If someone offers you a bet on how significant of an impact the legalization of sports wagering will be on not just the games America plays and watches, but the entire business of sports … take the over.
On Monday the United States Supreme Court ruled 6-3 to strike down the Professional and Amateur Sports Protection Act (PASPA), a 25-year-old law that effectively limited sports gambling to the state of Nevada. The case was brought by former New Jersey Gov. Chris Christie, who argued against the NCAA and four professional sports leagues, not to mention both the Obama and Trump administrations, that PASPA was unconstitutional.
Christie was proven correct.
So, what changes now?
Potentially everything, or at least a lot of things. In some places, it could change quite quickly. In others, maybe not.
First the ruling needs to be sorted out. A storefront sportsbook, like the ones across Europe, will not open down the block from your house today so you can bet on the Golden State-Houston game.
The ruling kicks the issue to the United States Congress to sort out, so politicians (and lobbyists) are going to be involved. If the feds don’t act, however, then the issue can be decided on a state-by-state basis. It’s expected that if Washington comes up with something, it will still allow state governments to handle local legalization, the way it is with lotteries (44 states have them) and casino gambling (30 states allow it). Industry estimates peg 32 states as likely to legalize initially, with more coming as they realize the revenue being lost.
If you live in Alabama (one state that bans both lotteries and casinos) and you sternly oppose wagering of any kind, it’s likely nothing will change. Although since the industry’s future is going to be linked to online and mobile, that too might fray.
For others, buckle up. In anticipation of this ruling, six states have already passed legislation on the legalization of sports wagering: Connecticut, Mississippi, New Jersey, New York, Pennsylvania and West Virginia. Those could get up and running in a matter of weeks, however it’s possible the feds will step in to pump the brakes, at least for a little while. States would need to adjust accordingly.
Ten other states, including major markets California, Illinois and Michigan, are considering or have considered legislation in the past year. Those can be revived, rewritten and passed based on legislative schedules.
What’s undeniable is that there is a massive public thirst to gamble. In 2017, the American Gambling Association reports sports wagering hit a record $4.9 billion in Nevada alone. People living everywhere else have been forced to wager exponentially more than that through local bookmakers, often linked to organized crime, or, of late, offshore sites via the Internet that offer no consumer protections.
Neither, of course, provides tax revenue or a cut to the leagues themselves.
And the leagues want in. This is a watershed day for all of them, and not simply if they can negotiate a cut of revenue under the premise that they need an “integrity fee” to staff up monitoring and enforcement of their contests.
The NBA has already proposed a 1 percent fee. If that’s an opening salvo, then it’ll likely get less, but it’s still a ton. In West Virginia, one proposal had a cut of every wager earmarked as an “integrity fee” for West Virginia University and Marshall, potential windfalls that could help reshape college athletics despite the NCAA’s vehement defense of PASPA.
It’s the axillary money that will rain down and, in some cases, already has.
“I think everyone who owns a top-four professional sports team just saw the value of their team double,” Dallas Mavericks owner Mark Cuban told CNBC Monday morning.
Start with television ratings, which for many sports have been soft in recent years, most notably the NFL. However, research by the AGA found in 2015 regular gamblers watched 19 additional NFL games compared to non-gamblers. They also watched for longer. Gamblers, AGA said, were just 25 percent of the market, yet they watched 47 percent of all the minutes of NFL football broadcasts. The AGA predicts once legal, sports bettors will increase to 50 percent of the viewing audience.
“Broadcasts and advertisers who desire highly engaged viewers would reap the benefits,” Geoff Freeman, president of AGA said.
It’s not just people sticking around to find out if a team covers a point spread or where a game hits on the over/under. Those are old bets. With mobile wagering, in-game bets on each play can make any game interesting no matter the situation or score. Nothing else matters when you’re wagering on the outcome of the next play – say a made field goal or a first down. It becomes less a sports event and more a game of chance/skill/luck (fill in your choice).
That was likely the thinking behind Fox Sports paying the NFL $3 billion-plus to broadcast just 11 Thursday night games in each of the next five seasons. Despite sagging ratings and complaints about poor quality of play, the per game average increased for the NFL from $45 million to $60 million.
More viewers mean higher advertising rates for the networks. Legal sports wagering also means a new market to sell advertisements and partnerships. Just as daily fantasy became a lucrative boom (FanDuel and DraftKings overwhelmed the airwaves in 2015) now comes an even bigger and richer group.
“Fanduel and DraftKings are in a unique position to leverage their huge U.S. databases into these new opportunities,” said Cal Spears, the CEO of RotoGrinders.com, which has been modeling player performances for years for fantasy and can now shift to actual wagering. “Look for them to offer traditional sports bets where legal, but also to create new game types that merge sports betting and fantasy concepts.”
Teams and leagues can benefit here also with a new money stream, not just from a cut of the action, but in sponsorship and advertising deals with sports wagering operations. The Sports Business Daily reported there are some 50 different gambling brands in England sponsoring professional soccer clubs there. The U.S. market is more than five times larger.
Regular sports gamblers don’t just watch more game action, they consume more of all coverage, which should be a boon to all types of media. That may especially be true of gambling specific shows, websites and publications. Not only will old media further adapt in coverage of wagering, but a “Gambling CNBC” will sprout up. The Brent Musburger-backed VSiN has been broadcasting out of a glass studio in the South Point Hotel and Casino in Las Vegas for almost 18 months. The recent launch of The Action Network follows the trend.
Then there are, like Wall Street, the data analysis and advanced statistics companies that can offer both gamblers and the house an edge. Information that suggests a pitcher is tiring or a boxer’s punching power has softened in the last round would be considered an essential premium.
It goes on and on. Imagination and innovation will rule.
What no longer will carry merit is the tired and untrue arguments by the NCAA and the professional sports leagues that propped up PASPA for all these years. The FBI has long said that the best tool it has in fighting point shaving or game fixing is legalized wagering because it can see suspicious activity in real time.
Instead anti-gambling forces argued against this and rather lined the pockets of organized crime, which for decades has used wagering money to fund far worse endeavors such as drug and human trafficking.
So, Monday was a bad day for the mob.
And a good day for common sense, not to mention Americans who want the freedom to live their lives to do just that.
Well, at least in some states. Which ones will be hashed out on Capitol Hill and in state houses across the land. At least the discussion has finally gotten real.
Sports wagering is coming. Sports, and the business of sports, will never be the same.
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