The big bet: Sports gambling has leagues, networks and books desperate for a piece of your action
As a blitz of advertisements touting online sports books infiltrates seemingly every station break of a game broadcast, it is easy to forget that just more than a decade ago, the NFL prohibited the city of Las Vegas from advertising on the Super Bowl.
In a landscape where big league managers now send their lineups to MGM before posting it in their clubhouse, it boggles the mind to imagine Major League Baseball once banned Mickey Mantle and Willie Mays merely for golfing and glad-handing with casino patrons.
With every dollar that changes hands at a sports book located within an NBA arena, it feels incomprehensible that just a dozen years ago, a referee was released from prison after a betting scandal that cast the association’s integrity into doubt.
The sports industry’s longstanding public disdain for its gambling counterparts belied a symbiotic relationship that has existed since Ancient Greece, whose citizens were known to toss a few drachmas on fights and races.
Now, three years after a landmark Supreme Court ruling opened the front door to sports gambling coast to coast, leagues, gambling sites and media entities – all facing some degree of existential threat – hope a full embrace of online wagering will result in a triangular benefit for their businesses.
For the gaming industry, this is their Oklahoma land rush: The 2018 Supreme Court ruling striking down the Professional and Amateur Sports Protection Act (PASPA) opened up a multi-billion dollar opportunity with the expansion of sports gambling beyond Nevada. That’s why DraftKings, FanDuel and William Hill have supplanted Budweiser, Ford and Cialis on your favorite team’s broadcast.
For sports leagues, this is their weapon against stagnation: While tens of billions of dollars in TV revenues keep their current ledgers balanced, aging fan bases and unprecedented competition for eyeballs create significant long-term concerns. That’s why multiple arenas and stadiums are building out sports books while leagues strike partnerships with betting parlors, getting a piece of the action and hoping new fans go along for the ride.
And media entities waylaid by cord-cutting, imploding business models or core audiences growing older seek the same tangible and visceral boosts as the leagues and casinos: New revenue streams and an increase in the ever-nebulous “engagement” metric.
For the casual gambler, it’s been a long and suddenly dizzying journey from annual Super Bowl squares or NCAA Tournament pools to betting the Nuggets-Magic adjusted over/under on a Tuesday night.
Now, with sports wagering legal in 19 states and the District of Columbia, available via mobile apps in 14 and at least six more likely receiving approval by year’s end, betting will be closer to the rule and not the exception across the U.S.
The appetite is there: January marked the sixth consecutive month the legal sports gambling handle set a record, with nearly $4.4 billion wagered across the country, according to the American Gaming Association.
Despite an increasingly glutted market, the house, as always, is expected to win.
“While bettors won’t make a lot of money in the long term, gambling is a sustainable system if it’s done right,” says Dustin Gouker, an industry analyst for Play USA, a network that monitors the gaming industry in all 50 states. “There’s room for growth – and it will be sustainable for everybody around.
“Right now, what we’re seeing is a lot of pent-up demand.”
And just what does that look like?
In Michigan, it means a whopping 10 online wagering apps going live almost immediately after sports betting tipped off on Jan. 22 – and more than $150 million wagered in just 10 days.
In New Jersey, it means welcoming thousands of New Yorkers – still barred from online wagering – across the George Washington Bridge or through the Lincoln and Holland tunnels to open their betting apps in the Garden State, whose legal challenge of PASPA made all this possible. Gouker estimates that up to 25% of New Jersey’s sports betting handle – which topped all states at nearly $960 million in January – comes from out of state.
And for veterans of the gambling industry who have seen all this unfold before, it looks like the first drops of what’s expected to be a flood of action as newbie gamblers grow more comfortable and the biggest states of all – Florida, California, Texas and New York – crawl toward legalization.
“I don’t think we’re seeing a tsunami-type surge,” says Jay Kornegay, vice president of race and sports book operations at the Westgate Las Vegas, whose Superbook app is live in Nevada and Colorado.
“I think we’re seeing the front end of the bell curve. And it’s a pretty big bell.”
Little wonder, then, why so many entities are desperate to ride that curve to the top.
Seed money
It’s one thing for the DraftKings and FanDuels to bombard radio, broadcast and even your snail mail with sign-up offers and promo codes.
It’s quite another for a gambling entity to spend $85 million to rebrand a major network of sports channels for a product that is not yet legal to enjoy in a majority of its markets.
Yet that’s the gambit Bally’s undertook when it struck a 10-year agreement worth a reported $85 million to rebrand Sinclair Broadcasting’s 21 regional sports networks it recently acquired from Fox.
All your favorite Fox Sportses across the land (Detroit to Southwest, Florida to Arizona) along with a few standalone networks (Sports Time Ohio, Prime Ticket in Southern California) became as of March 31 Bally Sports, putting thousands of local broadcasts per year under the umbrella of a sleeping gambling giant.
After some consolidation, the 19 networks will hold local TV rights to 45 teams across the NBA, NHL and MLB. In their October marriage announcement, Bally’s and Sinclair said the union would forge “a long-term strategic partnership that would combine Bally's vertically-integrated, proprietary sports betting technology with Sinclair's expansive market footprint” and “create unrivaled sports betting and gamification content on a national scale.”
While that all sounds exciting, implementation is far more meticulous and indicative that these splashy arrangements eye a longer game.
It has since struck licensing deals with the NHL and, last month, NBA and MLB, giving Bally’s access to official league and team logos and data, creating a lane to integrate gambling content into broadcasts.
Now, the waiting game: Thirty-six of the 45 sports franchises for which Bally Sports will hold local TV rights play in states where gambling is not legal. The company’s commitment seems to indicate the inevitability of coast-to-coast betting.
“You’re seeding that,” Gouker says of Bally’s strategy. “I want my name out there. People in the gambling industry know Bally’s, but it’s not a household name. There’s lots of value in future betting that will happen.”
And that’s a big reason why legacy brands and leagues alike find themselves pivoting from between the white lines to the betting lines.
News, cameras, action
For four decades, merely being the self-proclaimed "Worldwide Leader In Sports" was enough for ESPN. And there was little need to amplify a significant reason for its success: The never-ending thirst among gamblers and fantasy sports players for news and information.
Yet while its fantasy presence has been robust for decades, particularly online, saying the gambling part out loud on its many platforms has been gradual. Scott Van Pelt, whose Approachable Bro mien paved a path to anchoring the 11 p.m. ET "SportsCenter," was an early adapter, gaining a cult following with his cheeky “Bad Beats” segment.
As sports leagues began striking deals with gambling entities – rendering moot the delicate balance rightsholders struck with leagues that might have been averse to gambling talk – and ESPN agreed to a $1.5 billion contract with UFC, the ties grew stronger.
In March 2019, ESPN launched "The Daily Wager," a betting advice show which aired on ESPN2 and ESPNEWS, with pop-ins on "SportsCenter." Caesars was enlisted as the network’s official odds provider and suggested the network establish a studio in Las Vegas.
And so, in September 2020, "The Daily Wager" made its Las Vegas debut, the new studio providing ESPN a beachhead in the battle for gaming clout.
That same month, DraftKings reached a multi-year agreement with ESPN to become a “co-exclusive sportsbook link-out provider and exclusive daily fantasy sports provider.”
Now, betting lines make the bottom-screen crawls and, in more elaborate examples, take over nearly a quarter of the screen on ESPNEWS.
The 2021 MLB season was just three batters old when ESPN's Karl Ravech reminded viewers that betting on no runs being scored in the first inning of the Blue Jays-Yankees opener was a fine bit of gambling advice put forth hours earlier on The Daily Wager.
It has been a significant transformation in less than three years.
"We began to integrate gambling content in a deliberate way. We’re thrilled with how that developed in the years since the repeal of PASPA,” says Mike Morrison, ESPN’s vice president of business development. “With DraftKings and Caesars, we had a chance to bring in a couple excellent partners.
“We’re excited how it adds another layer to sports.”
It has proven an essential layer for media brands both nascent and established.
The Athletic, the subscription sports news media site, announced in January that BetMGM will be its exclusive betting partner; as part of the agreement, it created The Athletic Betting Hub to provide “sports betting content with integrated live odds and exclusive offers powered by BetMGM,” and “create an immersive betting experience for sports fans.”
Last week, The Athletic flooded readers' inboxes with an offer: Sign up and wager just $1 with BetMGM, and receive a year's extension on your subscription.
Yahoo Sports, BetMGM and the latter’s partnership with the NBA are also leveraging one another, with bettors able to log into BetMGM using only their Yahoo email address, bypassing the app. Want a free year of NBA League Pass? It’s yours if you merely place $100 in bets after opening a BetMGM account via Yahoo.
Barstool Sports has long made gambling a key wing of its testosterone-fueled content farm, which makes Penn National Gaming's takeover a natural. Penn, whose William Hill casinos and apps are firmly entrenched in the U.S. and overseas, paid $163 million to purchase what will eventually be a controlling interest in Barstool, valued at $450 million.
(Gannett, which publishes USA TODAY and more than 400 newspapers nationwide, carries advertisements and odds from BetMGM as part of a sponsorship package.)
For now, it is a race for your information as much as your money. DraftKings and FanDuel’s forays into daily fantasy sports put them on third base before their competitors could even stroll to the plate.
As for all those sign-up deals offered by your news subscription, your email service, your regional sports network? It's another mutually beneficial feature of this landscape.
The referring partner – The Athletic, Yahoo, whoever – gets a small kickback from the betting partner, Gouker explains. Meanwhile, the sportsbook partner calculates the lifetime value (LTV) of a customer; one may sample sports betting, get crushed and depart quickly, while others may be customers for life.
The LTV falls somewhere between those two, but the long-term customer would yield significant dividends for the sportsbook.
"The LTV," says Gouker, "would be far greater than what that payment would be (to the referring service).
Luring existing customers from their massive databases, without paying a referral fee, is just one more advantage DraftKings and FanDuel can leverage.
So, who might challenge the current kings of the hill?
Multiple industry analysts believe BetMGM – with its app available in 10 states and “official gaming partner” arrangements with the NBA, MLB and NHL – and William Hill will provide the most initial competition.
“There will be losers at some point. There’s too many brands out there,” says Gouker. “What’s a sustainable number of sports books in the U.S.? Tough to say.
“This is not DraftKings and FanDuel’s God-given right to do this. They are the leaders right now and have the advantage of collecting databases of fans for years and years.”
Says ESPN’s Morrison, who believes fans utilizing multiple apps will become the norm: “I think the consumers will tell us, right? The question is how many services is an individual fan to utilize? It’s way too early to predict how any of this is going to go.”
It’s probably not too early to say the paradigm of sports fandom has already shifted.
Eat the young
During a recent media briefing to highlight its new and updated products for 2021, MLB presented internal statistics regarding its “Game Rally” daily contest, a prelude to its 2021 “Rally Pro Championship,” which offered $650,000 in total prize money.
The average user, MLB said, spent 21 minutes engaging with Game Rally, making 15.6 game-situation picks per visit, with an average age of 33.
That’s considerably younger than a 2020 estimate of 57 for a typical MLB fan, and a good indication why it and other leagues are motivated to leverage the gaming space.
From his perch within the palatial “Superbook” in Las Vegas, Kornegay chuckles at the about-face on sports gambling. Unlike Mantle and Mays, MLB and the NBA did not ban Cal Ripken Jr. and Michael Jordan for serving as advisors to DraftKings; suddenly, they’re all on the same team.
Hours after Ravech's gambling callback on opening day, Matt Vasgersian, announcing MLB Network's coverage of Rays-Marlins, noted the over-under had taken a startling late-game turn.
No, the league that banned Pete Rose suddenly did not hire him as a program director. Yet the product placement indicates the leagues' and network's buy-in with their gaming partners.
“It’s a running joke around here,” says the Superbook's Kornegay. “There was a brown cloud that followed us around the longest time – we were the bad guys taking bets on the games. It’s been a 180-degree turn, from, ‘I can’t believe you’re taking bets on our kids!” to teams getting (gambling) sponsors, arenas getting sports books and we’re like, I guess it’s OK now.
“But we worked in a highly-regulated environment. Accepting wagers in a highly regulated environment is night and day.”
That was a point frequently cited by sports leagues as they cozied up to casinos. Billions of dollars were already being wagered on poorly regulated offshore books. Now, MLB managers, for one, must submit their lineups to MGM before they get publicly posted, the better to avoid injury news leaking to bettors first.
That’s not to say scorned bettors are no longer a concern.
A California man faces up to a five-year federal sentence after pleading guilty to threatening Tampa Bay Rays and New England Patriots players online after his wagers went awry. While the NCAA has not been rocked by a point-shaving scandal since Arizona State and Northwestern in 1994 and ’95, an unpaid labor force with nationwide access to sports gambling could prove to be a concern.
Yet the benefits seem to out-kick the risks. While analyst estimates vary about the long-term potential of sports gambling, it’s nonetheless a significant part of a global online gambling ecosystem expected to hit $127 billion by 2027, according to Grand View Research.
Human behavior suggests that curve will soon head straight up.
“We are teaching the masses as we move forward,” says Kornegay. “I think it’s going to scale up as they learn the space, as they get more comfortable with their wagers. The minimum bet is a dollar. And believe me, people bet a dollar, quite a bit, actually.
“So over our experience of watching players develop in Las Vegas, we have a lot of repeat customers. Maybe we see them once a year, three or four times a year.
"And in a lot of cases they tend to increase their wagers as they get more comfortable.”
This article originally appeared on USA TODAY: Sports betting: Leagues, networks and books want your action
