NBA why other leagues (the NFL & NHL) did not attend the March 1st public hearing — MLB/NBA defer to those leagues to respond to that question

State Representative Pat Boyd – D – House District 50 (Brooklyn, Eastford)
Connecticut House of Representatives Public Safety Committee Member

Pat Boyd Connecticut Sports Betting

(1:12:10) Clarification of 1961 Federal Wire Act and pending United States Supreme Court decision on Christie vs. NCAA and potential PASPA repeal — Wire Act enforcement jurisdiction belongs to US Department of Justice, which is why sports betting interests tend to prefer a “federal framework” for sports betting regulation
(1:13:57) Spillane explains how challenges to the Federal Wire Act have revolved around whether it pertains to sports betting only or other gambling services. The USDOJ published an opinion in December 2011 that it only applies to sports wagers
(1:14:16) Representative Boyd asks if there is any legislative precedent for leagues collecting “Integrity Fees” on real money sports wagers – NBA cites specific international markets and pari-mutuel events, although Spillane ultimately defers on this topic — explanation of “rights agreement” deals with operators that the NBA has in place for specific int’l sports betting jurisdictions
(1:15:30) Boyd asks leagues if they would pursue litigation against regulated markets if Integrity Fees aren’t included in eventual laws, leagues have no comment

State Representative Michael Dimassa – D – General Assembly District 116 (West Haven)
Connecticut Public Safety & Security Committee Member

Michael Dimassa Connecticut Sports Betting

(1:16:45) Representative Dimassa asks leagues how Connecticut would benefit from Integrity Fees, MLB explains that the fees would be paid directly by operator to leagues, and that the state would not specifically have a direct benefit from that proposed agreement
(1:17:46) Dimassa asks how liability would be determined in cases where customer-originated game integrity issues come into question, and whether leagues would subsequently be on the hook for payout disputes since they would be collecting Integrity Fees – Seeley states that this is clearly a risk for leagues, and thatgame integrity liabilities exist with or without compensation from bookmakers
(1:19:58) Dimassa points out why some sports bettors would still place wagers with illegal bookmakers even in a regulated environment — Spillane cites evidence that regulated sports betting markets have typically succeeded even with going up against inevitable black markets in those jurisdictions

State Representative Alphonse Paolillo – D – General Assembly District 97 (New Haven)
Connecticut House of Representatives Public Safety Committee Member

(1:22:12) Representative Paolillo asks if there are additional compliance guidelines that leagues must adhere to in regulated Nevada market compared to internationally – Spillane outlines data-sharing and monitoring of sports betting activities in Nevada, then reaffirms leagues’ desire for Integrity Fees due to more betting in a regulated environment
(1:24:56) Paolillo cites NBA Commissioner Adam Silver, and how proposed Integrity Fees act as both compensation and royalty payments — Spillane states that expenses to cover potential game integrity issues would be less than 1%, and reconfirms that proposed operator-to-league payments would serve a “combination” or purposes
(1:27:19) Paolillo implies he believes proposed Integrity Fees lean much more towards being royalty or compensation payments rather than being a method to reimburse leagues for incurred expenses
(1:27:48 Representative Paolillo points out how leagues have historically been opposed to regulation, and how they have actively battled against a repeal of PASPA prohibitions on a federal level — NBA reconfirms that it is now seeking Integrity Fees to support regulated sports betting IF U.S. Supreme Court repeals PASPA, while MLB remains “agnostic” on the issue, but desires Integrity Fees if legislation is brought forth
(1:29:25) NBA states that it has clearly communicated that it views Integrity Fees not solely as reimbursement, but as compensation and royalty fees that it believes are justified

State Senator Steve Cassano – D – Senate District 4 (Manchester)
Connecticut Public Safety & Security Committee Vice Chairman

Steve Cassano Connecticut Sports Betting

(1:30:44) Representative Cassano references game integrity/points shaving risks – Cassano wonders aloud how many underground Connecticut bookie jobs could be affected by formal regulation — Spillane respectfully passes on Senator Cassano’s concern regarding local bookmakers, but agrees with Cassano that game integrity risks do indeed exist

State Representative Daniel Rovero – D – House District 51 (Killingly, Putnam)
Connecticut Public Safety & Security Committee Member

Daniel Rovero Connecticut Sports Betting

(1:33:37) Representative Rovero makes it clear that he is “not fond of gambling,” but “took a chance 60 years ago” in matrimony with his current wife and that seemed to work out just fine — marriage odds contemplated

(1:34:38) Verringa requests that NBA/MLB give Committee members a “cumulative market value” of their respective leages — NBA estimates “in the tens of billions of dollars,” MLB states is not aware of exact figures

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