Weeks after the Tennessee Titans’ improbable run to the AFC Championship, there are strong indications that legal sports wagering could become operational in the Volunteer State by the first half of 2020 after considerable delay in recent months.
While it is unlikely that Tennessee will be able to roll out sports betting in time for April’s NFL Draft, Rep. Rick Staples (D — Knoxville) is hopeful that consumers can wager on sports across the state in time for the NBA Finals. By that point, Staples noted that sports betting in Tennessee would be in place for key events such as the start of the NFL and SEC football seasons, as well as the MLB postseason.
As one of three states with a proposed data mandate, Tennessee will be closely monitored throughout the industry in the coming months. Two others, Michigan and Illinois, have provisions that require sportsbook operators to purchase official league data in certain cases. None of the three have finalized sports betting regulations in their respective states.
Staples is urging patience over impulsiveness as Tennessee becomes one of the first Southeastern states to launch sports betting.
“I can’t stress enough we want to put out a good product and we want other states to model it,” Staples told TN Bets in an exclusive interview.
Staples, the sponsor of an interactive-only bill that passed in the House last April, made the comments ahead of two highly anticipated regulatory meetings later this month. When a Sports Wagering Advisory Council commissioned by the Tennessee Education Lottery Corporation (TELC) meets next on Feb. 18, the board is expected to conduct a formal review of proposed sports gaming regulations drafted last November. The TELC board will likely review the rules at a separate meeting a day later.
Earlier this week, state Sen. Steven Dickerson (R – Nashville) introduced legislation that could impact the role of the nine-member advisory board in crafting final regulations. It is immediately unclear if the bill will lead to further delays beyond the projected June launch.
It has been slightly more than 7 months since Tennessee’s mobile sports betting law went into effect. It has not taken a single bet. @jgreesontfp takes a closer look at the timeline for legal sports betting in Tennessee (with insights from me): https://t.co/HGFA5KvoQ7
— Daniel Wallach (@WALLACHLEGAL) February 4, 2020
Proposed data mandates
A sports gaming operator, according to proposed Tennessee regulations, must use official data provided by a professional sports league for in-game offerings. There is one notable exception. An operator can use an alternate feed if it demonstrates to the board that a governing body of the sport or another authorized entity is unable to supply the data streams in accordance with “commercially reasonable” terms. The board, under the rules, will have the discretion to determine if the rates meet the standard.
When determining a standard, Staples emphasized that Tennessee needs to look at the rates the market will dictate not just throughout the state but across the country. In Michigan, proposed regulations give the state’s gaming control board some latitude in delineating a standard for commercially reasonable terms when it comes to data. One factor the board in Michigan may consider, according to the proposed rules, is whether a league makes official data available to sportsbook operators from more than “one authorized source.” The provision assuages some concerns regarding a possible data monopoly if a league forms an exclusive partnership with a third-party supplier to distribute its official data feed to sportsbook operators.
— Howard Stutz (@howardstutz) September 10, 2019
Staples noted that he has heard the industry’s concerns associated with a single vendor in the marketplace. If the data concerns become unbearable, Staples indicated that he could foresee Tennessee considering an amendment that would address the problem. Under a scenario in which multiple states are grappling with data issues, Staples did not discount the possibility that the federal government could develop guidelines for states to follow.
Since the Supreme Court’s historic PASPA decision in 2018, several North American sports leagues have taken the position that as intellectual property creators of multi-billion dollar operations they should be compensated for their sports betting data platforms. Official league data helps protect the integrity of their games, protections that unauthorized feeds do not offer, they argue.
Safeguards against upcharging
Staples acknowledged that it could take months to evaluate market conditions for data after legalized sports betting is rolled out. He supports a product that allows Tennessee to stay competitive on the national stage, but one that is still appealing for consumers.
“As long as there is consumer protection in what the market is bearing then we’ll move with that,” Staples said.
Upcharging occurs when a vendor imposes an additional fee after a contract is already negotiated. For data purposes, the majority of sportsbook operators nationwide contract with third-party companies to receive a suite of in-game and risk management products. While the parameters of the contract may seem reasonable at first, there is concern that the rates could increase sharply once a data supplier becomes the sole provider of a league’s official data. The concerns are magnified when statutory mandates require sportsbooks to purchase data supplied by a specific provider.
There is also some trepidation that the added costs could be passed on to customers in the form of higher vigs and less favorable odds. Three data providers, Sportradar AG, Genius Sports, and STATS Perform, have emerged as the top players in the global sports betting market.
Staples reiterated that TELC has strong leadership in President/CEO Rebecca Hargrove and is more than capable in identifying potential nefarious acts related to upcharging. Once sports betting is launched statewide, the Lottery will be responsible for submitting an annual report to the state legislature. The legislature, in turn, can recommend various adjustments if it determines that upcharging is creating disruption in the marketplace.
“That’s one thing the legislative body here wouldn’t tolerate,” Staples said. “We have measures here to correct that.”
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