The final installment of this three-part series discusses the business implications of OTT sports betting for leagues and media networks. Part one analyzed the user experience, and part two examined the streaming technology and data rights that will power the experience.
Soon after the Supreme Court opened the door for legalized sports betting in the U.S., billionaire Dallas Mavericks owner Mark Cuban told multiple media outlets that he believed that the ruling doubled the value of professional sports franchises.
His bold proclamation drew plenty of naysaying from many who think such a rosy estimation was outlandishly high. But some think Cuban undersold.
“I think he’s being modest,” VSiN founder Brian Musburger said. “When you look at the money that was thrown around by FanDuel and DraftKings when we were just talking about the fantasy market, the dollars that are about to flood the [gambling] marketplace are going to make that look like child’s play.”
Cuban emphasized new in-venue marketing and entertainment opportunities as well as having a more captive viewing audience at home. A Nielsen Sports study commissioned by the American Gaming Association in 2016 found that sports bettors composed 25 percent of the NFL viewing audience, yet they accounted for 47 percent of time spent watching games—in other words, gamblers watched more than twice as much as non-gamblers. Furthermore, 65 percent said they were more likely to comment about sports on social media if they had money riding on the game.
TV and streaming networks will face a fundamental decision, whether to host, inform or ignore sports betting. Some could integrate a bookmaking platform into an OTT feed; others, like VSiN, plan to stay agnostic as an independent voice offering credible analysis; and some will shun all connection. But what’s undeniable is that gambling’s presence will be inescapable.
“Sports betting dominates every media channel in Europe,” said David Sargeant, a sports betting consultant and the founder of iGaming Ideas. “It’s going to transform every aspect of sport in the U.S.”
Sargeant, who has clients both in the U.S. and abroad, said sportsbooks traditionally account for only a small portion of a casino’s intake, but they remain an effective portal for customer acquisition. Sargeant said, in Europe, 40 percent of a sports betting company’s revenue is spent on marketing. Not only will betting ads now inundate viewers, but Musburger also said gambling-related platforms like his will stand to receive more mainstream advertising, as brands will be less skittish about the association.
As has been well documented, the price of sports broadcast rights has grown dramatically over the past decade as advertisers have flocked toward the last bastion of live content. There has been considerable speculation in recent years that this bubble was on the verge of bursting. The advent of sports gambling in the U.S. may prolong that eventuality.
Not only will traditional sports feeds likely draw larger audiences staying for longer periods of time, but also there may be the creation of another set of broadcast rights for betting houses. Nearly all online bookmakers overseas offer live streaming of games. Sports leagues in North America will undoubtedly create those rights for the next round of broadcast contracts.
Perform Group’s EVP of business development, Matt Drew, said his company has made an early appraisal that the market for sub-licensing those rights was a growth opportunity.
“It is part of Perform’s origin story, quite frankly, seeing that those rights were undervalued and selling them to betting operators and doing so in a structured and appropriate way,” Drew said.
Sportradar began offering OTT solutions to sports federations and rightsholders last year, and U.S. deputy president Laila Mintas said betting integrations domestically are likely to happen—although in the reverse order as happens overseas.
“In Europe, streams of games are typically added to betting platforms to allow fans to watch and bet at the same time, but technically it can also be the other way around and that might be something that we see different in the U.S. market,” she wrote in an email. “As long as games can be watched in real-time, there is no reason why rights holders shouldn’t add betting to their OTT offerings.”
Streaming OTT rights are particularly valuable when betting is legalized. Mobile phones and tablets offer the touchscreen functionality to integrate a gambling platform while connected televisions can host similar options through the remote.
As a result, the stable of tech giants who have been dipping their toes in the water with streaming live sports—Amazon, Facebook and Twitter, for instance—all could stand to be bigger players where mobile betting is permitted. Twitter has already touted an interest in offering microtransactions through its site, although that was months before the Supreme Court ruling and thus not explicitly stated in the gambling context. Spokespersons for Facebook and Twitter declined comment for this story; Amazon and BAMTech did not respond to interview requests.
The proliferation of legal sports betting will incite huge demand for content creation around this new industry. Those in the media business see an opportunity.
“We think those two worlds are going to come together quite significantly,” Drew said. “The advantages that we have in terms of the tech stack that allows us to power our DAZN streaming business—which is something of huge scale and huge power in delivering more hours of sports broadcasting than anyone else in the world at the moment—is technology that can be leveraged over time to be used to deliver betting content in new and exciting ways.”
The disparate fate of sports betting complicates matters, with 50 state legislatures free to decide whether to permit the industry and, if so, how. Chris Grove, the managing director of research firm Eilers and Krejcik Gaming, said policymakers will consider three primary questions while crafting a bill: 1. whether betting is allowed at retail sites only or also via mobile devices, 2. the type of physical retail locations (casinos, racetracks, official kiosks, etc.), and 3. how to tax and regulate the industry.
In-play sports betting is wildly popular in Europe, and most expect the trend to continue in the U.S. Sportradar is among the companies whose live odds fuel the in-play betting offers from several bookmakers in Las Vegas.
“In order to absorb the large off-shore market and bring it onshore so it can be taxed, sports fans need to be offered the possibility to bet live wherever they are,” Mintas wrote. “People are far less likely to drive to the nearest casino to place a wager, so if there is not a convenient channel for them, they will likely continue to bet in the off-shore markets as they have already been doing.”
Any kind of betting from a mobile device would pose a secondary benefit to just convenience: integrity enhancement. Such a mechanism would be cashless and require identification and a credit card from the user, aiding watchdogs monitoring the market for suspicious bets that signal match-fixing or spot-fixing.
“You’re talking about a system that’s far more auditable, that’s far more transparent, that is far easier to get an aggregate comprehensive picture of in a comparatively short amount of time,” Grove said. “There are definitely enforcement advantages and integrity advantages to having the online component.”
The head of Perform Group’s integrity services, Jake Marsh, said bet monitoring is “a useful tool, but it’s not a silver bullet.” He said Perform offers a more robust integrity infrastructure that includes in-depth risk management and security of the whole data supply chain as well.
In a written response to the Supreme Court decision, Capitals, Wizards, and Monumental Sports Network owner Ted Leonsis likened sports betting to Wall Street because data powers both industries. He hailed the Securities Exchange Commission as one of several important consumer protections in the financial industry that could be replicated in betting.
Leonsis’ venture capital firm, Revolution Growth, is an investor in Sportradar. He sits on the advisory board along with Cuban and Michael Jordan, among other sports luminaries.
“My dad has been very active and vocal in our support and near-evangelicism because we think it’s a really good thing for fans,” said Zach Leonsis, Monumental Sports’ SVP for strategic initiatives. “We think it’s a really good thing for the leagues and our teams. We think it’s really important to be a fully regulated industry, a fully taxed industry. Regulation will strengthen the integrity of our sport.”
NBA commissioner Adam Silver recently defended the leagues’ push for an integrity fee due to the increased enforcement cost of monitoring more U.S. jurisdictions all playing by different rules. He noted that there are “several so-called integrity provisions in place already”—and Vegas bookmakers contend they’ve already been monitoring the market successfully for years. Silver has also used the term “royalty” to discuss the fee, echoing similar comments from MLB commissioner Rob Manfred about betting operations “free-riding” on leagues’ “intellectual property.”
However that question gets settled, the money about to flood the U.S. sports market is enormous.
“It boggles the mind,” Sargeant said, “what a Super Bowl halftime betting ad will cost.”