As the new year approaches, a transformative deal that was initially scheduled to be announced in the fall could instead become a shiny Christmas present for a major tech company.
Over the summer, NFL Commissioner Roger Goodell indicated that a decision regarding a new Sunday Ticket package would be made at some point in the fall. Although talks have now bled into winter, the deal is expected to be extremely lucrative for the NFL considering that the league is seeking somewhere around $2.5 billion annually.
Given that tech heavyweights Apple, Amazon, and YouTube have emerged as potential frontrunners to land the contract, the bidding process will open a new chapter in the race for live sports broadcasting rights among streaming networks. Google’s YouTube has entered into advanced talks with the NFL for the package, the Wall Street Journal reported on Tuesday, with a deal possibly within reach by the end of the week.
Since innovative companies are continually brainstorming ways to integrate sports betting into game broadcasts, livestreaming offers another vehicle for sportsbooks to acquire new customers. The winning bidder will certainly have some type of tie-in to sports gaming, said Jeffrey Kamys, chief investment strategist for the Inherent Wealth Fund’s iBET Sports Betting & Gaming ETF.
YouTube reportedly will pay $2.5 billion per year for Sunday Ticket — and consumers (despite the best efforts of Apple) will pay roughly the same for the package as they paid DirecTV. https://t.co/qnsSXr2g3T
— ProFootballTalk (@ProFootballTalk) December 21, 2022
Efforts to marry in-game wagering with livestreaming have been dubbed “sports betting 2.0,” offering the possibility of a new way for viewers to interact with the broadcast. As a result, there is a strong likelihood that the intersection between the two will be placed under the microscope in 2023 and beyond.
The subject represented one of the hottest topics at three prominent conferences across the country in recent weeks. Appearing at a fireside chat at November’s Sports Business Journal‘s Dealmakers conference in Washington, D.C., NBA Commissioner Adam Silver remarked that the consumption of sports will change more in the next few years than it previously had over the course of his lifetime.
Silver specifically mentioned sports betting as an area that will alter fan engagement in the years to come.
“It’s various forms of gaming, betting, shopping, you name it. It’s going to be a huge part of the value add,” Silver said.
Silver’s views on the role sports betting could play in increasing fan engagement are shared by Mark Cuban, who appeared on a separate panel at the conference. Since then, Cuban has expressed interest in moving the NBA’s Dallas Mavericks to a new resort shared by a casino. A prerequisite to the move, according to media reports, is for Texas to legalize sports betting first.
Sports Betting 2.0
While a host of sportsbooks have signed marketing and odds integration deals with major media companies, there is still ample room for collaboration moving forward. Despite advances in voice-enabled smart devices for TV remotes, bettors are still unable to use voice activation to place a wager through a remote. Similarly, customers are unable to engage in touch-screen wagering directly from their television sets.
The largest hurdle in the proliferation of the second-screen experience lies in challenges with latency, NBC Sports executive Mark Lazarus told Sports Handle. For sports broadcasting, latency is defined as the difference between when a play occurs on the court and the exact moment when it appears to a viewer on a telecast. Though some online sportsbooks strive for near-second latency with in-game wagering, marrying betting and streaming presents numerous challenges.
“There are so many different pieces in the daisy chain,” said Lazarus, who serves as chairman for NBCUniversal’s television and streaming. “It’s us as a streamer, it’s your broadband provider, it’s where your house is. … It’s why it is so hard to get it right.”
Earlier this month, Caesars Sportsbook achieved something of a breakthrough when it became the first U.S. sportsbook operator to provide customers with live Watch & Bet video streams for select NFL games on their smartphones. Caesars is offering the viewing option on its sportsbook’s mobile app through a partnership with the NFL and Genius Sports.
"The expanded partnership proves that $GENI has become a central piece of the digital infrastructure connecting the @NFL, its broadcasters and the sportsbooks."🏈
Great overview of our recent Watch & Bet partnership with @CaesarsEnt in @Sportico today. https://t.co/ICH1q6aQ0R
— Genius Sports (@GeniusSports) December 21, 2022
“Delivering innovative technology like this remains a key emphasis for us, so being the first U.S. sportsbook to provide customers with in-app NFL livestreaming isn’t something we take lightly,” Eric Hession, who serves as president of Caesars Digital, said in a statement.
Digital sports broadcast rights
For the companies that miss out on the Sunday Ticket package, another opportunity awaits in 2025 when the NBA’s current broadcast deal expires. The NBA is reportedly prepared to offer an exclusive streaming rights package when the bidding begins. The price tag for a streaming-only package may be worth at least $1 billion per year, according to Front Office Sports.
At a separate Sports Business Journal conference in New York City, ESPN President Jimmy Pitaro noted that the NBA is incredibly valuable to the network and its parent company, the Walt Disney Co. The NBA caters to a younger audience than most sports, he said, and it brings value in a variety of markets due to the parity in the league. At the same time, he emphasized that the competition for live sports rights has become fierce, with a wave of new companies entered in the fray.
“There is more demand for live sports than ever,” Pitaro said.
For now, the timing on ESPN’s plans to partner with a sportsbook on an exclusive branding deal is unclear after Disney reappointed Bob Iger as CEO of the company in November.
“Bob’s ultimately going to have to dig in with me,” Jimmy Pitaro, ESPN Chairman, said on Wednesday of the sports betting opportunity.
“He doesn’t just look through the ESPN lens, he looks through the Walt Disney Company lens.”
— Sports Handle (@sports_handle) November 30, 2022
On the regional side, Monumental Sports & Entertainment (MSE) added a media asset in September when it completed the acquisition of NBC Sports Washington. MSE is the owner of several pro sports franchises, including the Washington Wizards of the NBA and the Washington Capitals of the NHL.
Those teams play their home games at Capital One Arena in Washington, D.C., a facility that is home to a Caesars retail sportsbook. In 2019, NBC Sports Washington aired a second-screen Wizards broadcast focused on betting, becoming one of the nation’s first regional sports networks to offer an alternative game telecast dedicated to sports wagering.
When asked by Sports Handle if MSE has quantified a ballpark amount for how sports betting has impacted the company’s valuation, CEO Ted Leonsis responded that the company does not undertake a “piece-by-piece analysis” of every aspect of its business operations. However, MSE emphasizes that “innovation is a deliverable” for many components of its operations, and sports betting is no exception, Leonsis indicated.
Although prominent tech companies may increasingly dip their toes into sports betting, it is a stretch to assume that they will make a run at acquiring a major sportsbook. Gaming regulators in some states often require high-level executives to undergo exhaustive background checks as part of a sportsbook licensing process, and ultra-wealthy individuals such as Apple’s Tim Cook and Jeff Bezos of Amazon might be hesitant to allow regulators to pore through their financial records, said Brad Fischer, an attorney with the New York law firm Orrick, Herrington & Sutcliff.
Instead, by securing a lucrative package such as Sunday Ticket, a major tech company can expand into sports betting without enduring the headaches of the regulatory process, Fischer suggested.
“You don’t have to get a gaming license,” he told Sports Handle. “That’s a mental hurdle for a lot of people.”