In New York City this week, the inaugural Sports Betting USA Conference kicked off with full schedule of panels including sports betting industry veterans, seasoned experts in regulation and gaming integrity, representatives from sports leagues, state legislators and media folks, like yours truly. Attendees hailed from all over the world with an estimated 70% coming from international locations.
The rundown below is intended to provide you insights in (fairly) easily-digestible form: Main takeaways, quick synopses of the seminars, statistics of note, plus some odds and ends from the first four panels that took place on Day One of Sports Betting USA. Coming in less than three weeks? Oral arguments in Christie v NCAA, aka the Supreme Court Sports Betting Case that puts in the crosshairs the 1992 federal law PASPA, which effectively bans sports betting outside of Nevada.
Takeaways From Sports Betting USA Conference: Ways Leagues Can Monetize Partnerships With Betting Companies; On Boosting Engagement and Legislative Approaches to Sports Betting
Talkin' about league monetization opportunities via sports wagering. That's the money question (pun intended). Commish of Arena Football League, Scott Butera, here to weigh in. #SBUSA17 pic.twitter.com/BD8VfRw1f0
— Brett Smiley (@brettsmiley) November 14, 2017
Panel One: Monetization Opportunities for Sports Leagues: Additional revenue streams that regulated sports betting could bring into the US sports industry
– During a recent conversation with Sports Betting Conference USA panelist Andrew Brandt, an ESPN business analyst and former Green Bay Packers general counsel, he said the “ultimate question“ is how the NFL and other U.S. professional sports leagues can/will derive revenue from an expansion of sports betting.
– Given that that’s indeed the ultimate question for U.S.-based sports leagues, I’ve got quite a bit to share on this matter. Scroll down if you’re only interested in the fan engagement and legislative information. (Check out Part I of our coverage here.)
– Thanks to the large international delegation from jurisdictions where sports betting is legal and regulated, where leagues indeed derive varying and very real financial benefits from sports betting, we have some answers. First consider:
Per Rick Parry (Fmr CEO of EPL), most principal sponsors used to be brewers. Today, 9/20 are betting companies. Direct revenue from sponsors. #SBUSA17
— Brett Smiley (@brettsmiley) November 14, 2017
– Arena Football League commissioner Scott Butera is looking beyond direct revenue via sponsorships and more at more substantial partnerships with betting entities, which he suggests will add to the entertainment experience, increase the value of media rights, and boost ticket sales. He pointed to the success of the NHL’s Las Vegas Golden Knights, who in their first year are seeing great ticket sales and very high engagement in part thanks to sports wagering taking place before and during games.
– How about exposure driving interest? Laila Mintas, Deputy President of Sportradar US, said that United Kingdom study revealed that 20% of all soccer fans have seen advertising paid for by bookmakers. That translates to increased demand for ads on TV networks.
– Panel moderator Rick Parry, an international football (soccer) consultant and former CEO of Liverpool FC and the English Premier League (EPL), discussed the volume of EPL advertising spends by bookmakers. Last year it amounted to $400M — up 60% from 4-5 years ago he said.
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– Ross MacEacharn, CEO of Perform Content, underscored the point Butera made about partnerships with leagues having equal importance to sponsorship relationships that provide direct revenue to leagues. But he emphasizes that leagues don’t want to get into bed with just anyone. Leagues should seek reputable partners who conduct due diligence on clients: sportsbooks or others in the sports betting space that are licensed, reputable, good actors.
Maryland Live!'s Mario Maesano says some leagues will take money via deal/partnership… but not publicly. "You don't want to go on date w/someone who doesn't want to be seen with you." #SBUSA17
— Brett Smiley (@brettsmiley) November 14, 2017
– Regarding the above, Maesano says the NBA, NHL and MLS are great partners. You can figure out which one(s) are not (yet).
– Mintas highlighted a reality about TV ratings that the NFL in particular is grappling with: Many fans are spending less time watching games. (Ratings are also down a few points across all major network programming.) This is an issue for media partners. How to engage more fans and for longer? Sports betting is one answer. She suggests that even fans wagering $10 will want to stick around to the end to see if they win.
– But how much is too much advertising from sportsbooks and betting companies? MacEacharn emphasizes that you don’t want to get to the point of oversaturation. Remember the DraftKings and FanDuel onslaught of 2015 that backfired? There’s a need to strike a balance and not take too much.
– And how about leagues having an actual stake in sports wagering operators’ handle or hold?
Regarding DIRECT revenue via "betting right" (or some share of handle/hold)… "Bigger bite than anyone willing to take on" right now says Butera. #SBUSA17
— Brett Smiley (@brettsmiley) November 14, 2017
– That said, MacEacharn noted that at least in one jurisdiction with legal, regulated sports betting, French sports leagues take a one-percent “betting right” on all wagers. Perhaps this is something U.S. leagues will explore (or at least discuss out loud) but it seems very unlikely, at least at the outset.
– As an aside, MacEacharn points out that France’s market is a disaster for operators, given the taxes and generally very-poorly crafted legislation. All operators are losing money there, other established brands won’t even enter their market, and about 72% of sports betting by French bettors goes through offshores.
– Top-notch data is highly valuable, too. Companies specializing in producing data at ludicrous speed can enable leagues to create their own salable products and platforms for fans. And greater engagement.
Panel Two: Using gaming and wagering-like mechanics to drive fan engagement and enhance sports viewership
– This panel moderated, by veteran sports and entertainment marketing and PR consultant Joe Favorito, answered questions about the relationship between sports wagering — including fantasy and daily fantasy platforms — and viewership. Effectively another “money” question for leagues and media rights holders-partners.
– Here’s the most compelling statistic, and evidence of sports wagering’s impact, from Stephen Master, Senior Vice President at Nielsen Sports:
Stephen Master of Nielsen Sports with fascinating figures on #NFL viewing:
– avg non-bettor fan watches 16 games/year, avg. 79 minutes
-avg bettor fan (includes fantasy, wagering) watches 38 games, 92 minutes. #SBUSA17
— Brett Smiley (@brettsmiley) November 14, 2017
– A related figure from Master: 25% of the NFL’s total viewing audience that are involved in some form of sports betting (again, this includes fantasy and DFS) account for 60% of all the viewing minutes. (And this is why I’ve argued that the NFL actually wants to lose the SCOTUS case.)
– Numbers don’t lie. Leagues and rights holders are certainly aware of those figures, which is why you see so much fantasy sports and sports betting content on ESPN/ESPN.com (which is partnered with SportsInsights); CBS Sports/Sportsline; NFL Network has fantasy-dedicated shows and analytics information with Cynthia Frelund and much more. ESPN also has straight on-air programming discussing sports betting with Stanford Steve’s “Bad Beats” segment on Scott Van Pelt’s midnight edition of SportsCenter.
– Brandt notes that the leagues want to figure out how they can forge new partnerships in an environment with expanded sports betting in the U.S. Indeed, there are already two pro leagues with teams in Las Vegas (including the to-be Las Vegas Raiders). But a regulated environment is key.
– As pointed out by SidePrize founder/CEO Adam Wexler, fantasy sports have absolutely boomed in popularity over the last 25 years and particularly in the last decade, coinciding with Yahoo!’s StatTracker module and better fantasy platforms. I missed the exact figures Wexler cited but he reported the fantasy-playing crowd has grown from roughly 12 million in the early aughts to almost 58 million today.
– Master also mentions that one Nielsen study showed that a whopping 83% of people watching games do so with a mobile device in hand. There’s a big interplay between the big and small screen and certainly opportunity there involving sports betting.
Panel Three: NCLGS panel: Legislative path to regulated sports betting: congressional and state approaches
– NCLGS stands for the National Council of Legislators from Gaming States. NCLGS lawmakers meet on a regular basis to discuss issues in regard to gaming and they are primary focused on proper regulation of the industry.
And here are the legislators… including @WVUFLU and others to discuss congressional and state approaches to sports wagering. Depends on state expectations and appetite. #SBUSA17 pic.twitter.com/oVu7Y2zXI8
— Brett Smiley (@brettsmiley) November 14, 2017
– A couple key points from Maryland State Delegate Jason C. Buckel: (1) Gaming states are looking to protect and gain market share — with some states acting with greater speed than others; and (2) Revenue from gaming is benefiting Maryland’s Education Trust Fund (although there are disputes about how those funds are getting allocated). States with legalized marijuana are making similar appropriations benefiting education.
– There’s unanimity among the panelists that sports betting licenses would begin (if not remain) with land-based casinos that are already registered and approved by their respective state gaming boards. This is consistent with the bill that Pennsylvania passed just two weeks ago.
– But regarding that Pennsylvania law… panelists Shawn Fluharty of the West Virginia House of Delegates expressed of skepticism about the 36% tax that the PA bill imposes on to-be operators’ gross gaming revenue. This echoes what one panelist said earlier (I don’t want to misidentify him/her) that the right number is about 15-20%, and that anything over 30% will prevent profitability or cause losses.
.@WVUFLU says West Virginia on board with using existing casinos to begin as sportsbook home base, but emphasizes need to open up to bigger audience via mobile. Especially in fairly rural state. #SBUSA17
— Brett Smiley (@brettsmiley) November 14, 2017
– That said, in my estimation, even 15% seems too high. Other states have much to learn from Nevada where gross revenue from sportsbooks in Nevada is taxed at a rate of 6.75%, although the rate is tiered and costs a bit more for higher-revenue sportsbooks.
– And now a word from Assemblyman Gary Pretlow (D-89th District) of New York. New York’s gaming scene is a jambalaya of gaming operators and laws with casinos, tribal casinos, racinos, Off Track Betting (OTB) parlors, and racetracks throughout the state under different licenses. There are varying and substantial implications for these entities based on what unfolds at the federal level and in the Supreme Court.
#NYS Assemblyman Gary Pretlow notes that the state, via 2013 Constitutional amendment, has regulations for sports betting ready. Law doesn't address racinos, OTB and other stakeholders, which he's attempting to address. #SBUSA17
— Brett Smiley (@brettsmiley) November 14, 2017
Pretlow adds that he's in favor of standalone sports betting parlors, perhaps a nod to OTB. #SBUSA17
— Brett Smiley (@brettsmiley) November 14, 2017
– Referring to a current proposal (check out our legislation tracker) that could allow sports betting beyond just traditional casinos, Pretlow said last week that “The lawyers are looking at that right now,” reports the Albany Times-Union. And they’re look to bypass a constitutional amendment process that would take two years.
– Why the need for additional legislation? Well, a 2013 New York State constitutional amendment contemplated a change in federal law on sports betting, but it appears to only apply to licensed casino gaming facilities — not necessarily racinos, racetracks or OTB parlors. The law contains language that appears to regulate sports betting when “There has been a change in federal law authorizing such or upon a ruling of competent jurisdiction that such activity is lawful.”
– Frankly I’m not sure this gives New York a green light to burst out of the gate if PASPA gets repealed, because a repeal of PASPA would not be tantamount to federal authorization of sports betting. I think it would still take the passage of an affirmative federal law to trigger the regulations contained in this bill. This might just be a matter of interpretation.. I also suppose New York might promulgate a new law, but some federal action on sports betting does feel increasingly more likely, regardless of the outcome of Christie v NCAA. That said, who can fathom a guess on what Congress might do, or when, given the current political climate?
– Lastly, if regulation does occur on a state-by-state level, regulation might resemble the experience of daily fantasy operators (namely DraftKings and FanDuel), which have battled attorney generals on legalities and percentages in almost every state (and recently in New Jersey). That said, the DFS operators are private, digital-based companies disconnected from land-based state casinos, so sports betting seems likely proceed through smoother waters.
– Let’s close with an earlier word on this point from Executive Vice President of the NFL, Jeff Pash (who was not in attendance):
As practical matter, if New Jersey prevails in the Supreme Court, I think by the time Congress gets around to doing something about sports betting, you will have so many different types of laws and regulatory schemes passed in the 50 states that… I don’t know what happens after the horse gets out of the barn, but that’s what will happen — the horse will be so far away you won’t be able to see it. There’s no chance I think that Congress could put the genie back in the bottle.
Stay tuned.
Also check out from SportsHandle:
New Jersey Senator Ray Lesniak Sees Finish Line, Irony And Shame in Supreme Court Betting Case
Could DraftKings Really Become a Sportsbook As CEO Suggests?
Andrew Brandt on the NFL and Sports Betting: Fantasy Helps ‘Bridge the Gap’
