Earlier this spring, a Major League Baseball executive embarked on a road show out West stopping at several major sportsbooks on or around the Las Vegas Strip.
There, the executive disseminated a pitch deck for the league’s Authorized Gaming Operator (AGO) program, through which prospective sportsbook operators can become an “official league data licensee.” The six-page pamphlet details the benefits of partnering with MLB for gambling purposes, including the crown jewel, access to the league’s official betting data.
The executive met with a handful of sportsbook managers, according to sources, to make the league’s sales pitch. Multiple outlets have reported in recent weeks that if sportsbook operators do not become an AGO (a direct licensee) by the All-Star Break, their access to MLB data through authorized MLB data providers could be cut. Keep in mind that this license to obtain official data would come in addition to a commercial agreement with the data provider, a separate entity. In some cases, sportsbooks already have those agreements in place, and already receive MLB data.
As the deadline nears, it remains unclear how many sportsbooks, if any, are close to becoming an authorized gaming operator of the league. With the NBA season possibly coming to an end tonight, after the Stanley Cup Playoffs ended Wednesday, potential negotiations between MLB and the sportsbook operators could pick up before the All-Star Game on July 9.
Sports Handle obtained copies of the pamphlet from multiple sources. While reporting this article, Sports Handle reached out to six executives from prominent sportsbook operators. Several sources agreed to discuss the program on the condition of anonymity.MLB Authorized Gaming Operator Program
Besides gaining access to MLB’s data feed, there are other assets a sportsbook can “unlock” by signing on as an AGO. But to do so comes at a cost — possibly a flat fee, or a percentage of the sportsbook’s handle.
“The fee that we are charging for that bucket of rights, and again it’s not just for the data, it’s relative to the size of the operator’s business,” Kenny Gersh, MLB’s executive vice president of gaming and new business ventures, told the Associated Press. “So, we are not going to charge somebody who is a small operator the same as somebody who is a large operator.”
The commercial relationship provides a book with access to MLB club partnerships, media and content extension opportunities, as well as access to MLB product integration through MLB.TV. While several sportsbooks have already inked sports betting deals with individual clubs in other leagues, none of the 30 MLB teams have reached such a partnership with a casino.
Here, you can see a color close-up on one component of the pitch deck. The screen on the left shows an in-game menu from DraftKings Sportsbook under the red-colored headline, “PRODUCT BASED ON UNOFFICIAL DATA.” To our knowledge, DraftKings is not at this time an official MLB data licensee.
On the daily fantasy side, DraftKings became MLB’s “official daily fantasy game,” in April 2015 as part of a multi-year extension of its exclusive partnership with the league. DraftKings’ banner is ubiquitous at a number of ballparks throughout the league providing the website with enhanced visibility among a key demographic. Last April, MLB and the NBA announced plans to divest their stakes in DraftKings and rival FanDuel ahead of the Supreme Court’s decision on legalized sports betting.
When it comes to marketing efforts, sportsbooks might take advantage of the ancillary benefits of becoming an authorized gaming operator of the league, a veteran bookmaker told Sports Handle.
“Sometimes you want to market or have a partner as far as advertising your name at stadiums, therefore your name is out there,” he said. “Those kind of partnerships are fine.”
By becoming an authorized gaming operator of the league, licensees will receive official MLB designation to promote the formal relationship, according to the proposal. An authorized operator will have the right to use the MLB stamp on a billboard advertising their baseball betting products. The operator can also place the MLB logo on tote boards inside their brick-and-mortar facilities and on their mobile apps.
Under the program, operators will receive the right to purchase, use and advertise the use of official MLB betting data from the league’s authorized data distributor, the proposal states. During Spring Training, MLB announced a multi-year deal with Sportradar that designated the Switzerland-headquartered company as an official global data provider of the league. In April, the U.K.-based Perform Group was announced as an Authorized MLB Data Distributor to U.S. sports betting operators.
While the MLB imprimatur and team logos might provides bettors with some comfort that the bets are graded with “official data” (compare with “unofficial”) as the pitch deck notes, some books downplay the value of having the emblem on a betting screen in place of a category with the header “pro baseball.”
“I’m not positive gamblers would be affected by the use of logos versus say pro baseball, etc.,” another manager said.
Despite the conflict on data pricing, some sportsbook managers would still like to maintain a marketing relationship with the professional sports leagues. They value the leagues and understand some of the challenges posed by the expansion of legalized sports gambling. But the price, they insist, must be right.
In some years, leading books may be able to withstand the costs of purchasing official league data. Last year, for instance, Nevada sportsbooks won more than $47.1 million on baseball wagers, a year-over-year increase of 28 percent. Based on a statewide baseball handle of $1.03 billion, the casinos recorded a hold percentage of 4.59 percent, their highest in more than a decade, according to statistics compiled by UNLV’s Center For Gaming Research.
In other years, a 0.25 percent royalty on a book’s baseball handle could cripple a book’s bottom line. In 2014, Nevada legal sportsbooks won just over $21.2 mm on baseball representing a win percentage of 2.95 percent. In those years, some books will struggle to remain viable if forced to pay the fee, industry insiders say. As a result, certain operators are reticent about entering into a revenue sharing agreement with the leagues. There is no certainty in betting or bookmaking, which is a volatile business month to month.
There is also some ambiguity as to whether state mandates on the use of official sports betting data for in-play wagering may violate federal or state antitrust law.
As MLB and the NBA seek to centralize ownership of game data and force business partners to acquire it, both leagues place themselves at reasonable risk of an antitrust challenge https://t.co/8S3shbwvXb pic.twitter.com/sp0kgA4qsP
— Forbes SportsMoney (@ForbesSports) June 10, 2019
At present, Major League Baseball has one official betting partner: MGM Resorts International. MGM, which also has nonexclusive sports betting partnerships with the NBA and NHL, became MLB’s official gaming and entertainment partner last November.
Months earlier, MGM reportedly paid at least $25 million over three years to become the NBA’s first official sports betting partner, according to ESPN.com. Major League Baseball has not publicly disclosed the financial parameters of the AGO program. But as noted above, the price tag could vary based on the size of the book.
Major League Baseball did not respond to requests for comment in time for Thursday’s deadline.
Eventually, MGM plans to offer unique prop bets based on data gathered from MLB’s high-speed automated tool Statcast. By this time next year, bettors at MGM could be able to wager on the exit velocity of a Giancarlo Stanton double or the distance of an Aaron Judge home run. But the wagers still require regulatory approval in Nevada, said Scott Butera, MGM’s president of interactive gaming.
[For more on the components of data — “game state” data and actual betting data — go here.]
Although the vast majority of Las Vegas sportsbooks receive in-game data from a feed provided by Stadium Technology Group, a Nevada-based software company, there are still several others that grade in-play wagers on their own.
For the most part, customers at one Las Vegas-area book rarely spend more than pocket change on in-game wagers, according to the sportsbook’s manager. The manager described the in-play tendencies at the facility during an interview on June 6, while watching the Houston Astros’ 8-7 win over the Seattle Mariners.
Most bettors at the location are not interested in complex exotic bets that can take more than 24 hours to settle, he said. Instead, when making in-game bets they are looking to wager on the outright winner. The simplicity of the wager allows them to collect immediately after a game ends.
“That’s what they want to bet — not how many extra base hits there are, not how many pitchers the managers will use, not if the next pitch is a ball or strike,” he said.
Circle your calendars
The All-Star Game in Cleveland could represent a pivotal moment in the ongoing data war between the leagues and sportsbook operators.
With little action scheduled for the evening’s slate, in-play betting for the Midsummer Classic could take center stage. One aforementioned sportsbook has the ability to offer in-game lines on popular events such as the All-Star Game when their small in-game staff is not spread thin by a menu of dozens games on a given night.
The official betting data feed from MLB is “sourced and delivered using procedures direct from the ballparks,” the pamphlet states, providing reduced latency or lag from real-time action. The latency reductions will enable authorized operators to offer new in-game markets, according to the proposal. Still, the manager does not plan on purchasing official data from Major League Baseball or another pro league anytime soon.
A league may have a compelling intellectual property claim on bets derived from proprietary technology such as Statcast, but is the same claim valid for straight win bets?
“We’ve survived a long time without it,” the manager said of official league data. “We’ve had a pretty good run and that’s with them fighting us every inch of the way. Now, all of a sudden they not only want to partner with us, they want us to pay for information we’ve pretty much been getting for free.”
Which side will blink first? The dispute could extend well beyond the All-Star break.
Brett Smiley contributed to this report.