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WV lawmakers say no to ‘integrity fees,’ but pro leagues push again through regs

CHARLESTON, W.Va. — Professional sports leagues couldn’t persuade lawmakers to institute “integrity fees” for sports betting during the regular legislative session, but they’re going into overtime on the effort while West Virginia Lottery hammers out long-term rules.

Representatives of the National Basketball Association, Major League Baseball and the PGA Tour made their case in a letter to the West Virginia Lottery Commission:

“If the Sports Wagering Rule does not include strong and reasonable integrity protections the leagues are seeking, legalized sports gambling in West Virginia will deprive the leagues of important tools to detect and prevent manipulation and corruption.”

That position represents another flare-up in the months-long dispute over whether West Virginia’s state government should impose a fee for pro sports leagues as it allows betting on outcomes and other aspects of games.

West Virginia lawmakers have been adamant that they will not allow the integrity fees.

During the debut of sports betting earlier this month at Hollywood Casino and Resort in Jefferson County, Senate Finance Chairman Craig Blair proudly described West Virginia moving nimbly to become the fifth state to offer sports betting.

Craig Blair

“But there’s another thing that was part of this legislation that didn’t happen. It was called integrity fees. And that’s where people from pro sports, the NFL, the NBA, people like that wanted a cut of what’s going on,” said Blair, R-Berkeley.

“They weren’t getting a cut when the bookies were doing it and when it was off shore. And they’re not getting it now. And as long as I’m the Senate Finance chairman, it’s not going to happen.”

Blair will have an opportunity to ask what’s going on during a 10 a.m. Monday meeting of the Joint Standing Committee on Finance.

The agenda includes an update on sports betting by Doug Buffington, the acting state Lottery director.

Lottery Director Alan Larrick resigned Sept. 1, the day before sports betting made its official debut at Hollywood Casino. No particular reason was given for his resignation or the timing.

Lottery is also without its general counsel, Danielle Boyd, the agency’s most knowledgeable resource on sports betting. Lawmakers have said Boyd has been forced out by the Justice administration.

This is all happening against the backdrop of the rollout of sports betting at West Virginia’s five casinos, along with the rollout of the long-term rules that will govern the interaction between bettors, the casinos and the agency.

West Virginia’s Legislature overwhelmingly passed its sports betting law this past legislative session, anticipating a ruling by the U.S. Supreme Court to allow for broadened betting on sports events.

Governor Justice let the bill pass into law without his signature because his family owns The Greenbrier resort, which has a casino. The resort also hosts The Greenbrier Classic PGA event, as well as off-season practices by NFL and NBA teams.

Larry Puccio

Larry Puccio is the registered lobbyist for Major League Baseball, the NBA and the PGA in West Virginia. He is also the lobbyist for DraftKings and FanDuel

Puccio was the leader of Governor Justice’s transition team, and also is a lobbyist for The Greenbrier Resort, owned by Justice’s family.

In the months after Governor Justice’s initial hands-off approach, the Governor’s Office got more directly involved.

Bray Cary, the governor’s senior adviser, served as a moderator during a May closed-door meeting of state regulators, representatives of professional sports leagues and casino operators.

Jim Justice

The governor himself called into that meeting to tell the participants to work out a deal. “I want it done,” Justice said, according to multiple accounts by those who were there.

The casino operators walked out insisting such an agreement belongs in the private market, rather than being enforced by the government.

Now those undercurrents are playing out during the legislative rule notice filing period.

Emergency rules were already filed to allow West Virginia’s casinos to get started as the fall football season kicks off.

But more regulatory work remained.

A legislative rule has to be filed within 30 days of the emergency rule filing. That triggered a 30-day comment period, which ended at 5 p.m. Sept. 7.

Lottery has to respond to the comments and officially file both the comments and responses. At the end, the agency-approved rule is filed.

All that is happening now without the Lottery director or the agency’s general counsel.

West Virginia MetroNews filed a Freedom of Information Act request for the comments, which were filed by Hollywood Casino, Wheeling Island Hotel Casino Racetrack and Mardi Gras Casino and Resort and, finally, the pro sports leagues.

“Too much is at stake for Lottery to get this wrong,” the sports leagues wrote in comments mailed August 30.

The leagues, in their comments, propose a bit of a twist on the integrity fee.

They suggest dividing bets on their events into tiers. The first would be traditional outcome-based bets like scores and wins, which could be determined based on public information such as box scores.

The second tier represents real-time betting on particular aspects of games. Those, the leagues say, should be determined only by statistics based on official league data.

The data would be available based on what Lottery would determine to be “commercially- reasonable terms.”

According to what the leagues propose, “Sports pool operators shall use only official league data to determine the result of tier two sports wagers, provided that the data is available from governing bodies or a data sub-licenser based on commercially-reasonable terms.”

The leagues propose another requirement to mandate coordination among sports pool operators, the leagues and the Lottery “to protect the integrity of the games.”

This isn’t necessarily related to a fee, but does require the entities involved with sports betting to share information in real time to head off cheating.

“Requiring West Virginia sports pool operators to provide real-time data to the leagues will facilitate the aggregation of this information with data from other state to identify abnormal or suspicious betting patterns that may not be identified by the Lottery Commission alone,” the leagues wrote.

The leagues suggest some cheaters may spread their bets across casinos over various state lines, escaping the scrutiny of local regulators.

“In the absence of an integrated federal regime that would require all of this data to be collated and monitored across state lines, it is imperative that states like West Virginia require operatores to share this data with the leagues in real time.

“Likewise, because sports pool operators are the best gatekeepers at the time bets are made, they should be required to notify the leagues directly of wagers that suggest corruption of a sporting event and to make a reasonable effort to identify any insiders — players or league personnel — who may try to place a bet in violation of league policy or state law.”

Finally, the leagues propose being allowed to weigh in and work with regulators to restrict types of betting that represent “greater integrity risks.”

“As the betting market matures, casinos are likely to offer more types of exotic bets, some of which may be inappropriate given the integrity concerns involved,” the leagues wrote.

“For example, any bet involving outcomes that can be controlled by a single competitor, such as a missed free throw late in a one-sided game may present a greater risk of manipulation and corruption.”

FOIA Request (Text)

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