Sports Betting Integrity Fees: What They Are and Who Pays

Integrity fees were a controversial proposal from professional sports leagues seeking a cut of legal sports betting revenue. Understanding this debate provides insight into the relationship between sports leagues, sportsbooks, and state regulators as legal sports betting expanded across the United States.

What Are Integrity Fees?

Integrity fees are payments from sportsbooks to sports leagues, theoretically to help fund integrity monitoring programs. Leagues argued they needed compensation for the costs of detecting match-fixing, monitoring suspicious betting patterns, and maintaining the integrity of their competitions.

The concept emerged after the Supreme Court struck down PASPA in 2018, opening the door for states to legalize sports betting. Major leagues including the NBA, MLB, NHL, and PGA Tour lobbied state legislatures to include mandatory integrity fees in sports betting legislation.

The proposed fee structure typically called for sportsbooks to pay leagues 1% of the total amount wagered, known as the handle. This would have represented a significant percentage of sportsbook revenue since profit margins on sports betting average only 5-7% of handle.

History of the Integrity Fee Debate

The integrity fee push began immediately after PASPA fell.

2018-2019: Leagues lobbied aggressively in early-adopting states like New Jersey, West Virginia, and Pennsylvania. They framed integrity fees as essential for protecting sports from corruption.

Industry Response: Sportsbook operators and gaming associations strongly opposed integrity fees. They argued the fees were economically unworkable and essentially amounted to a tax on betting operators for the privilege of using publicly available sports data.

Legislative Outcomes: No state ultimately passed mandatory integrity fee requirements. Leagues failed to convince legislators that such fees were necessary or appropriate.

Shift in Strategy: After losing the integrity fee battle, leagues pivoted to seeking official data mandates and partnership deals instead.

How Integrity Fees Would Have Worked

The proposed integrity fee structure would have required licensed sportsbooks to pay leagues based on betting volume.

Proposal Element	Typical Structure
Fee Amount	1% of handle (total amount wagered)
Who Pays	Licensed sportsbook operators
Who Receives	Professional sports leagues
Stated Purpose	Fund integrity monitoring programs

At 1% of handle, a sportsbook taking $100 million in bets would owe $1 million in integrity fees. Given that the sportsbook might only keep $5-7 million as revenue, this fee would consume 14-20% of gross revenue before other operating costs.

Why Leagues Wanted Integrity Fees

Sports leagues presented several arguments for integrity fees.

Integrity Costs

Leagues claimed they bear significant costs monitoring for suspicious betting activity and investigating potential match-fixing. They argued sportsbooks should share these expenses since betting creates the integrity risks.

Product Value

Leagues maintained that sports betting only exists because of their product. The games, players, and competition create the betting markets. Leagues believed they deserved compensation for this value.

Precedent Concerns

Some league executives worried that without establishing a revenue stream early, they would lose leverage as sports betting became normalized. Integrity fees were seen as a way to establish ongoing payments.

Risk Management

Leagues expressed concern that expanded legal betting could increase match-fixing attempts. They wanted resources to combat potential corruption before problems emerged.

Why the Industry Opposed Integrity Fees

Sportsbook operators and gaming associations pushed back forcefully.

Economic Viability

A 1% handle fee would consume too much of sportsbook revenue to be sustainable. Operators argued this would make legal betting uncompetitive with illegal markets, undermining the goal of bringing bettors into regulated channels.

No Legal Basis

Critics noted that leagues have no intellectual property rights over the outcomes of games. Anyone can discuss, report, or bet on game results. Leagues were asking for payment for information that is publicly available.

Existing Monitoring

State regulators and sportsbooks already conduct integrity monitoring. Suspicious betting patterns are flagged and investigated. The leagues do not bear sole responsibility for detecting manipulation.

Misaligned Incentives

Opponents argued leagues would pocket integrity fees as profit rather than spending them on actual integrity programs. There was no requirement that fees fund specific activities.

Tax-Like Burden

Integrity fees would function as an additional tax on sportsbooks, layered on top of state gaming taxes that can reach 50% or more of revenue. This would create an unworkable cost structure.

Integrity Fees vs Royalty Fees

The terminology shifted as debates continued.

Integrity Fees: Framed as compensation for integrity monitoring costs. This terminology emphasized protecting sports from corruption.

Royalty Fees: More honestly described as compensation for using league data and benefiting from league products. This framing acknowledged the request was really about revenue sharing.

Some legislators and critics pushed leagues to drop the integrity framing since it obscured the true nature of the request. Calling them royalty fees made clear that leagues wanted ongoing payments regardless of actual integrity spending.

States That Considered Integrity Fees

Multiple states debated integrity fee proposals during their legalization processes.

Indiana: Considered integrity fees but ultimately rejected them. The state passed sports betting without mandatory league payments.

Illinois: Early drafts included integrity fee language. Final legislation did not require direct payments to leagues.

New York: One of the most contentious battlegrounds. Leagues lobbied hard but did not secure mandatory integrity fees.

West Virginia: Rejected integrity fees despite league pressure.

Across all states that legalized sports betting, none ultimately mandated integrity fee payments to leagues. The industry successfully argued that such fees would undermine the regulated market.

Current State of Integrity Monitoring

Without integrity fees, how is betting integrity monitored?

State Regulators

Gaming commissions in each legal state oversee integrity monitoring. Sportsbooks must report suspicious activity. Regulators investigate potential manipulation.

Sportsbook Systems

Licensed operators use sophisticated systems to detect unusual betting patterns. Sharp line movements, coordinated betting, and other indicators trigger reviews.

League Partnerships

While mandatory fees failed, leagues have secured voluntary partnerships with some operators. These deals provide data access and revenue sharing without government mandates.

Third-Party Monitors

Companies like Sportradar and Genius Sports provide integrity monitoring services to both leagues and sportsbooks. These businesses specialize in detecting suspicious activity across global betting markets.

Athlete Restrictions

Leagues maintain strict prohibitions on athlete betting. Players, coaches, and team personnel face severe penalties for gambling on their sports, helping maintain integrity from within.

The Official Data Mandate Pivot

After losing the integrity fee fight, leagues shifted to pushing for official data mandates.

Official Data Requirements

Some states require sportsbooks to use official league data for certain bet types, particularly in-play betting. This creates revenue for leagues through data licensing deals.

Partnership Model

Leagues have signed partnerships with sportsbooks and data providers. These voluntary agreements generate revenue without mandatory fees.

Advertising Deals

Rather than extracting integrity fees, leagues now profit from sports betting through advertising partnerships, sponsorships, and media deals with gaming companies.

The industry and leagues have found alternative arrangements that work for both sides without government-mandated integrity payments.

What This Means for Bettors

For people betting on sports, the integrity fee debate had practical implications.

Competitive Odds

Without integrity fee burdens, sportsbooks can offer more competitive odds. Higher fees would have forced operators to widen margins, giving bettors worse prices.

Market Availability

Excessive costs could have limited which operators entered certain states. The absence of integrity fees supports a competitive marketplace with multiple options.

Regulatory Focus

With leagues not receiving direct payments, state regulators remain the primary authority over betting integrity. This keeps consumer protection focused on bettors rather than league revenue.

The integrity fee debate is largely settled, with leagues having lost the argument in state after state. However, the tension between leagues wanting compensation and operators wanting workable economics continues through other channels like data rights and partnership negotiations.