NBA, MLB using data to chase better deals with sportsbooks

For NBA and MLB executives, a cut of sports betting revenue is pretty much a no-brainer. The wagers wouldn't even exist, they argue, without their teams playing the games, so they should be paid and sportsbooks should be required to use their data to determine the outcomes of bets.

The problem for the leagues has been convincing anyone else in the sports betting world.

They've been rejected by lawmakers in at least 10 states on both payments and the use of official stats, weakening their positions for private deals with sportsbooks beyond the benefits of vast marketing muscle.

But giving casinos a taste of official data this season has given MLB and the NBA new confidence as they attempt to negotiate agreements under deadlines. The newest argument: Pay us up front or give us a cut of what's bet on our games, or lose our data feeds and good luck setting and settling in-game wagers at the speed of sports.

The NBA ended its data services for some sportsbooks during the playoffs, when interest in pro hoops is at its highest. The MLB could follow suit later this season, hoping for new deals with sportsbooks by the All-Star break next month and cutting off anyone else without an agreement.

Gleefully or begrudgingly, some sportsbooks are signing up, less for the logos and more for the data, which they can use for a wide variety of live wagers — a type of betting expected to expand in the coming years as betting shifts toward smartphones and away from physical lounges. In-game bets for baseball, for example, may include which team has a lead after the sixth inning or the total runs in the first five innings.

While neither league nor several sportsbooks would discuss the financial specifics of the agreements with The Associated Press, the NBA is pursuing deals that require sportsbooks to pay either a percentage of handle to the league or a fixed fee.

"The fee that we are charging for that bucket of rights, and again it's not just for the data, it's relative to the size of the operator's business," said Kenny Gersh, MLB's executive vice president of gaming and new business ventures. "So, we are not going to charge somebody who is a small operator the same as somebody who is a large operator."

The fees could be reworked, league officials tell sportsbooks, if the payments ever become enshrined in law. Gersh said the MLB would net the legally required payments against the fees in the private agreements.

Fans can currently place wagers in eight states after the U.S. Supreme Court ruled a year ago that states were free to legalize sports betting, ending Nevada's monopoly. Four more states and the District of Columbia have passed laws for sports wagering but haven't begun taking bets yet.

The ruling last May quickly gave way to leagues chasing a piece of the action, with the gambling industry quickly balking at effort by the leagues to bake a 0.25% cut of all bets into laws.

The commercial agreements have been more successful, tying data with rights to use recognizable logos and trademarks, advertise on league broadcasts and market sports bets without the generic touch seen for years in Las Vegas, where sportsbooks often try to convince gamblers to bet on the "Big Game," the Super Bowl.

FanDuel, a household name in fantasy sports competitions but a relatively new player in the sports betting market, gained access to the NBA's official data, marks and logos after becoming an "authorized gaming operator" of the league. Kip Levin, president and chief operating officer of FanDuel Group, said the data was a key driver of the partnership, citing that more than 50% of the action the company has seen in New Jersey during this NBA season has been in-play betting.

"To do that well, it's really important that you have real-time stats feeds and data feeds that are sort of input into your models that sort of then help you efficiently and effectively price all the in-play odds," Levin said. "So, working in conjunction with the league, being able to get access to their official data feeds, just creates a better end consumer product."

Levin declined to provide financial details of the agreement with the NBA.

The NBA allowed its data distributors to give access to all operators this season while it negotiated deals, but it ended the service to those with which it didn't reach an agreement. MLB is using a similar strategy, hoping to reach deals well ahead of its playoffs in September and October.

"We provided a season-long grace period for other betting operators to have access to official NBA data while we discussed partnership terms," said Scott Kaufman-Ross, NBA senior vice president and head of fantasy and gaming. "While that period is ending — something distributors and operators have known since the start of the season — we remain committed to securing additional sports betting partnerships."

While the commercial agreements are customized to each sportsbook, some longtime operators disapprove of the approach by the leagues and would rather go it on their own. Their viewpoint is that sports betting is already a low-margin business, and revenue specifically from live betting — the only version for which near-real-time, official data is truly useful — is a tiny sliver of the national market. Sportsbooks often set low limits on those wagers or don't offer them at all, and leagues have been asking for a cut of wagers even for bets where their data doesn't make a material difference.

"We respect the leagues; we want to work with the leagues," said Jay Kornegay, vice president of race and sports books operations at the Westgate Las Vegas. "There are marketing deals to be made. When it comes to revenue sharing, we just don't have the room for that. ... If we just pay one league, we are in the red. That's how it's so minimal on in-progress betting."

Longtime oddsmakers say sportsbooks in Nevada have been in business for four decades without having to rely on league-licensed data. They also point out that data suppliers are lining up for opportunities to enter the market.

"My database in my brain is just as much or more than the database that they can send out," said Jimmy Vaccaro, who is now the director of sports relations for Rivers Casino Pittsburgh after working in Las Vegas for decades. "People like me have been doing it for their entire life and it always comes out about the same, we hold about the same percentage wise. ... We don't need help. What are they going to offer me that I can't already see? We don't need their database that bad."

Some oddsmakers believe in-game betting could end or never flourish in some markets if the leagues continue to push the issue.

The NBA and MLB have offered various reasons for their intentions to profit from the legal betting market. They have argued that they have to take steps to ensure their games are not manipulated and have invested millions in technology needed to track data.

League officials have also said the data is a matter of intellectual property. Courts, however, have disagreed, holding in previous cases that fantasy sports operators weren't required to pay for the use of statistics that are widely known.


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