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States Eye New Revenues After Supreme Court Backs Legal Sports Betting

8 hours ago
Originally published on May 15, 2018 11:03 pm

Now that the Supreme Court says it's OK, states are free to legalize betting on sports if they want to. As a once under-the-table economy moves into the open, it creates some large business opportunities — and the potential for millions in new tax revenues.

But first comes the nitty-gritty part: writing the rules for how sports fans can bet on their favorite games — the legal age, where people can bet, licensing requirements, software standards for mobile apps, and money laundering safeguards.

"We also have to establish what the tax structure will be," says New Jersey Assemblyman John Burzichelli. "That's very important. We're actually in our budget cycle now."

He says the tax rate is still being negotiated, but will be between 8 percent and 15 percent of revenue after winnings are paid out. He says New Jersey can get these rules written in about four weeks.

This puts the state neck and neck with Delaware and Mississippi. Close behind them — and just in time for football season — are Pennsylvania, West Virginia and Connecticut. These are all states with an established gaming industry, all trying to be the first to take legal sports bets.

"Markets of this size don't just come into being on a regular basis," says Chris Grove, a gaming analyst for the research firm Eilers & Krejcik.

He expects 32 states to eventually allow sports gaming, worth roughly $6 billion annually. But, he says, that may not come so easily.

"There's an existing black market. It's entrenched. It's attractive. It offers a number of advantages that regulated betting sites will never be able to offer: the lack of having to fill out tax forms and have your winnings reported, the ability to bet on credit," Grove says.

But new entrants into the gaming industry don't expect much competition from the black market.

"I think most people would prefer to do things in a legal manner if given the option," says Jason Robins, CEO of the daily fantasy sports company DraftKings.

He compares illegal sports betting to the pirating of music. Most people shifted to legal products when streaming services came along. He contends something similar will happen in sports gambling.

Some analysts warn that profit margins might not be as plush as investors hope. A lot depends on how heavily sports betting is taxed.

And on top of taxes, there's what professional sport leagues want.

After years of fighting against sports betting, the NFL, Major League Baseball and other leagues have changed their approach. Over the last few months they've been going state to state, lobbying aggressively for a special fee to pay for policing against cheating, like an athlete intentionally throwing a game.

In New Jersey, leagues tried to get a fee between 2 percent and 3 percent of gross wagers. But lawmakers balked.

"They're not paying that in Nevada and their not paying that to the illegal sportsbooks." Burzichelli says. "That's a nonstarter as far as I'm concerned."

In statements Monday, the major sport leagues said they will be looking to Congress for a "regulatory framework" to protect the "integrity" of their games.

U.S. Rep. Frank Pallone of New Jersey is sponsoring one bill, which would establish a legal framework for consumer protections and give the Federal Trade Commission some oversight. But he acknowledges it's not getting passed anytime soon.

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MARY LOUISE KELLY, HOST:

When Henrietta Lacks was dying of cancer in 1951, her cells were harvested without her knowledge. They became crucial to scientific research, and her story eventually became a best-selling book. Lacks has become one of the most powerful symbols for informed consent in the history of science. This morning the National Portrait Gallery here in Washington, D.C., honored Henrietta Lacks by installing a painting of her. It's located just inside one of the main entrances. NPR's Neda Ulaby was there along with three of Lacks' grandchildren.

KIMBERLY LACKS: This is amazing. As soon as you walk through the doors...

JERI LACKS WHYTE: Yes, right there.

LACKS: ...There she is (laughter).

NEDA ULABY, BYLINE: Kimberly Lacks and Jeri Lacks Whyte are seeing this portrait for the first time. They never knew their grandmother. She died before they were born.

LACKS: A beautiful woman.

WHYTE: Just like they said she was in life - happy, outgoing, just giving. And she's still giving.

ULABY: Tons of Lacks' cells have been grown in labs over the past 67 years. They helped develop the AIDS cocktail, the polio vaccine and treatments for hemophilia, herpes, influenza and leukemia. Henrietta Lacks and her family never benefited from the thousands of patents and billions of dollars her cells helped generate.

(SOUNDBITE OF FILM, "THE IMMORTAL LIFE OF HENRIETTA LACKS")

UNIDENTIFIED ACTRESS: (As character) Everyone's saying Henrietta Lacks donated them cells. She didn't donate nothing. They took them and didn't ask.

ULABY: That's from an HBO movie based on the book "The Immortal Life Of Henrietta Lacks" by Rebecca Skloot. HBO commissioned the painting. Now it's co-owned by the National Portrait Gallery and the National Museum of African-American History and Culture. Bill Pretzer is a senior curator there. He says the story of Lacks is also one of racial history, bioethics and medical history.

BILL PRETZER: Doctors had been trying for half a century to grow cells in laboratory circumstances that would reproduce.

ULABY: Lacks' cells did. What's become known as her immortal line is represented, says Pretzer, by a pattern in her cheerful red dress that resembles cell structures when you look at it closely. And...

PRETZER: There are a couple of buttons that are missing on Henrietta Lacks' dress. And those were explicitly left off by the artist as a symbol of the cells that had been removed from her body.

ULABY: The artist, Kadir Nelson, painted Lacks standing in front of a wall covered with blue and purple hexagons, says National Portrait Gallery curator Dorothy Moss.

DOROTHY MOSS: A pattern that almost looks like wallpaper, but it's actually representative of her cells.

ULABY: In the painting, Henrietta Lacks clasps a Bible in front of the part of her body from which her cells were removed. Her face is haloed like a saint's by the brim of a light sun hat. The doctor who cut her open wrote later that the tumors made it look as though pearls studded the inside of her body. Lacks wears pearls in the painting. Her granddaughter Kimberly has her own interpretation.

LACKS: Pearls seem like it's classy, just a test of time. And that's that she was. She was classy. And I just think it's amazing, a great representation of our grandmother, our shero (ph).

(LAUGHTER)

ULABY: Time now for selfies. But it's hard given family emotions.

LACKS: My hand's shaking (laughter).

ULABY: This portrait should be a reminder, says curator Bill Pretzer...

PRETZER: That history can be remade, can be re-remembered.

ULABY: Henrietta Lacks is being re-remembered in all kinds of ways. She received a posthumous doctorate in public service from a college in Maryland. A high school for students interested in medicine now bears her name. So does a minor planet whirling in the asteroid belt between Mars and Jupiter. Neda Ulaby, NPR News. Transcript provided by NPR, Copyright NPR.