Pittsburgh Pirates Want Cut of Sports Betting Profits to Fund Stadium Upgrades

Posted on: June 27, 2018, 03:00h. 

Last updated on: June 27, 2018, 02:53h.

The Pittsburgh Pirates are taking the concept of “integrity fees” to whole new heights as they seek to benefit from proceeds derived from new sports betting legislation to improve their stadium.

Pittsburgh Pirates
Pittsburgh Pirates president Frank Coonelly wants sports betting profits for stadium upgrades. (Source: bizjournals.com)

In a letter to the Pennsylvania Gaming Control Board (PGCB), team President Frank Coonelly suggests that a cut of sports betting revenues should go towards upkeep of the team’s home stadium, PNC Park.

Coonelly’s argument is a straightforward one. He believes that, since there would be no games to bet on if the Pirates didn’t exist, it follows that they should get a portion of the profits.

“We think it is important to note that any revenue generated through sports wagering is largely dependent on organizations like the Pirates who actually supply the sports wagering product,” Coonelly wrote in the letter to the PGCB this week.

He goes on to say that “without professional sports there can be no sports betting”, while pointing out that their landlord, the Sports & Exhibition Authority of Pittsburgh, doesn’t pay for maintenance and improvements to their park.

That may be a hard pill to swallow for the Pennsylvania public, who funded $222 million of the $262 million cost of the stadium.

Meanwhile, at least one expert asserts that there is no legal basis for Coonelly’s claims.

Are Sports Intellectual Property?

Ever since the Supreme Court overturned PASPA in May, opening the door for states to offer sports betting, officials from Major League Baseball and the National Basketball Association have argued that they have a right to a so-called integrity fee. They contend that the money would be used to spot any suspicious betting activity on their games.

The Pirates are taking it a step further, claiming they deserve money for their stadium as well. But neither position holds any legal water, according to lawyer Marc Edelman, who writes for Forbes.

Edelman asserts that two court decisions indicate that sports leagues have no right to such fees whatsoever. He points to the case of NBA vs. Motorola, in which the U.S. Court of Appeals ruled that sports statistics fall under the public domain and are not intellectual property of the leagues.

In another case, C.B.C. Distribution vs. MLB, the court ruled in a favour of a fantasy sports operation, saying they didn’t need a license from the league to operate.

Edelman’s legal opinion   is that sports statistics belong to the public, and leagues have no right to ask for fees, but that hasn’t stopped them from giving it a shot.

Leagues Waging Losing Battle

So far, the leagues haven’t had much luck in convincing state lawmakers to hand over their desired cut. An early draft of sports betting legislation in New Jersey called for a fee of 2.5 percent to go towards the leagues. However, that idea was scrapped when the state passed an updated bill, with one lawmaker calling it “extortion”.

Delaware doesn’t pay an integrity fee, and neither has Nevada over its many years of offering sports betting. Meanwhile, in New York, an early draft of sports betting legislation there would allow for a one-quarter percent integrity fee. However, that legislation has yet to be passed.

Pennsylvania hasn’t finalized all the details of its sports betting bill, so it’s too early to say whether they will concede on that front.

However, given what we’ve already seen from lawmakers in other states, it’s unlikely that officials in the Keystone State will be fans of the stadium demands being made by the Pirates president.