Legal Sports Betting a Winner for Local Teams and State Budgets

·4 min read

Today’s guest columnist is sports betting and gambling industry consultant David Sargeant.

Betting is changing the sporting landscape across America. From the New York Jets to the Arizona Diamondbacks, from the PGA Tour to NASCAR, new deals are being announced every day, many of which this author has had a direct role in. New revenues being generated by teams in legal sports betting states are giving those teams a distinct commercial advantage over rivals where sports betting remains illegal.

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And while legalizing gambling for the benefit of sports teams may not be top of mind for politicians and legislators, the benefits of doing so for the people they represent should be: Legal betting generates significant new taxable revenues, creates transparency within regulated markets, and removes the risks inherent in illegal markets.

Since the repeal of PASPA in 2018, which permitted states to make their own policies, 33 states (including D.C.) have legalized sports betting operations, and three more are currently debating legislation. But in the other states there is no active legislation. This means nearly half of U.S. pro sports teams are currently in states that do not have legalized or live sports betting.

The legal framework for sports betting can create important revenue opportunities for teams. For instance, betting is changing the face of sports stadiums. Sports bars, lounges and actual sports books can become 365-day, in-stadium operations, transforming the venues themselves into year-round attractions, adding to direct and indirect revenue streams. In D.C., Maryland and Arizona, this is already taking place, and North Carolina and Ohio could follow suit soon.

However, it is the digital world where revenues are really being driven. Untethered digital sports betting should account for at least 85% of handle in an open and unrestricted state. We have seen nationwide that gaining digital betting licenses is a significant revenue tool for casinos, racetracks and Native American tribes. Now, in some states, professional teams have successfully argued that since their product is the driving force for sports betting, they should also participate in this process. Such participation can double the value of sports betting to a team. This is the model in Arizona, and it’s being pursued by teams in Ohio, Texas and others.

Research shows if someone bets on a game, they are more likely to watch that game. Sports betting operators know the converse is also true—if you watch a game, you are more likely to bet on it. This creates opportunities for both betting operators and sports teams looking to engage with customers, deepening fan relationships and the atmosphere around the game.

The sums of money involved are staggering, even by major league sports’ standards. There are deals worth hundreds of millions of dollars for sponsorship rights, in addition to market access fees and interlinked commercial agreements that generate revenue for both team and partner. Those transactions are complex, but with experienced hands at the wheel, successful deals are now being struck with increasing regularity.

While teams benefit, so do states. Previously illegal in-state wagers are now being conducted in safe, well-regulated, secure environments, with net-new dollars being put back into state coffers and new jobs being created.

At the highest level of professional sport, the difference between winning and losing is often measured in tiny fractions. Teams go head-to-head under salary caps and drafts to ensure the best talent doesn’t always go to the biggest teams, all to maintain a more level playing field.

Thanks to these rules, billionaire owners who want to win the Super Bowl cannot go and buy a fantasy team. What they can potentially do, in a legalized sports betting state, is spend their gambling revenue on improving everything they can around the athletes on the field, the court, the rink or the pitch, improving their odds of winning.

In the U.S., 55% of teams are in states with legal sports betting. However, some of the biggest states have yet to allow a path to legalization. The opportunity is currently blocked to teams in California and Texas, and limited in many other states. Teams in these states will be at a commercial disadvantage until legislative changes are passed.

Now is the time to level the playing field for all, with fans pushing politicians to see they can help ensure the future health of sports organizations in their states, maintaining the balance and preserving the quality that drives interest in U.S. sport—unpredictability.

Sargeant is a consultant, investor and dealmaker in the sports betting, iGaming and gambling industry. Since 2018, he has been directly responsible for over 40 deals across 16 U.S. states, with teams in MLB, the NFL and NBA, as well as NASCAR, the PGA Tour and CBS Sports.

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