Why Indiana is suddenly the center of the sports betting world's focus

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While the gambling world awaits the United States Supreme Court's ruling in the New Jersey case and whether single-game sports betting will be legal outside of Nevada, several states (Pennsylvania, Mississippi, Connecticut are among them) and some sports leagues are getting a head start.

New legislation in Indiana provides a glimpse of what Major League Baseball and the NBA want from any state-run legal sports betting markets and reveals a divide in how the other major American sports leagues are preparing for that future, which could be here by summer.

Here's what we know about Indiana House Bill 1325:


Which leagues are involved?

MLB and the NBA have teamed up on a lobbying effort that kicked off in Indiana and is expected to spread into the increasing number of states poised to get in the bookmaking game. For now, though, the two professional sports leagues appear to be on their own.

The two leagues have hired San Francisco law firm Orrick, Herrington & Sutcliffe to lead the lobbying effort. The firm previously oversaw a state-by-state effort by daily fantasy sports operators DraftKings and FanDuel that resulted in close to 20 states passing laws clarifying the legality of DFS over the past two years.

The NFL, NHL and NCAA, on the other hand, remain mostly quiet on the issue.

All five leagues sued New Jersey in 2012 and 2014, as Gov. Chris Christie attempted to boost his state's casino and gaming industry by allowing Las Vegas-style sports betting.

The Supreme Court accepted the case in June. Oral arguments were heard on Dec. 4. A decision is expected by the end of June, if not sooner. The case is centered on the Professional and Amateur Sports Protection Act of 1992 (PASPA), the federal law prohibiting state-sponsored sports betting in all but a handful of states, most notably, Nevada.

The Supreme Court could uphold PASPA, strike it down on constitutional grounds or rule narrowly in New Jersey's favor.


Why is this bill important?

Indiana House Bill 1325 aims to legalize sports betting at the Hoosier State's racinos, riverboats and satellite facilities, if federal law is changed. While other states have taken similar steps, Indiana is the first one to publicly work with the sports leagues.

MLB and the NBA provided input on the bill, resulting in stipulations that would give participating leagues the ability to "restrict or limit wagering on sporting events conducted by the governing body to ensure the integrity of its contests." In some instances, leagues would have rights over the data and video used by bookmakers to grade wagers and the types of bets that could be offered.

The leagues also would receive a 1 percent "integrity fee," paid quarterly by operators and based on the amount of money bet on a governing body's events.

For example, if a $100 bet was placed on an NBA game with a licensed Indiana bookmaker, the league would receive $1 from that wager, win or lose. The leagues would not have a cut on the outcome of the wager, only the amount of the bet. That could produce a multimillion dollar windfall for the leagues.

In Nevada, for example, $1.04 billion was bet on baseball in 2016. If Indiana generated the same amount of handle on baseball, Major League Baseball would be in line for approximately $10 million from a 1 percent integrity fee.

The idea of an integrity fee being paid to the leagues has drawn condemnation from the gaming industry.

American Gaming Association president and CEO Geoff Freeman says the leagues' opportunity to profit for legalized sports betting is by increased fan engagement, advertising and data rights -- not a straightforward cut of the action.

"They have an opportunity to make money in a host of different ways," Freeman said. "It's going to take a little bit of work. It's going to take some sophistication, but it's an extraordinary opportunity. Trying to con legislators into giving [the leagues] a direct cut of the amount that bettors wager is a lowest-common-denominator approach and actually undercuts the entire business of sports betting and will insure that we have more people going right back to the illegal market."


It will be politically complex

Indiana HB 1325 is only weeks old and faces a complex political road ahead. State Rep. Alan Morrison, the bill's sponsor, believes having MLB and the NBA on board will only help.

"It is a piece of the puzzle to make this whole thing work," Morrison said. "The integrity language and the integrity part of it is going to be very important. ... I don't think it's a bad thing to implementing that in there."

Morrison said he did not speak with the NCAA before introducing the legislation on Jan. 8. The NCAA, which is headquartered in Indianapolis, has declined to comment on the issue in recent weeks. However, the Division I Athletic Directors Association has been addressing the topic with its members and examining what added costs collegiate programs may endure if sports betting is legalized.

"Eighty percent of our members are against this," said former U.S. Congressman Tom McMillen, who is now president and CEO of the DI athletic directors association. "But we're looking at it."

Indiana State Sen. Jon Ford also has introduced a bill aimed at legalizing sports betting. Ford's bill, SB 405, does not include an integrity fee for the leagues.

"We deal with businesses in the state house every day, and we put requirements on them and we don't pay for it," Ford said. "And this is a business, and quite honestly, if this is successful, [the leagues] have the potential of making more money through advertising, more people watching their games, get better TV contracts. That's where I think they make the money.

"If you can help all the parties, sure, politically, it might help," Ford added. "But at the same time, I'm not sure of the appetite for the vote or taxpayer to keep subsidizing this kind of thing."

This week, Ford's and Morrison's bills were each assigned to the Committee on Public Policy in the Senate and House of Representatives respectively.