NBA signs deal with MGM to be gaming partner

The NBA has become the first major U.S. sports league to partner with a sportsbook operator as legal wagering begins to expand into new states.

On Tuesday, commissioner Adam Silver announced that the league struck a deal that makes MGM Resorts the exclusive official gaming partner of the NBA and WNBA. MGM also receives the rights to use league highlights, logos and a direct data feed from the NBA that will be used to help fuel the company's growing sports betting footprint.

Industry sources pegged the deal to be for three years and at least $25 million.

Silver said teaming up with the NBA will give MGM an edge over its competitors and produce a superior experience for customers.

"Those operators who create the best experience for consumers that have official data, that have the official imprimatur of our league and other leagues as well, are going to be those that win in the hearts and minds of consumers," Silver said during an afternoon news conference in New York City to announce the partnership.

Jim Murren, CEO of MGM, sitting side by side with Silver, called the deal "historic."

"The foremost mission is to maintain and preserve the integrity of the game, the fan experience for the NBA fans, [and] in fact help catapult further the global presence of the NBA," Murren said. "As a global entertainment company, I feel MGM has an opportunity to partner with the NBA to do that."

MGM casinos will be able use league and team logos on oddsboards at sportsbooks, something not currently done in Las Vegas. NBA logos and league highlights also will appear on an MGM sports betting app, which will be available to states that approve online sports betting. As of now, only Nevada offers legal mobile sports betting, but sports betting operators in New Jersey are expected to launch mobile apps at some point in August. Murren said the MGM sportsbook at the Borgata in Atlantic City would start offering mobile sports betting at the end of the week, but no official date has been announced.

The partnership represents a dramatic shift in how American sports leagues look at betting. For decades, the leagues vehemently opposed the betting on their games and fought for six years to stop New Jersey's efforts to legalize sports wagering, before ultimately losing in the U.S. Supreme Court.

The NBA's pioneering move comes less than three months after the Supreme Court struck down the Professional and Amateur Sports Protection Act of 1992, the federal prohibition that restricted full-scale legal sports betting to only Nevada. The ruling opened a path for states to decide whether to legalize sports betting. Delaware and New Jersey began accepting bets in June, and some Mississippi casinos will open their sportsbooks Wednesday.

The NBA, along with Major League Baseball and PGA Tour, has been lobbying in states looking to legalize sports betting, asking that leagues receive a fee, sometimes called an "integrity fee," based on the amount wagered on their respective games and events. States, to this point, have not given into the sports leagues' requests.

The NBA believes that gaming partners should compensate the league for the commercial value of its intellectual property, and sources said that MGM did that in this deal. Silver did not give specifics but denied that any of the proceeds were based on the amount wagered on the NBA, like the proposed state fees would be.

"I think we're still having our discussions with our states about so-called integrity fees based on (betting) handles," Silver said. "[T]o me, there's many different ways to skin the cat, so to speak; and we decided here, rather than sort of re-litigating the integrity fee, which is still being hotly discussed state by state, let's find an approach which is unique to us and where we both feel that we're being fairly treated."

MGM operates in Michigan, Mississippi, Nevada, New Jersey and soon in Massachusetts and New York and has been aggressive in the newly expanded sports betting landscape.

On Monday, MGM and GVC Holdings announced a $100 million joint venture to create an online gaming experience and also formed a partnership with Boyd Gaming.

The American Gaming Association, which represents the casino industry, applauded the NBA-MGM deal.

"Sports betting deals should be done through contracts -- not statutory obligations," Sara Slane, senior vice president of the AGA said in a statement. "Today's announcement highlights the symbiotic partnership between casino gaming companies and sports entities. We anticipate this is the first of many to come."

The most lucrative opportunities figure to come in three to five years when it is projected that more than 20 states will have legalized sports gambling. In the meantime, the NBA and MGM are expected to promote the direct data feed relationship as a way to enhance the live betting product. Already in the United Kingdom, where sports wagering has been legal for decades, more money is bet during a soccer match than is bet on the match prior to kickoff. The U.S. sports betting market also is expected to gravitate toward more in-game wagering in the future, and the speed and reliability of data will be key.

"[Now], we have tremendous data analytics information from the NBA -- and that will determine who wins and loses in this arena, the sports betting arena, in the United States," Murren said. "And I think MGM's going to win."

Basketball is the second-most popular sport to bet on in the U.S., behind only football. Nearly $1.5 billion was bet on basketball at Nevada sportsbooks in 2017. Nevada Gaming Control does not separate the NBA and college basketball on its revenue reports. Sportsbook managers say the NBA accounts for 40-50 percent of the amount bet on basketball.