(CNN) It's no secret that business leaders, entertainers and heads of major corporations think North Carolina's gender bathroom bill is not just discriminatory, but bad for the state's economy.

Now, the National Basketball Association is working with lawmakers to modify the controversial HB2 law, with sports legend Michael Jordan playing a key role.

A source with knowledge of the negotiations told CNN Sports that the NBA, Jordan, owner of the Charlotte Hornets, and team president Fred Whitfield are involved in talks with legislators over the law, which requires people to use the bathroom that corresponds to their gender at birth and prevents local governments from passing anti-discrimination ordinances.

The news comes amid reports that the North Carolina House leadership drafted new legislation modifying HB2 amid pressure from the NBA.

With Charlotte set to host the 2017 All-Star Game in February, the league's interest in the outcome is clear. Community leaders in Charlotte have urged the NBA to keep the game in the state despite calls for the league to boycott.

Earlier this month, NBA Commissioner Adam Silver said he met with Charlotte business leaders working with government leaders behind the scenes "to craft some sort of compromise." He called the law's bathroom provision a "distraction" and said the anti-discrimination protections were the "core issue."

"I'd say there is absolutely strong interest in trying to work something out. I think both sides of the issue recognize, however heartfelt their views are, that the current state of being is causing enormous economic damage to the state."

According to the source, if the game is played in Charlotte, the NBA wants everyone to be able to use the bathroom according to their gender identity, contrary to what the law mandates.

It's not clear, though, that they'll get their wish.

copy of the draft legislation appears to do little to address the bathroom issue or anti-discrimination protections. A copy obtained by CNN affiliate WBTV retains a provision of the bill that bans transgender people from accessing public restrooms in accordance with their gender identity. It also keeps a section that blocks localities from passing anti-discrimination protections.

The most significant change is the creation of an official document that would recognize a person's gender reassignment. The new document, which effectively would be the equivalent of a birth certificate, is referred to as a "certificate of sex reassignment" in the draft legislation. The proposed language requires a "notarized statement" from a physician who performed the surgery in order to request a certificate from the state registrar.

It also adds federal anti-discrimination workplace protections, but specifically states that the use of bathrooms according to biological sex "shall not be deemed to constitute discrimination."

Draft legislation a 'work in progress'

Rep. Charles Jeter (R-Mecklenburg) told CNN that the draft legislation is legitimate and confirmed that the state House is considering changes to the law.

He disputed the suggestion that the NBA threatened to pull the All-Star Game from Charlotte over the legislation.

"It's unfair and uncharacteristic to say that there was pressure from the NBA," Jeter told CNN. "We've had discussions with stakeholders, be it religious groups, businesses, or sports leagues, but there has been no mandate from the NBA or anybody else."

Jeter said North Carolina lawmakers are mindful of criticism of HB2 but insisted that the NBA did not pressure them to act.

"We'd be naïve to say that [outside criticism] doesn't have an impact," Jeter tells CNN. "We listen and we pay attention."

Jeter said it is common for legislators to create paper versions of drafts, noting that more changes could still come.

"This is a draft. It is by no means a final version of the bill and there are still discussions to be held," Jeter said. "It's a process and a work in progress."

He said a final amended version of HB2 was "close" to being released within the next few days.

It's also not clear how the draft or any other proposed changes would effect a pending lawsuit from the federal government over the law. The Justice Department's lawsuit seeks declaratory relief and threatens to curtail federal funding to the North Carolina Department of Public Safety and the University of North Carolina.

Groups insist law be repealed

LGBT groups said the draft legislation is a far cry from what they want: a full repeal of the law.

"This is nothing more than 'HB 2.0,'" said Human Rights Campaign President Chad Griffin. "Anyone who cares about equality must reject this ridiculous proposal out of hand. This despicable bill would continue insidious policies targeting LGBTQ people for discrimination and do nothing to fix the mess HB2 created. It's past time for North Carolina lawmakers to listen to the overwhelming chorus of voices from across North Carolina and around the country calling for full repeal of this hateful law."

"Legislative leadership must stop digging their own hole ever deeper. North Carolina can't afford it," said Equality NC Executive Director Chris Sgro, a member of the North Carolina General Assembly. "This leaked draft is the result of another backroom deal that does nothing to fix the problems of HB2. We need to repeal HB2 immediately. The legislature cannot cut and run."