NBA signs deal with MGM

The NBA has become the first major U.S. sports league to sign an official betting sponsor.

On Tuesday, commissioner Adam Silver announced that the league struck a deal with MGM that will give the gaming company rights to use league highlights, names, logos and its direct data feed, as well as exclusively market itself as the official gaming partner of the NBA and WNBA.

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

The pioneering move comes as no surprise since Silver has been the most progressive of all U.S. sports leaders in talking about how the NBA could interact in the gambling space.

The NBA believed 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.

It is not known if the NBA receives an "integrity fee" that gives the league a percentage of the amount wagered on NBA games and events. The league was looking for a .20 percent to 1 percent cut based on total bets made on the NBA to compensate for increased compliance costs the NBA believes will arise from expanded legal sports betting in the U.S. The integrity fee is strongly opposed by the American Gaming Association, whose position is that it unfairly taxes operators whose margins are already razor thin.

Allowing use of league logos and team names on boards at MGM casinos is a first for a major American sports league. The logos and league highlights will also 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.

On Monday, MGM and GVC Holdings announced a $100 million joint venture to create an online gaming experience. MGM also formed a partnership with Boyd Gaming on Monday that allows the companies to eventually offer online and mobile sports gambling in states where sports gambling becomes legal and either of the two have physical casinos.

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. Partnering with the league also could pay off in the ability to place a bet on the same screen where a live game is being shown. But this deal does not include those rights.

The NBA and MGM are expected to promote the direct data feed relationship because it will enhance the live betting product. While that product makes up a small percentage of the total NBA betting, it has been hurt by complaints of slow third-party data feeds.

MGM has properties in Nevada, Maryland, Mississippi, New Jersey and Mississippi and will open in Massachusetts next month. In May, the company also announced intentions to acquire Empire City Casino in Yonkers, New York.

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.