MGM and NBA Ink Deal to Become First Sportsbook and Sports League Partnership in the US

The National Basketball Association and the casino, entertainment and hotel giant MGM Resorts International, Inc., have inked a deal that will make MGM the exclusive gaming partner of pro basketball.

It is a move that is sure to produce some ripple effects as far as the history of legal sports betting is concerned, as the deal will give MGM exclusive rights to use NBA and WNBA game highlights, promotional images, team and league logos and even direct data feeds of player and team stats for the gaming firm’s marketing efforts.

The goal, said NBA Commissioner Adam Silver, who spoke on Tuesday, July 31, about some of the details of the deal, is to help MGM develop its presence in the sports betting market in a way that the NBA is not left out in the cold. Though nobody knows exactly how much the deal was worth, ESPN.com’s reporters have cited anonymous “industry sources” as indicating that MGM paid out a cool $25 million to the NBA for the privilege of these exclusive rights.

In practical terms, that means MGM casino sportsbooks will be allowed to use all the above materials in the design and “fan experience” when it comes to their odds boards and betting lounges, as well as using video streams in the company’s mobile betting apps and so forth. This is a novel approach, as there are no Las Vegas sportsbooks that are currently able to do the same, which – presumably, anyway – ought to give MGM’s sports wagering products that much extra clout when compared to the competition. This development is especially significant when one considers that MGM is expected to open its first ever sportsbooks in New Jersey in the immediate future, starting with the Borgata casino in Atlantic City, through which it will begin offering a mobile friendly sportsbook app within a week at the earliest, effectively corning the market fresh out of the starting gate.

Silver said the arrangement with MGM will give the massive international gaming company “an edge over its competitors” by producing “the best experience” for customers,” but beyond the much needed injection of that extra cash, what is in the deal for the NBA? Well, for starters, basketball is already in second place in terms of popularity with sports bettors, and the NBA accounts for somewhere between 40 percent and 50 percent of all the money bet on the sport. Nevada sportsbooks, the only kind that were legal to any great extent from 1992 until May of 2018 (when the US Supreme Court issued a majority decision to overturn the Professional and Amateur Sports Protection Act of 1992, otherwise known by the acronym PASPA), took in an estimated $1.5 billion or thereabouts in basketball related handle in 2017 alone.

The same pattern holds true for the legal offshore sports betting sites such as Bovada, BetOnline, SportsBetting, BetDSI and 5Dimes, though they took in many orders of magnitude above the number quoted by the Nevada Gaming Control Board’s in its annual report on the earnings of the state’s sports betting industry. With that information in mind, there is a strong case to be made for a successful partnership between MGM and the NBA on that basis alone, so there is nothing that realistically could be said against Silver’s assessment of the situation.

However, what exactly does the NBA get out of this “historic deal” outside of an injection of let’s say $25 million in cash over the course of three years (which is only roughly equivalent to a single decent NBA player’s contracted salary over that same period)? For his part, Silver definitely sees the partnership with MGM as a “long game” strategy toward creating a market in the nascent sports betting industry for the information contained in the league’s direct data feed. If MGM is successful, or, as the case might be, more successful - and demonstrably so – as a result of its dealings with the NBA, then there may be other big names in the casino industry that start lining up at the NBA’s door.

That raises another interesting question though: is there actually an inherent advantage to having access to a direct data feed in the first place?

Naturally, Silver thinks so, and evidently so does MGM CEO Jim Murren, whose name appears on the partnership between the two monstrously huge companies, but the rest of the sports betting world is divided on the issue. MGM’s own casino sportsbook operations in Nevada do not currently use direct data feeds from the NBA (obviously) or from any other league for which their odds makers write betting lines, and certainly it does not seem to be the case that Sin City or Reno are what you would call “struggling” for want of sports betting action. The talking point brought up by Silver and Murren, among other proponents of direct data feeds is that the speed and reliability with which having direct access to the official data from sporting events can afford to sportsbook operators will be increasingly important as the industry makes what seems to be a pivot in the direction of live in game betting.

“…we have tremendous data analytics information from the NBA -- and that will determine who wins and loses in this arena, the sports betting arena, in the United States," Murren told reporters earlier this week. "And I think MGM's going to win."

Indeed, a precedent has already been established for the growing popularity of the live in game betting option, as in the case of the United Kingdom’s sportsbook market, which has been widely legal nationwide for many years, a report from the country’s gaming authorities last year indicated that more money is wagered by fans during the typical soccer match – to say nothing of during big international affairs like the recently concluded FIFA World Cup – than in the days and even hours before the start of the match. Additionally, legal offshore sportsbook websites have experienced a similar shift in popularity toward live in game betting, which is further boosted by their free to download mobile sports wagering apps that work with Android and Apple smartphones and tablets, though no exact numbers in terms of handle generated by that option exists for sports betting outlets based overseas.

At any rate, with the May 2018 decision to overturn PASPA looming large on the collective sports betting consciousness, it appears as though nearly two dozen states will be legalizing sportsbook operations inside their jurisdictions and many others around the US are looking into the prospect of doing just that. To that point, MGM already owns and operates casinos in several states that have legalized or will soon legalize sports betting – Nevada, New Jersey, Mississippi, Massachusetts, New York and Michigan among them – so the company is definitely expecting big things from its investment in the NBA’s data stream. Furthermore, the NBA deal is not the only big news to come out of the MGM Resorts headquarters this week, as it was revealed on the morning of Monday, July 30, that the company would be entering into a 50-50 joint venture worth a combined $200 million with UK based gaming company GVC Holdings to roll out an online sports betting product offered through various casinos owned by MGM.

The American Gaming Association (AGA) also thinks the arrangement between MGM and the NBA makes a lot of sense, but for reasons that go beyond dollars and cents.

“"Sports betting deals should be done through contracts -- not statutory obligations," said AGA Senior Vice President Sara Slane in a statement released Tuesday.”[The] announcement highlights the symbiotic partnership between casino gaming companies and sports entities. We anticipate this is the first of many to come."

That seemingly offhanded comment is worth digging into a little bit. PASPA itself was an attempt at getting around what is ostensibly the inability of the federal government to pass laws related to gambling activities, which had long been considered the exclusive province of state governments – a fact that led to the inevitable demise of the patently unconstitutional law which nevertheless was the law of the land for more than a quarter of a century. The likelihood of the US Congress being able to put enough brain power together to pass a good law related to the sports betting industry is incredibly low, especially with many more pressing concerns from legal and illegal immigration to healthcare policy to military adventurism overseas taking up the lion’s share of their combined bandwidth. So, once again, it seems that the easiest way to make sure that related business interests tied together by the newly available prospect of state-by-state legal sports betting is to leave things in the hands of the private corporations that are directly involved, as MGM and the NBA have demonstrated by signing this data exclusivity deal.

LegalBettingSites.com thinks the part of the deal that smells a little fishy about the whole thing comes from the fact that the NBA was pretty much the most vociferous opponent of legal sports betting becoming the real thing going all the way back to the early ‘90s when PASPA was still being debated. Right up until the day the highest court in the land struck the ill fated law down, the NBA (and Commish Silver himself) were leading a coalition of professional and collegiate sports leagues in support of PASPA’s continuance, but not – it seems anyway – out of any sense that sports betting was a national ill that needed to be limited in scope for the sake of “the children,” but rather because it was looking like the leagues were not going to be able to get a slice of the pie like the wanted to have. That situation led to the laughable concoction of the concept of “integrity fees” – essentially a rent that sportsbook operators would have to pay out to the leagues in exchange for the use of their “intellectual property,” meaning information about the games, the existence of the games, the data related to player performance, the likeness of players, and so on, though the full extent of what constituted intellectual property in the minds of the league’s legions of lobbyists was never fully fleshed out or spelled out.

Now that it seems that integrity fees – which, in some cases in a few different states would have amounted to 23 percent of a sportsbooks gross adjusted revenues if not more, a frankly untenable cut of the business to make it worth anybody’s time – are either a non-starter at worst or a matter of serious contention at best in state legislatures around the country, it really brings things into focus. For all the talk about making the sports betting experience bettor for gamblers and expanding the brand of the casino owners, we cannot help but see deals (even small time money deals like the one with MGM) as part of the same cash grabbing trend. The NBA and other pro sports leagues are just trying to bilk other industries in a seemingly never ending cycle of lawyers screwing over other lawyers forever, and comments like the next one from Silver only seem to confirm our worst suspicions about the leagues, which seem to making a pivot of their own toward becoming little more than “diet” versions organized crime syndicates (that is, they have not yet starting dumping bodies in the dessert when negotiations break down).

“I think we're still having our discussions with our states about so-called integrity fees based on (betting) handles," Silver said. "[T]o me, there's many different ways to skin the cat, so to speak; and we decided here, rather than sort of re-litigating the integrity fee, which is still being hotly discussed state by state, let's find an approach which is unique to us and where we both feel that we're being fairly treated."