Last week, a Canadian company called The Stars Group purchased a European entity called Sky Betting and Gaming for a whopping $4.7B… that’s B for billions.
Why would a sports marketing and consulting agency in Phoenix care?
An otherwise uninteresting footnote in your business news actually is the sign of big things to come for sports in the United States. The “players” in big-time gambling overseas are aligning themselves for market share.
On Monday, our Supreme Court put forth a ruling that will legalize sports gambling in the United States. Some 15 states are already ahead of the curve and are setting up a protocol for how they are going to garner the massive amounts of tax revenue from legal sports betting. Sports leagues (including the NCAA) will also receive a piece of the action and they are not sitting in the proverbial stands on this one either. They are in talks with individual states and gaming companies on just what this is going to look like as they determine what they want to do with this moving forward.
The entities that stand to win on this issue are pretty obvious. The leagues will see an increase in revenue that allows them to pay more to owners who seem to never make enough money. Teams will also get revenue which means they can continue to “feed the hog” that is player’s and coach’s salaries. As more money goes into that balloon, let us not forget sponsorship opportunities as ratings swell with a significantly more interested audience who may have way more on the line than just office bragging rights.
Sounds like a win for everybody. What are we waiting for? The ILLEGAL sports gambling market in the United States is estimated at $150B annually … yes, that’s another B and we all know what that stands for. For purposes of contrast the largest LEGAL sports gambling industry is in the UK and it’s worth $19B.
The revenue this will generate will be staggering.
My only concern about this thing is the integrity of the game. Quite frankly I can say that and admit I’m wrong before you even finish this paragraph. For pro sports, I don’t really care that people want to bet on it. If that makes it more exciting for them or it’s what they want to do with their money then so be it. After some reflection, I just don’t see a big impact on how the pro game is played.
Legalized sports gambling could have a big impact on ratings and if you look back at last month’s blog on how the NBA is “cashing in” on selling the last few minutes of an exciting game you might just see how the sausage is going to being made here. Think about it … in the past you really didn’t care who wins the Nets – Heat game except now you’ve got $500 on Brooklyn to cover. A game you might never watch suddenly is very important to you. You may even buy NBA League Pass so you can make better gambling decisions. And guess what … if you are bumping around Costco with your wife and that game is close; you’re going to watch, even if you have to pay a small fee to do so.
The league likes that. The team likes that. The players like that. The sponsors like that. Your wife may not like that, especially if you lose, but that’s not my problem to worry about.
College sports are different and I do worry about that. In my world, we keep college sports out of the discussion on legalized sports gambling. The problem is I’m too late and too irrelevant to impact that. The NCAA publicly states that they would like to see the Supreme Court rule against legalized sports gambling yet they always seem to be in the room when there are conversations on how states are going to divvy up the revenue it will create. It’s hard to take their stated position too seriously when they are already at the trough minus a cogent way of keeping gaming from negatively impacting the integrity of a league; a league of young, immature, impressionable, unpaid amateur athletes that has plenty of issues already.
This won’t be the first time that I’ve opined that money has, or is, having a negative effect on college athletics. Legal sports gambling that involves the NCAA will create an even greater strain on compliance which is already a monumental struggle for the league. They most certainly better get ahead of this before someone else does it for them and leaves them with more challenges than they already have with men’s basketball, athlete compensation, out of control coach’s salaries, fun with Title IX, and the problems that come from a lack of parity in the bread basket that is football.
The allure of bigger ratings is a powerful one. If legalized betting means increased funding to institutions by the way of tax revenue and more lucrative rights deals then there is nothing that will stop it. Rights holders, conferences, individual schools and sports marketing companies like mine will benefit. If it’s going to happen the league has got to get ahead of the process, the regulation, and the technology that will maximize the revenue.
I “bet” it will be a markedly more difficult process for them to manage if they wait and allow the protocol to be dictated to them. The NCAA needs to think forward on this opportunity before they end up being handed yet another problem.
About the Author:
Ed Olsen is the President and CEO of Line Drive Sports Marketing. Line Drive Sports Marketing is a marketing and consulting firm based in Phoenix that does business both in Phoenix and Seattle. He has spent much of his career selling sports sponsorship assets at Cox Media, Fox Sports and IMG College.