Pro leagues score with Michigan's new sports betting law
Lansing — Pro sports leagues have scored a major victory that could require their officially approved statistics be used to settle in-game wagers in Michigan.
Opponents say the mandate will increase costs but supporters say it's vital to legalizing sports betting.
Michigan joined two other states in approving such a requirement after sports leagues, including the National Basketball Association and Professional Golfers Association, spent at least $188,000 on lobbying.
The leagues' victory came in 11 paragraphs embedded in a 40-page bill that Gov. Gretchen Whitmer signed into law on Dec. 20. The bill's language could force businesses taking wagers on athletic events to rely on "official league data" provided by the leagues on "commercially reasonable terms."
Consider this football bet scenario. If someone wagered at halftime that Detroit Lions quarterback Matthew Stafford would pass for more than 200 yards in the final 30 minutes of the game, operators would likely have to purchase statistics sanctioned by the National Football League to decide if Stafford's total second-half passing yardage fell short or exceeded 200 yards.
Critics argued the data policy mandate is anti-competitive and could drive up costs for betting customers. Supporters countered that the requirement would ensure the accuracy of data and was crucial to getting the leagues on board with legalizing sports betting in Michigan.
Twenty states have legalized sports betting, according to the American Gaming Association. Three have "official league data" requirements — Michigan, Illinois and Tennessee, according to Sports Handle, a website that tracks sports betting regulation nationally.
Pro sports leagues had "strongly advocated" for the Michigan policy, acknowledged Rep. Brandt Iden, the chief sponsor of the sports betting bill.
"It’s obviously something that was very important to the leagues," said Iden, R-Oshtemo Township, the House Ways and Means Committee chairman.
But most states have been reluctant to adopt "official league data" requirements, said John Holden, an assistant professor at Oklahoma State University who has studied gaming and sports integrity.
The requirements add fees to wagers and prevent other sports data companies from launching and competing with businesses aligned with the leagues, giving more of the data market to the leagues, he said.
"I think it’s bad for consumers," Holden explained. "That cost, at some point, is going to be passed on to consumers."
Why 'official league data?'
In May 2018, the U.S. Supreme Court struck down a 1992 federal law that had banned sports betting in most states.
The decision spurred lawmakers across the country to consider whether their states should legalize sports betting and try to capture new revenue from it. At the time, Iden was already working on a proposal to legalize sports betting here.
Within three months of the 2018 Supreme Court decision, the NBA, the PGA, Major League Baseball and the National Football League had all registered to lobby in Michigan.
Three leagues, the NBA, the PGA and MLB, registered on the same day — July 25, 2018 — and all hired Governmental Consultant Services Inc., one of the largest multi-client lobbying firms based in Lansing, according to state disclosures.
The NBA disclosed spending $62,978 lobbying in Michigan from July 25, 2018, through July 31, 2019 — the latest information available. The MLB spent $61,877, while the PGA spent $22,274.
The NFL, which first registered on July 3, 2018, spent $41,040 on lobbying through July 31, 2019.
The Republican-controlled Legislature passed a sweeping plan to legalize online gambling and sports betting near the end of 2018, but GOP then-Gov. Rick Snyder vetoed it. Snyder said the law deserved more study, arguing it raised "unknown budget concerns," including the potential that allowing online gambling on poker and other casino games could depress Michigan Lottery revenue that supports K-12 schools.
It's unclear how much of the $188,000 that pro sports leagues spent went to lobbying on sports betting. But when Iden introduced his second proposal to legalize sports betting, the Lawful Sports Betting Act, on Sept. 9, 2019, it included the "official league data" requirement.
By the time Iden's bill became law in December, the final version gave the governing bodies of sports leagues based in the U.S. the ability to notify state regulators if they want betting operators in Michigan to use "official league data" for certain bets.
Sen. Curtis Hertel, D-Meridian Township, who was heavily involved in the legislation said while he would have done it differently, the language was a "fair compromise." The leagues wanted all bets to require their data, Hertel said.
The law describes the bets in question as "Tier 2" bets that are made after a game has started. Iden used the example of someone betting on how long a golfer's drive would be on a certain hole.
If the leagues decide they want their own data to be used for these bets, the regulators could then inform the operators that they need to use the official data.
But under the law, the data would have to be available to the operators through a live feed and at "commercially reasonable terms." It would be up to state regulators to decide whether the proposed rates meet that condition. Under the law, the regulators could consider whether a league's numbers are available from more than one authorized source and "market information."
"We want to make sure the operators aren’t getting gouged," Iden said.
The leagues argue using their own data promotes security and accuracy, he said.
Joel Schuchmann, vice president of communications for the PGA Tour, echoed Iden's arguments. Betting markets are built on data, and it's in the best interest of everyone involved to have "one official source for that data," Schuchmann said in a statement.
Data accuracy a concern
The PGA Tour has invested in a system that collects information on more than 30,000 shots each week, Schuchmann said. Unofficial data could conflict with the PGA's data, he argued.
"This helps ensure that all consumers receive the same results for their bets and that the data used to settle bets is timely and accurate, which is necessary for a functioning system," Schuchmann said.
To decide in-game bets, bettors need fast and accurate data, and league-sanctioned information is the best way to provide it, said Chris Dougan, chief communications officer for Genius Sports Group. Genius Sports Group is a Britain-based sports data company that has contracts with the NBA and English Premier League (soccer). About 75% of the bets made in the United Kingdom are made during games, Dougan said.
An example would be a wager on which player scores the next goal in a match or whether Los Angeles Laker LeBron James makes his next 3-point shot. Both bets would be informed by data flowing during the competitions, Dougan said.
"It moves too fast and it needs to be accurate," he said.
Official league data can be transmitted in less than a second, Dougan said. While he said it's up to lawmakers to decide whether there should be mandates, he said official league data is the most accurate and provides revenue to leagues.
But data requirements are essentially "just a tax" on customers, said Matthew Davidow, chief operating officer of Nevada-based DeckPrism Sports, which provides in-play odds to operators.
There should be a standardized way for deciding bets, Davidow said. But that's different than forcing operators to purchase league-approved data, he said.
If the leagues' statistics are the best, gaming operators will want to use them and won't require a mandate, Davidow argued.
Oklahoma State assistant professor Holden said he's not convinced the leagues' numbers are better than those from other companies. The same firms that some leagues pay to officially collect data also work unofficially in other sports, he noted.
The unofficial collection of data could be someone sitting in the crowd recording statistics or someone watching a live feed of a game and taking notes. While the unofficial numbers could be slightly delayed, they could still compete with the official sources, Holden said.
A single league source for data could be corrupted, he argued.
"The leagues have been very good at advancing a narrative that this is somehow better," he said. "The issue there is that nobody else has really stepped in and said, 'Why is this better?'"
The leagues originally wanted a portion of every bet that was placed on their games, Holden said. But when the idea met resistance, they resorted to backing requirements that operators buy "official data," he said.