As the NFL announces with Caesars, DraftKings, and FanDuel, a key phrase in the legislation in four regulated states for official data mandates could yet have a central role in what the sportsbooks end up paying for NFL data.

On its face, the cost of NFL data to legal sports betting operators in the US and further afield is set to rise substantially as of the start of this year’s pre-season games.

According to reports regarding the terms of the deal struck between the NFL and new exclusive data supplier Genius Sports, the cost per year has soared to $120 million. It is believed a portion will be paid in stock in the soon-to-list Genius Sports.

The same reports suggest the fee paid by previous data supplier Sportradar was less than one-fifth of that or around $20 million.

Official Data Mandates Are An Easier Sell Than Integrity Fees

Official data mandates have been the preferred route for certain sports leagues to extract money from regulated sports-betting states after it became apparent soon after the fall of PASPA that so-called integrity fees as a concept were dead in the water.

Though not quite the same legislative poison as integrity fees, the official mandate is controversial enough that it is an active feature only in Tennessee, Illinois, Michigan, Virginia, and Arizona. But the adoption of these mandates is trending up.

In Indiana, though there is a provision for official data, the regulator has opted not to push for a mandate. Similarly, New York will (according to the current wording) leave it to the state regulator.

Even in the states where lawmakers have opted for an official mandate, further nuances are written into the legislation.

In Illinois, for instance, the law discusses two tiers of data, with the first applying to the score and result of a game and the second relating to in-play data. A similar difference applies in Tennessee, and in both cases, it is only with in-play that the official mandate applies.

What Constitutes Reasonable Official Data Fees?

But it is the wording around what the fee should be for official data that is perhaps most interesting in light of the new multi-million dollar deal.

In Illinois and Tennessee, the lawmakers inserted the phrase “commercially reasonable terms,” apparently in the expectation that otherwise, the NFL and its data partner might seek to extract more than the market can bear.

The limits of what is reasonable will undoubtedly get tested, and the expected price hike faced by the operators might well cause many to balk.

Indeed, while the new deal extends to international operators, the chances they will bear much increase are slight. While the agreements also include AV rights, their value to operators will also likely be modest given time differences, the limited popularity of the sport, and the availability of other broadcast alternatives.

At least until play-by-play betting becomes established to any great extent – still an if rather than a when – the bulk of the international markets’ NFL data needs can be obtained from alternative supply sources gleaned from broadcast coverage.

That leaves the burden of covering the costs of the new deal to fall almost exclusively on the US operators. And the mandated states will be at the forefront of the arguments.

What exactly is reasonable? Well, that is unclear. Sources suggest that as a percentage of gross gaming revenue, the NFL currently costs circa 5%. That applies across all states. The economics of the new deal suggests this will have to rise, and the same sources say the uplift could potentially be substantial.

But any substantial rise might test the bounds of what is reasonable in states where official data is mandated. At the very least, it will likely get the lawyers taking a look at how a significant price hike stands in relation to what is written into the legislation.

That would then affect the charged fee in states that don’t apply a data mandate. After all, if a ‘reasonable price’ is in place in Illinois, why should an ‘unreasonable’ price be accepted in New Jersey or New York?

Next-Gen X

Alternatively, if the price set in mandated states is too high, it will leave operators with the option of seeking an unofficial route in non-mandated states.

Of course, this route will not be open to all. A handful of names have signed official betting partner deals, including Flutter Entertainment’s Fox Bet and Caesars.

They will undoubtedly be waiting on what kind of uplift the much promoted ‘Next Gen’ stats can bring to their handle. With the vast majority of money taken on the main betting markets, this might also be slight.

All of which leaves the US sportsbooks staring down the barrel of having their main product becoming a loss-leader due to delivery costs. Which is doubtless not what anyone had in mind as the long-term model for regulated sports-betting.

In such circumstances, the sure-fire winners will be the sports and the offshore operators who will be happy to sit outside the requirement to pay over the odds for any officially sanctioned content.