West Virginia Governor Jim Justice plans to call a special session to review the state’s recently passed sports betting bill.

West Virginia Governor Jim Justice

West Virginia Governor Jim Justice believes the leagues should have their “integrity fee,” although the benefit to the state is unclear. Lawmakers passed a bill to legalize sports betting in early March. (Image: NPR.org)

It seems the sports leagues have been bending the governor’s ear. Justice said Friday he supports tweaking the new law to include the so-called “integrity fee” –  a cut of all wagers in a future sports betting market that would go directly to the leagues.

West Virginia approved a bill to legalize sports betting in early March, but rejected the integrity fee, despite lobbying from the leagues. Many legislators across the country believe the fee is little more than a royalty payment in disguise – and one that would strangle the sector, taking revenues from operators and states.

But the leagues were rattled at the failure of their lobbying efforts and, fearing that the West Virginia bill would become a model for other states to adopt, MLB Commissioner Rob Manfred stepped in.

Manfred Tosses Weight

“We hope the House and the Senate reconsider the bill, delay the vote, take an opportunity to put together a better bill and, if that fails, we will continue to urge the governor to veto the bill,” he told reporters on March 9.

He added that he had spoken to Justice, who now has a “good understanding of the serious problems that are associated with the bill.”

Quite why Manfred felt he had the right to intervene in the democratic process in a state that does not have an MLB team is anyone’s guess, but it seems to have worked.

Justice neither signed nor vetoed West Virginia’s sports betting bill, meaning it became law on March 9. But speaking at a press conference on Friday, he confirmed the bill would be revisited and that a meeting had been arranged for this week involving leagues and stakeholders.

Justice League

“I really believe that we need to bring [the leagues] under the umbrella for the amount of the fee that they wanted, or we negotiated,” he said.

“They wanted a percent, we negotiated to a quarter of a percent and if we can get them to sign on for that and everything and bring them under the umbrella, I think that’s very, very minimal cost to the casinos, and I think it would be a good thing.”

The leagues’ initial demand of one percent of betting handle would have translated into an onerous 20 to 25 percent tax on sports books’ gross gaming revenue. But draft bills doing the rounds in New York, Kansas and Connecticut that propose a .25 percent fee suggest the leagues may have compromised behind the scenes.

The claim, however, that Justice has somehow negotiated the leagues “down” on the integrity fee is dubious, as Legal Sports Report pointed out this week. Since West Virginia already passed a bill with zero integrity fee, all negotiations are now clearly taking an upwards trajectory – with no discernible benefit to the state.