Major League Baseball Gambles On MGM Resorts

We’ve talked a couple of times this year about a potential new revenue stream for Major League Baseball: legalized sports gambling. As a quick refresher, back in May, the United States Supreme Court struck down as unconstitutional the Professional and Amateur Sports Protection Act of 1992 (“PASPA”), the federal law that banned states from permitting sports gambling in the United States (outside of Nevada, which was exempt). Even before PASPA was nullified by the Supreme Court, its imminent demise had been seen coming for a while, and so several states had already passed, or were in the process of passing, laws permitting sports gambling within their borders. Those laws, in many cases, took effect as soon as the Supreme Court ruled that PASPA was unconstitutional. And so it was only a matter of time before we saw the major sports leagues get in on the action themselves.

Enter MGM Resorts International, which took advantage of the opening to strike an exclusive deal with Major League Baseball to become the league’s first official gaming and entertainment partner. What does that mean? Well, I’m glad you asked.

As an official sponsor of MLB, MGM Resorts will domestically promote its brand and gaming options across MLB’s digital and broadcast platforms, including MLB Network, MLB.com, the MLB At Bat app and additional fan engagement offerings to be jointly developed.

MGM Resorts will be identified as an MLB-Authorized Gaming Operator and utilize MLB’s official statistics feed, on a non-exclusive basis, throughout its digital and live domestic sports gaming options. MLB will also make enhanced statistics available to MGM on an exclusive basis. In addition, MGM Resorts and MLB will work together on comprehensive responsible gaming measures and work to protect the integrity of the game both on and off the field.

If that seems a bit opaque to you, you’re not alone. So let’s break this down. This is not, as some have said, an event heralding MLB’s acceptance of players gambling and the rehabilitation of the reputation of Pete Rose. Nothing MLB has done overrides or modifies Rule 21, which prohibits players from betting on games. Nor does it mean illegal sports betting is going the way of the dinosaur; if the news is any indication, that dubious vocation is alive and well.

But it does mean that Major League Baseball is, for the first time, officially sanctioning gambling on games – and perhaps more. For starters, MGM is getting official access to MLB’s stats, but it is not getting exclusive access to most of them. That means MLB can turn around and license most of the same data and intellectual property to other gaming companies as well. And MLB made sure that its other gambling ventures (yes, they do exist!) aren’t impacted.

As to the future, as of today, there are no plans to integrate wagering on baseball into MLB’s digital and mobile platforms, such as the popular “At Bat” for mobile devices. The deal also does not impact MLB’s equity investment in DraftKings for fantasy baseball, although there has been talk that both MLB and the NBA may be looking to divest themselves of their ownership stakes in daily fantasy sports companies.

That opens quite a few doors for MGM, as SB Nation notes.

For starters, one of the most interesting parts of this agreement is that MGM will have access to MLB’s statistical data. Despite the fact that baseball and various gambling venues have had a tenuous relationship over the years (to say the least), this means that MGM will likely use that data to set the betting lines and they’ll be at the forefront in that regard.

That kind of access carries some value, as Forbes relays.

MGM Resorts locations will be see labeling such as “MLB-Authorized Gaming Operator” for digital and live gaming events. As part of the deal, MGM will be granted the use of official league logos and marks. MGM will have a visible presence at the so-called MLB Jewel Events, including the All-Star Game and the World Series.

So what did MGM pay for this unprecedented deal? Actually, that’s not at all clear. MLB didn’t disclose how much MGM paid, but at least one unconfirmed report placed the figure at $80 million. And if that seems light, that’s because (at least in one sense) MGM paid for not all that much, as Christian Pina explains.

In the new industry of mobile apps, this all comes back to the flagship app for MLB, MLB At Bat. No, MLB-At Bat isn’t acting as a DraftKings type of sportsbook for you to place bets, it’s honestly mostly just an open line of communication. Major League Baseball will give MGM and MGM’s mobile applications free-reign over their up to the second stats, next-gen stats (exit velocity, spin rate, etc), and most likely input some live betting expected win %’s pulled from MLB At Bat right into any mobile app parented by MGM.

In short, it really doesn’t mean much for you, the gambler and consumer, which isn’t what you probably wanted to hear.

So in one sense, this is, despite the gaudy headlines, not much more than Major League Baseball garnering a new sponsor in a new area that was previously unavailable; were it, the price MGM paid would likely have been substantially higher. As the official gaming sponsor for Major League Baseball, MGM mostly just bought advertising rights. MLB will have other sponsors and gaming partners, but MGM paid for the use of the word “official” by being first in line.

But in another sense, MGM did score a major coup here. Why? Because MGM is receiving exclusive access to what MLB calls “enhancing” statistics, which MGM Resorts will use for the purpose of setting betting lines. In other words, MGM just purchased the right to set betting lines based on Statcast data, which would, in theory, allow for in-game betting based on those data and metrics. (The specific form that data takes, and which exact Statcast stats and feeds will be available to MGM, is still unclear.) And MGM does have avenues to grow its relationship with the league even further, because its contract is only with MLB and not with any of the thirty individual teams. MGM is currently negotiating with multiple teams in the hopes of signing official sponsorship deals with them as well. And Statcast data will allow for more accurate betting lines and more realistic gaming. How Statcast might be used for betting is an issue that has yet to fully develop – and it’s one we’ll be following closely as this new frontier comes into focus.

We hoped you liked reading Major League Baseball Gambles On MGM Resorts by Sheryl Ring!

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Sheryl Ring is a litigation attorney and General Counsel at Open Communities, a non-profit legal aid agency in the Chicago suburbs. You can reach her on twitter at @Ring_Sheryl. The opinions expressed here are solely the author's. This post is intended for informational purposes only and is not intended as legal advice.

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Joser
Member
Joser

Does MLB get any kind of cut from MGM’s gambling-on-baseball business, or is the entirety of the agreement “enhanced stats” and “official recognition” plus MGM branding at MLB events in return for a flat $80M?

evo34
Member
evo34

I would hope not. If MLB had a direct stake in betting volume, they could very easily do something like change the baseballs without telling anyone to dial up scoring to the precise level that maximizes betting volume. Oh wait — they already did that.

Or, let’s say they noticed that betting volume spiked whenever the Yanks went on a win streak….guess which umpires would be getting positive reports for skewed strike zones.

The threat of corruption is so much greater at MLB HQ than it is on the field. If Congress really wants to be involved, they should pass a law prohibiting sports leagues from having any connection whatsoever with gambling operators.

Joser
Member
Joser

Exactly. That’s why I asked. It’s a slippery slope.