Lottery Commission rejects sports leagues proposal to include integrity fee in sports betting rules

CHARLESTON, W.Va. — The state Lottery Commission approved the final rules for sports betting Wednesday rejecting a proposal by professional sports leagues to include an integrity fee which had previously been rejected by state lawmakers.

John Cavacini

The commission reviewed 18 comments (proposed changes) to the rules before its vote. It rejected all seven changes proposed by the sports leagues, the most significant being the integrity fee. The commission said, “The Lottery declines to intervene between negotiations between private business entities.”

West Virginia Racing Association President John Cavacini, whose organization represents the casinos, said the commission made the right call.

“The state has no business negotiating a contract between two privately held, for-profit, companies,” he said after the commission’s vote.

State lawmakers passed the bill earlier this year creating sports betting. Gov. Jim Justice allowed it to become law without its siganature. Lawmakers rejected attempts by the leagues during the legislative session to include an integrity fee but the leagues tried to use the rule-making process to convince the Lottery Commission to approve it. Cavacini said doing so would have set a “terrible precedent.”

“It puts us in a position if we don’t like the information that we’re getting, or if it’s not good information, we’re stuck that we have to buy it from major league sports or one of their sub-leasees, which they own most of them,” Cavacini said.

Representatives of the National Basketball Association, Major League Baseball and the PGA Tour made their case in a letter to the commission last month.

“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.”

John Myers

State Lottery Director John Myers addressed integrity in the first slide of his power-point at Wednesday’s meeting.

“The loss of integrity can be devastating to the state lottery. Integrity is not a four-letter word,” Myers said. “If we don’t have integrity players don’t play, If they don’t play we lose revenue,” he said.

Sports betting began at Hollywood Casino in Charles Town in late August. It’s been up and running since last month at the casino at The Greenbrier, which is owned by Gov. Justice. Delaware North which owns both the casino at Wheeling Island and Mardi Gras Casino in Nitro is apparently just a few weeks away from opening its sports betting operations.

Cavacini said the casinos are still interested in talking with he professional leagues but not through the state.

“The tracks on an individual, contractual basis are available and quite frankly, want to, want to negotiate from a private sector standpoint as opposed to the legislature saying ‘Hey, you either buy it from these guys or you’re not going to do business in West Virginia,'” Cavacini said.

Myers did tell the commission there would likely be proposed changes to the rules in the future especially if the federal government gets involved in sports betting. Myers also expects the market to mature.

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.

When asked Wednesday if the governor was still pushing for an integrity fee, Cavacini said he didn’t know.

“I can’t answer that question. I don’t know. The pushing never stopped, but (I don’t know) where it was coming from? It was coming from somewhere,” he said.

Cavacini said he wasn’t sure how the commission would vote on the integrity fee Wednesday but he was hopeful.

“We’ve been a partner with the Lottery for 24 years now and I couldn’t imagine the Lottery would make changes that would hurt its business partner,” he said.

The commission did approve two rule changes including allowing those using the sports betting app to check their accounts while in another state. Placing a bet on the app will still only be allowed while the player is physically in West Virginia.

The legislature will give the final approval to the permanent rules during next year’s 60-day regular session.

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