AFP-WV: Mountaineers Deserve Better Than Governor’s Closed-Door Corporate Crony Scheme

May 10, 2018 by AFP

CHARLESTON, W.Va.— Gov. Justice announced that he will circumvent the legislature in order to hand millions of dollars to out-of-state, multibillion-dollar corporations at West Virginians’ expense. The governor announced an “integrity fee” that will tax sportsbook operators nearly 20% of their revenue.

“The integrity fee is blatant corporate cronyism and the shadowy negotiating process being pushed by Gov. Justice lacks transparency and accountability. Lawmakers of both parties strongly oppose an integrity fee, which is why Gov. Justice has side-stepped the legislative process. The governor effectively kicked average citizens’ representation out of the conversation in order to make more room for rent-seeking lobbyists,” said AFP-WV State Director Jason Huffman. “It’s the economy and taxpayers that suffer when the government picks winners and losers. The governor should immediately withdraw this dubious corporate welfare scheme. Taxpayers deserve better than a backdoor deal that will ultimately leave them holding the check.”

Whether the so-called “integrity fee” takes the form of a tax on bets, profits, or a required transfer of funds between companies, it is clearly a case of the government picking winners in the market. This scheme creates market distortions that will ultimately harm the overall revenue that might be realized by West Virginia should the United States Supreme Court rule to allow legalized sports betting.

The announcement came following a closed door meeting between the governor, public employees, and representatives from pro-sports leagues.

BACKGROUND:

So-Called “Integrity Fee” Is Just A Corporate Handout At The Expense of Mountaineers:

This summer, the Supreme Court will decide a landmark case that could lift the federal ban on most sports gambling. States would rightly have the power to decide whether or not to legalize the practice within their borders. In fact, many states are already looking to bring this currently illegal activity out of the shadows, pending the SCOTUS decision.

Unfortunately, professional sports leagues are looking to cash in on these developments by calling on state legislatures to implement a new “integrity fee” which would be funneled directly to their bottom line. It’s laughable that these multi-billion-dollar entities are demanding millions in corporate welfare giveaways to line their pockets at the expense of West Virginians.

Any state-mandated “integrity fee” is pure corporate welfare:

Whether the so-called “integrity fee” takes the form of a tax on bets or profits, or even a required transfer of funds between companies, it is clearly a case of the government picking winners in the market. And when government picks winners, the economy and taxpayers of West Virginia lose.

Corporate welfare creates market distortions, rewards well-connected interests for aggressively lobbying in the statehouse, and promotes waste in the economy. It undermines taxpayers’ trust in their government and is inherently unjust and unfair. West Virginia policymakers should be focused on eliminating corporate welfare, not creating new provisions like the proposed “integrity fee”.

States don’t need to implement an “integrity fee” to maintain clean betting (and Nevada proves it):

The main argument from supporters of this bad proposal is that states should require this “integrity fee” so that leagues have the additional funds they need to prevent the fixing of games or outcomes. With this fee, the leagues say they can ensure the games continued to be honest. But this would be a solution in search of a problem.

Nevada, which is currently exempt from the federal betting ban, does not impost this fee and yet there hasn’t been evidence of widespread fraud. Players, many of whom would not risk their million dollar contracts on insider bets, are not using their siblings or cousins to place bets for them in Las Vegas as they affect the outcomes of games.

Furthermore, professional sports leagues already have rules in place to protect against insider or fraudulent betting. Violators of those rules, such as Pete Rose, stand as a stark reminder of what happens for those who do not comply. It’s not the responsibility of West Virginia taxpayers to subsidize these rules.

The vast majority of current sports betting in the US happens illegally. Experts estimate this betting to be as high as $200 billion a year. No regulation or “integrity fee” is applicable due to the illegal nature of these bets, yet leagues’ existing internal safeguards have protected the integrity of games.

West Virginia’s sports betting law already protects against fraud and abuse:

West Virginia’s statute already contains considerable penalties for defrauding the sports betting system, which means the so-called “integrity fee” is not needed. The recently-passed law that would legalize sports gambling at casinos brings those activities under the oversight of the West Virginia Lottery. This means that, should the Supreme Court ultimately overturn the federal ban on sports gambling, West Virginia will already have a regulatory mechanism in place to monitor sports betting in casinos.