Ethics CasesSport

Cases · NBA / MLB / state legislatures · 2018–present

Integrity Fees and Official Data Mandates: Who Profits From the Numbers?

After the Supreme Court allowed states to legalize sports betting in 2018, the NBA and MLB lobbied state legislatures for an 'integrity fee' of 1% of the amount wagered on their games, later lowered to 0.25%. Most states refused. The leagues then pushed for official league data mandates, laws requiring sportsbooks to buy league-sanctioned data to settle in-game bets. Tennessee and Illinois adopted mandates in 2019, and Michigan, Virginia and others followed with versions triggered by a league's request. Critics called the payments a 'private tax' and said mandates hurt small operators; Tennessee repealed its mandate in 2023. The case asks how much leagues should be paid for the use of their games, and whether data control actually protects integrity.

By Tanner Simkins, editor

Timeline

  1. An Indiana House bill includes a 1% 'integrity fee' on amounts wagered, the first such proposal.
  2. The leagues lower their ask to 0.25% in New York; that bill fails.
  3. West Virginia's Lottery Commission rejects the leagues' proposed integrity fee and other changes.
  4. Tennessee and Illinois enact official league data mandates for live or tier 2 bets.
  5. Michigan and Virginia enact mandates triggered by a league's notification, with 'commercially reasonable terms' exceptions.
  6. The NFL names Genius Sports its exclusive official betting-data distributor, taking warrants for up to 18.5 million shares.
  7. Tennessee's governor signs a law removing the state's mandate, effective July 1.
  8. MLB signs an eight-year exclusive data deal with Sportradar, including $35.5 million in equity.
  9. The NFL extends its Genius Sports deal through the 2029 season for 9.5 million more warrants.

The ethical issues

  • Whether leagues have a fair claim to compensation for betting on games they produce.
  • Labeling: whether 'integrity fee' accurately describes the payment.
  • Market fairness: mandates' burden on small operators and competition.
  • Whether official data actually improves integrity or creates a single point of failure.
  • The role of the state in brokering private commercial deals.

Stakeholders

StakeholderInterests & obligations
LeaguesRevenue from betting and tools to monitor integrity.
Sportsbook operators, large and smallAffordable data and fair competition.
Data providersExclusive or official contracts with leagues.
State legislators and regulatorsTax revenue, consumer protection and market integrity.
BettorsAccurate, fast settlement of bets and competitive odds.
Casinos and racetracksOperating without paying leagues by mandate.

The case

When it became clear that states could soon legalize sports betting, the NBA and Major League Baseball went to state capitals with a request. Sportsbooks should pay the leagues a share of every dollar bet on their games. The first version appeared in an Indiana House bill in January 2018: operators would remit to a sports governing body “an integrity fee of one percent (1%) of the amount wagered on the sports governing body’s sporting events.”[1] Over the next five years the fight shifted from fees to data, and from a few states to many.

Background

Before 2018, legal single-game sports betting was largely confined to Nevada. The NBA and MLB argued that legalization would bring new integrity risks and costs. NBA Commissioner Adam Silver said in October 2018 that leagues would “need to monitor line movements” and “aberrational bets on games, things that we have learned from international soccer.”[1] Yet league executives also described the payment in commercial terms. NBA General Counsel Dan Spillane said the league “doesn’t call it an integrity fee” and called it “a royalty in a way.” He added, “These are our games. (They) are the backbone of the whole business of sports betting… You can’t have sports betting without our game.”[1] An MLB executive made a similar point: “If the Yankees weren’t playing the Red Sox last night, the casinos don’t have that game to offer bets on.”[1]

Critics noted that the leagues had not explained what the fee would pay for, or shown costs to justify 1% of the handle. In a Legal Sports Report analysis, sports law scholar John Holden argued that the request was best described as “a private tax,” imposed by government on operators for the leagues’ benefit.[1] The leagues lowered their ask to 0.25% in New York, but that bill also failed.[1]

States largely refused. In West Virginia, lawmakers rejected an integrity fee during the 2018 session. The NBA, MLB and PGA Tour then asked the state Lottery Commission to include one in its rules. They warned that without “strong and reasonable integrity protections,” legal betting “will deprive the leagues of important tools to detect and prevent manipulation and corruption.”[2] In October 2018 the commission rejected all seven changes the leagues proposed. It said it “declines to intervene between negotiations between private business entities.”[2] The head of the state’s racing association, representing casinos, said “the state has no business negotiating a contract between two privately held, for-profit, companies.”[2]

The rules and governance

Having lost on fees, the leagues lobbied for official league data mandates instead. These laws require sportsbooks to use league-sanctioned data to settle certain bets, usually in-game or “tier 2” wagers.[5] In 2019 the leagues won mandates in Tennessee and Illinois.[5] Tennessee’s law said a licensee “shall exclusively use official league data for purposes of live betting” unless it could show the league could not provide a feed “in accordance with commercially reasonable terms.”[3] Illinois created a licensing system for tier 2 official data providers, with fees of $30,000 to $500,000 based on data sales.[4]

Later laws took a softer approach. Michigan’s law, enacted in December 2019, lets a U.S.-based sports governing body notify the regulator that it wants official data used for tier 2 bets, after which operators have 60 days to comply. It lists factors for judging whether data is offered on commercially reasonable terms.[5][10] Virginia’s 2020 law follows the same model. Operators may use any source for tier 1 bets, and may use any source for tier 2 bets until a league requests official data, and even then only if the data is offered on commercially reasonable terms.[6] By 2023, Arizona, Illinois, Kansas, Massachusetts, Michigan, New York, Tennessee and Virginia had some form of requirement.[7] Other states resisted. Ohio lawmakers called an official data mandate an attempt at a monopoly.[5]

Tennessee’s reversal

Tennessee’s mandate was the strongest: it applied without a league having to request it. In practice it required operators to buy NFL data from the league’s exclusive data partner.[7] In 2023, two smaller operators asked the state regulator for permission to use unofficial NFL data, saying the price was unreasonable. The regulator sent the issue to the legislature.[7] Large national sportsbooks typically buy official data through national deals, so the cost falls harder on smaller operators. Industry consultants said that official feeds are fastest and that a few seconds’ delay can matter for live odds.[7]

Who sells the data

Whether or not a state requires official data, the leagues have turned their data into an exclusive product sold through a few specialist companies. Those companies’ own filings show how the arrangements work.

Genius Sports’ annual report for 2025 describes the NFL agreement it signed on April 1, 2021. It made the company “the worldwide exclusive distributor of NFL official data to the global regulated sports betting market,” the exclusive distributor to the media market, and the NFL’s exclusive sports betting and i-gaming advertising partner.[11] Part of the payment was equity. Genius agreed to issue the NFL up to 18.5 million warrants, each allowing it to buy one share for $0.01. When the deal was extended on June 6, 2025, through the end of the 2029 season, the NFL received 9.5 million more warrants.[11] So the league holds a financial stake in the company that sells its betting data.

The filing makes the company’s case for official data plainly. It says official data is “critical to sportsbooks, as only official data provides guaranteed access to the fast and reliable data necessary for in-game betting.” It also describes official data as “critical to regulators, as it is legally compliant and an independent source of truth that protects consumers.”[11] The same report lists the risks in the model. Rising rights costs, including for the NFL deal, have to be passed on to sportsbooks. If customers do not accept that “the increased fees charged are commercially reasonable,” they may lobby the leagues to cut fees “and/or customers may seek to obtain data via unofficial channels.”[11] The company also warns that a court “might challenge our exclusive arrangements with sports organizations as being in violation of competition laws.”[11]

Sportradar, which holds rights from the NBA, MLB and NHL among others, makes the link to state law directly. Its 2025 annual report says that “in certain jurisdictions, the legal requirement to only use official data increases our reliance on such sports league partners.”[12] On February 7, 2025, it signed an eight-year exclusive agreement with MLB, running through the 2032 season. Under it, Sportradar distributes official MLB data, including Statcast data, and MLB receives equity worth $35.5 million that vests through July 1, 2032.[12]

The “commercially reasonable terms” test that states wrote into their statutes is therefore applied to prices set in exclusive contracts between leagues and data companies in which the leagues own equity.[6][10][11][12]

Aftermath

On May 17, 2023, Tennessee Gov. Bill Lee signed a law removing the mandate, effective July 1.[8] A gaming consultant called the mandate “government overreach.” A Florida State University professor argued that relying on a single data source “allows a single point of failure to disrupt the integrity of the entire betting market,” because independent sources “serve as a robustness check against each other.”[8] Official data remained widely used through private deals between leagues, data companies and major sportsbooks.[7][8] The question of who controls betting information has not gone away. In October 2026, Silver said the NBA wanted greater access to wagering data and more control over the markets offered on its games.[9]

The core dilemma

Leagues produce the games on which a betting industry is built, and they bear real costs to monitor integrity. But their requests for payment were framed in integrity terms while serving commercial ends, and mandates can distort markets. Should the state guarantee leagues a share of betting revenue, through fees or data mandates, or leave compensation to private negotiation?

Competing values

  • Fair compensation vs. free competition: rewarding the producer against open markets for public information.
  • Integrity vs. revenue: funding monitoring against enriching leagues.
  • Transparency vs. framing: honest labels for payments against persuasive branding.
  • State action vs. private ordering: legislation against negotiated contracts.

Strongest arguments

For fees or mandates: betting depends entirely on the leagues’ games. Leagues bear monitoring costs and reputational risk. Official data is faster and more accurate, which can protect bettors and markets.

Against: game results and statistics are public facts. Leagues never documented costs to justify their ask. Mandates force operators to buy from one source, raise barriers to entry and can create a single point of failure. Major operators already buy official data voluntarily.

Applying the frameworks

Justice and fairness

A justice lens asks what each party deserves. It weighs the leagues’ contribution against operators’ investment and the public nature of results. It also asks whether mandates distribute costs fairly between large and small operators.

Utilitarian

A utilitarian lens compares outcomes: better data and funded monitoring against higher costs, less competition and possibly worse odds for bettors. Tennessee’s experience offers evidence for both sides.

Kantian (duty)

A duty-based lens examines honesty in advocacy. Calling a revenue request an “integrity fee,” while executives described it as a royalty, raises questions about whether legislators were treated as partners in reasoning or as targets to be persuaded.

Walk it through: the Simple Decision Model

  1. Spot the issue. You are a state legislator drafting a sports betting bill, and league lobbyists ask for an official data mandate. Stakeholders include leagues, large and small operators, data companies, bettors and taxpayers. Less visible are future market entrants. The codes are your draft statute and state procurement and competition principles.
  2. Gather facts. What integrity costs do leagues document? What do operators pay now? Beware authority bias: famous leagues may seem more credible than their evidence warrants.
  3. Test options. (a) No mandate; leave data to private deals. (b) A mandate triggered by a league’s notification, with commercially reasonable-terms review. (c) A strict exclusive-use mandate.
  4. Check codes and law. Antitrust and competition concerns, the regulator’s capacity to judge “commercially reasonable,” and how other states’ laws have worked.
  5. Decide and document. Record the evidence on costs and integrity benefits, and why you chose your approach.
  6. Communicate and follow up. Require reporting on data prices and integrity alerts, and schedule a review, as Tennessee eventually did.

What’s settled and what’s contested

  • Settled: the leagues’ 1% and 0.25% fee proposals and their failure in most states; mandates in Tennessee, Illinois, Michigan, Virginia and others; Tennessee’s 2023 repeal.
  • Contested: whether leagues deserve a share of betting revenue; whether official data improves integrity; whether mandates are fair to small operators.

Why this case matters

The integrity-fee fight shows how commercial interests can be framed in the language of ethics. It also shows that control of data has become central to the business and integrity of legal betting.

Key terms

Commercialization
The process of turning sport into a product and a business enterprise, with profit pressures that can compete with principle.
Conflict of interest
A situation where a person’s private interest could improperly influence a decision they make in an official role.
Integrity
A commitment to honesty and ethical principle in competition and administration, including when nobody is watching.
Authenticity vs. PR spin
The tension between communicating truthfully and managing perception. Spin may protect a brand short term while eroding trust.
Stakeholders
Everyone with something at stake in a decision: athletes, coaches, parents, officials, fans, employees, sponsors, media, communities and regulators, including the less visible ones.

Definitions from the Ethics Cases glossary.

Discussion questions

  1. The NBA's general counsel argued, 'You can't have sports betting without our game.' Does that create a moral claim to a share of betting revenue?
  2. Was 'integrity fee' a fair label for a payment the leagues had not tied to specific integrity costs?
  3. Should states require sportsbooks to buy official data, or leave it to private negotiation as West Virginia's regulators preferred?
  4. One expert warned that a single official data source could be a 'single point of failure.' How should that risk be weighed?

Sources

  1. When they say integrity fee, are pro sports leagues really asking for a private tax? — Legal Sports Report
  2. Lottery Commission rejects sports leagues proposal to include integrity fee in sports betting rules — WV MetroNews
  3. Tenn. Code Ann. § 4-51-316, Official league data (Acts 2019, ch. 507) — OpenJurist (Tennessee Code)
  4. 230 ILCS 45/25-60, Tier 2 official league data provider license — Illinois General Assembly
  5. Newest Michigan sports betting bill gives US pro leagues what they want: official data — Legal Sports Report
  6. Code of Virginia § 58.1-4036, Use of official league data — Virginia Law
  7. What's the impact of official league data decision in Tennessee? — Sports Handle
  8. Industry experts applaud removal of Tennessee's data mandate — Sports Handle
  9. NBA tightens betting rules, develops AI to flag suspicious wagers — CNBC
  10. MCL 432.410a, Source of league data (2019 Act 149) — Michigan Legislature
  11. Genius Sports Limited, Annual Report on Form 20-F for fiscal year 2025 — Genius Sports (SEC filing)
  12. Sportradar Group AG, Annual Report on Form 20-F for the year ended December 31, 2025 — U.S. Securities and Exchange Commission