If MLB and the NBA get their way, the Colorado Rockies and Denver Nuggets will profit directly from the presence of Colorado legal sports betting.
Other Colorado sports teams like the Colorado Avalanche, Colorado State Rams, Denver Broncos and the University of Colorado Buffs should see their valuations increase as well.
The extent of that valuation bump depends on many factors, however. The state will make decisions to influence those factors in the coming months.
Colorado professional sports teams’ involvement in legalizing sports betting
At the Colorado Limited Gaming Control Commission’s first meeting since the state’s voters approved legal sports betting in Colorado, representatives for some of these entities will be present. That includes lobbyists on the payroll of MLB and the NBA.
General counsel for the Rockies will also be present. The counsel will be advocating for the CLGCC to include a couple of tenets in the forthcoming regulations:
- A royalty of 0.25% of handle paid by future legal sportsbooks directly to the leagues
- An “official data” mandate
College athletic conferences, the NFL and the NHL haven’t pressed for those matters to the same extent. However, they might be included anyway if it becomes part of the final framework.
Until now, MLB and the NBA haven’t had success getting any other states to codify their royalty ask. They have had some success with the “official” data mandate, however. Data, in this case, refers to information that sportsbooks use to set their bets.
It isn’t difficult to see how both of these demands by the leagues simply amount to a private tax. The arguments for why the league should get either fall apart quickly as well.
Why the demand to pay for “official” data is illogical
Firstly, it’s important to understand the difference between “official” and “unofficial” data. The biggest difference amounts to a stamp of approval from the leagues.
There is no research that shows official data is in any way superior to that from so-called unofficial sources. The official sources use the same collection methods and reporting channels that the unofficial parties use.
Requiring sportsbooks to purchase data feeds from a single seller flies in the face of a perfect market. If the official product is so superior, as the leagues argue, then a mandate is unnecessary because the buyers would on their own choose to purchase that product because of its higher quality.
Thus, requiring sportsbooks to purchase data from the leagues seems like an unnecessary directive.
Leagues will automatically benefit from sports betting
The leagues’ royalty demand is even more ridiculous. The main argument has always been that the leagues bear the cost of producing the product (games) that sports bets are placed upon, so they deserve a share of the revenue created.
The problem with this argument is that legal sportsbooks can make the same claim. Having skin in the game increases people’s interest in attending or watching sporting events, which leads to more revenue for leagues and teams.
In fact, New York Giants minority owner Jonathan Tisch recently went on the record with that exact statement. Tisch attributed the NFL’s rising television ratings to legal sports betting.
Tisch points to the way that all of Colorado’s sport-entertainment corporations will benefit from legal sports betting in the Centennial State. Those aren’t the only ways they’ll benefit, either.
New marketing and sponsorship opportunities for all
In the past, some Colorado teams like the Broncos have partnered with daily fantasy sports providers. The same cross-promotional opportunities exist in regard to sports betting and perhaps to an even greater extent.
There’s nothing to stop the Avalanche or the Pac-12 from signing a sponsorship deal with FanDuel, for example, as their “official sports betting partner.” There are myriad ways legal sportsbook operators and professional sports teams can benefit from mutual relationships.
That’s all in addition to the benefit of increased consumer interest. Increased demand for the leagues’ products is the biggest win they could ask for.
There is no need for the state to put regulatory strain on legal sportsbooks requiring kickbacks to the leagues. Colorado’s professional sports teams are going to get a cut of the action without either of those potentially harmful mandates.