Taking a Chance on Sports Betting

In May 2018, the U.S. Supreme Court overturned the Professional and Amateur Sports Protection Act. The decision effectively allowed states to legalize sports betting—outside of Nevada, where it was already legal—although there are some court challenges ongoing related to the Wire Act that may alter the landscape somewhat.

In the year and a half since the Supreme Court ruling, 11 states have legalized sports betting. Seven states have passed laws but not yet implemented them (Colorado will ask its voters to approve its law in a referendum this November), and another 24 have bills pending.

As a result of this legalization, the major pro sports leagues have been making deals with a variety of companies to facilitate betting by their American fans:

  • The National Football League forged an agreement with Sportradar to distribute its real-time play-by-play data to sports betting operators in the U.S. and internationally and another with Caesars to be its casino partner.
  • Major League Baseball signed with sports betting company DraftKings, which becomes its authorized gaming operator. It also has deals with sportsbook operator FanDuel and MGM Resorts International, as well as with Perform Content, which distributes MLB data for betting purposes.
  • The National Basketball Association named MGM resorts as its official gaming partner for both the NBA and WNBA. The NBA and the NBA Players Association also launched a virtual sports betting game with Highlight Games called NBA Last 90, in which players can bet on outcomes of the last 90 seconds of a simulated NBA game.
  • The National Hockey League has several official betting and gambling partners, including William Hill, FanDuel, and MGM Resorts International.
  • Major League Soccer partnered with MGM Resorts and Roar Digital. The deal with the latter, a joint venture between MGM and GVC, involves enhanced MLS data for sports betting platforms and the development of a free-to-play betting game app.

Each deal in the sports betting space has its own parameters and connections to betting. Agreements may involve the provision of data for betting purposes, the creation of league-identified betting platforms or locations, the development of online or mobile betting games, or other elements, with some incorporating multiple facets. Sponsorship and promotional elements are often integrated as well.

Outside of the five U.S. leagues, agreements related to sports betting are on the rise all over the world. Examples include individual U.S. teams (e.g., NFL’s Indiana Colts with FanDuel); international soccer/football clubs (English Premier League with Football DataCo and FC Barcelona with 1xBet); arenas (Washington D.C.’s Capital One Arena with William Hill); and sports organizations (UFC with IMG Arena, Premiership Rugby with BetUK, and PGA Tour with DraftKings). Meanwhile, the U.S. leagues have done deals internationally, as the NFL did by making bookmaker Tabcorp its official betting partner in Australia.

Sports betting is likely to be a significant revenue generator for the leagues and other sports organizations. But how will all of this affect the licensing business? Much like the rise of fantasy sports, sports betting in all of its forms is likely to increase fan engagement with the sport. While it remains to be seen whether this will translate to increased sales of licensed merchandise, there is certainly the potential—as has been seen with fantasy sports—for that to happen.

And the total market of engaged fans could be big, since about 100 million people in the U.S., or 39% of adults, say they are currently or are considering becoming sports bettors, according to the American Gaming Association.

A reminder that Raugust Communications’ monthly e-newsletter goes out tomorrow, October 15, 2019. The Licensing Topic of the Month is a discussion of the retailers that seem to be on the verge of bankruptcy and the implications for licensing, while the Datapoint research spotlight takes a look at agency commissions. If you have not yet subscribed to this free publication, you can sign up here.

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