West Virginia Lottery Commission rejects Ethics fee

In West Virginia this week, the final rules for sports betting were approved by the state Lottery Commission while a proposal to include an integrity fee was rejected.

According to the West Virginia MetroNews…

It was the second time the integrity fee had been rejected when earlier this year during the legislative session attempts by the leagues to include an integrity fee in the state’s new sports betting bill were thwarted by state lawmakers. The second effort attempted to use the rule-making process to persuade the Lottery Commission to approve the fee.

Proposed integrity fee:

John Cavacini, president of the West Virginia Gaming & Racing Association, reportedly said that in approving the integrity fee a “terrible precedent” would have been set.

“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,” said Cavacini.

Prior to Wednesday’s vote, 18 proposed changes to the rules were reviewed by the commission. Seven of the 18 proposed changes were from the sports leagues. All seven were rejected, the most significant of which was the integrity fee.

The commission reportedly justified its vote by saying, “The Lottery declines to intervene between negotiations between private business entities.” And according to Cavacini, whose West Virginia Gaming & Racing Association represents Hollywood Casino at Charles Town Races, Mardi Gras Casino & Resort, Mountaineer Casino, Racetrack & Resort and Wheeling Island Hotel-Casino-Racetrack, the commission made the right call.

After the commission voted, Cavacini reportedly said, “The state has no business negotiating a contract between two privately held, for-profit, companies.”

PASPA & SB 415:

Acting in anticipation of a favorable US Supreme Court ruling in Murphy v. National Collegiate Athletic Association, where on May 14, 2018, the high court held that the Professional and Amateur Sports Protection Act (PASPA) was unconstitutional, on March 9 this year, less than six weeks after it was first introduced in the Senate, SB 415 (pdf) labeled, West Virginia Sports Lottery Wagering Act, became law.

The bill became law without West Virginia Governor Jim Justice‘s signature and in spite of a last-ditch attempt from Major League Baseball (MLB) along with the National Basketball Association (NBA). The pro leagues have been lobbying for their preferred version of the bill, one with a tax on 1% of handle or an “integrity fee,” which would be paid directly to the leagues.

Last month in the letter to the commission, representatives of the NBA, MLB and the PGA Tour made their case for the integrity fee, according to the news agency.

“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.”

At Wednesday’s meeting, the integrity fee was addressed by State Lottery Director John Myers, who said, “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.”

The casinos, Cavacini said, are still interested in talking with the leagues, just 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,’” said, Cavacini.

According to the news agency, the casino operators walked out of the meeting on Wednesday having insisted that such an agreement belongs in the private market, not the government.

What the law says:

The WV Sports Lottery Wagering Act permits the state’s five gaming facilities to offer sports betting under the purview of the state lottery. Each will pay an application fee of $250,000 and in five years it can be renewed for $100,000, along with a tax on operators’ gross gaming revenue of ten percent.

One of the state’s five gaming facilities, which per the law would allow sports betting, is The Casino Club at the Greenbrier in White Sulphur Springs, WV.

The Greenbrier & Gov. Justice:

Located in the Allegheny Mountains, The Greenbrier is a luxury resort that was acquired by The Justice Family Group, LLC, led by Jim Justice (now Governor Justice) on July 10, 2009. The Greenbrier Casino Club has been home to FanDuel Sportsbook since last month. The casino is only open to “registered overnight guests as well as attendees of an event or convention when more than 400 rooms are occupied.” Those fitting the criterion can place bets on all major U.S. sports at The Casino Club.

Sports betting is also available at Hollywood Casino in Charles Town where it began in late August while Wheeling Island and Mardi Gras Casino, owned by Delaware North, is expected to have their respective sports betting operations up and running in just a few weeks.

Final approval of the permanent sports betting rules will reportedly be given by the legislature during the 2019 60-day regular session.