How betting will change the Sports Media business

In an article published in the New York Times yesterday, journalist Kevin Draper embarks on an analysis of how the Supreme Court's verdict last Monday may inject a dose of optimism into the industry, producing 'a major boost to the value of live, televised sports', which according to surveys, would come at just the time when it is most needed.

Industry insiders claim without fear that the sports television industry is struggling against streaming services, video games, social networks and mobile phones. Expensive cable subscription, increasing rights costs and an aging audience seem to support Draper's analysis. 

According to a Nielsen Sports study, commissioned by the American Gaming Association, sports bettors made up 25 percent of the N.F.L.’s television audience in 2015 but accounted for 47 percent of all minutes viewed. Sports bettors watch about twice as much sports coverage as non-bettors do. So it stands to reason that making it easier for people to become sports bettors will make them more likely to watch sports.

“Hands down, it’s a huge deal,” said Brad Humphreys, a sports economist at West Virginia University. “How huge it is depends upon how quickly states move and how many states move to legalize sports betting.”

As regards to the size of the legalized sports betting industry, concrete numbers show almost $5 billion was bet on sports in Nevada last year. However, that figure is dwarfed by the amount bet on the illegal betting market, which is estimated to be anywhere from tens to hundreds of billions of dollars.

In Britain, home to just 65 million people and a far less-diverse sports market, bettors wagered nearly $20 billion for the fiscal year ending in March 2017, the last year for which figures are available, according to a report from that country’s Gambling Commision.

Draper draws the example of Bet365, one of Britain’s largest bookmakers, which generated $3 billion in revenue (and $666 million in profit) for the fiscal year ending in March 2017. In addition to spending hundreds of millions of dollars on media advertising, the company also has had a sponsorship with the soccer club Stoke City, which was recently relegated from the Premier League but had the Bet365 name on its jerseys and stadium.

“If Bet365 invest 25 percent of their revenue back into sports, that’s $700 million per year” said Laila Mintas, the deputy president of Sportradar, a sports data company that distributes instant statistics and other information for professional sports. “You can imagine what that means.”

Industry sources even claim less high-profile events are likely to see a boost in interest, and this is expected to benefit ESPN, for example, which recently introduced the ESPN+ streaming service, featuring thousands of live games and original programming for $4.99 a month. The company hasn’t solidified its plans to produce shows that target sports betting fans, but Connor Schell, ESPN’s executive vice president for content said Tuesday that such programming has been on the ESPN+ “content roadmap” from the beginning.

“We’ve thought about betting and the conversation around betting in line with what Doug Kezirian is doing on the ‘Behind the Bets’ podcast,” Schell said after the network’s annual presentation to advertisers in New York City on Tuesday.

The longtime ABC and ESPN broadcaster Brent Musburger, who was known for making sly betting references on-air, retired last year and co-founded Vegas Stats & Information Network. The network streams 12 hours of betting-focused video a day, which is simulcast on Sirius radio.

Joe Asher, the chief executive of William Hill US, a bookmaker, cautioned that it might take a few years for the big advertising money to find its way to national channels like ESPN, Fox and NBC, as states need to go through the legislative process to legalize and regulate sports betting.

“It’s hard to see the national advertising being effective now when you are dealing with a finite number of states,” he said.ising on regional sports networks in states where gambling becomes legal first seems more likely.

While some expansion of sports betting will happen soon — New Jersey, the state at the center of the Supreme Court case, could be ready to take bets in weeks, and a handful of other states have recently passed sports betting laws — a full build-out won’t be immediate. Betting could eventually be legal nationwide, but there is a legal morass to navigate before that happens.

Both the N.B.A. and N.F.L. have called upon Congress to pass federal legislation to regulate sports betting, rather than having a patchwork of 50 state laws, and Senator Orrin G. Hatch of Utah has said he intends to do so. Sports leagues, unions representing players, casino companies, and Native American tribes are jockeying to shape the laws that will regulate sports betting to make sure they get a big cut of the action.

“Congress has long recognized the potential harms posed by sports betting to the integrity of sporting contests and the public confidence in these events,” the N.F.L. said in a statement released Monday. “Given that history, we intend to call on Congress again, this time to enact a core regulatory framework for legalized sports betting.”

Daily fantasy has always been a hair’s width away from sports betting, and the companies involved have a couple of big advantages in becoming bookmakers. The two largest of the daily fantasy companies, DraftKings and FanDuel, announced on Monday they intend to do. DraftKings says it has 10 million registered users, while FanDuel has 6 million, all with credit card numbers already on file. Both companies say they hope to be up and running when the N.F.L. season starts in September.

Draper concludes stating that if both operators can follow-through on that commitment, it may give the N.F.L. a better chance of reversing two years of declining television ratings than any marketing campaign that emerges from the league’s Park Avenue headquarters.