TV should benefit from fans betting on sports
Kevin Draper
The sports television industry is struggling. There is an onslaught of competition from streaming services, video games, social networks and mobile phones. Fans cannot see the vast majority of games without an expensive cable subscription, and millions are opting to “cut the cord” or never install one. Rights fees are up while ratings are decreasing. The advertising outlook is grim.
But the Supreme Court injected a dose of optimism into the industry when it ruled May 14 to strike down a 26-year-old federal law that largely prohibited sports betting in the United States. The ruling is likely to produce the next major boost to the value of live, televised sports, industry executives and experts say, at just the time when it is most needed.
Nearly everyone agrees the appetite for sports consumption both online and on traditional television will surely rise. History has shown that the ability to place a bet on a sporting event makes fans pay closer attention.
According to a Nielsen Sports study, commissioned by the American Gaming Association, sports bettors made up 25 percent of the NFL’s television audience in 2015 but accounted for 47 percent of all minutes viewed. Sports bettors watch about twice as much sports coverage as nonbettors.
“Hands down, it’s a huge deal,” said Brad Humphreys, a sports economist at West Virginia University. “How huge it is depends upon how quickly states move and how many states move to legalize sports betting.”
The eventual size of the legalized sports betting industry in the United States is anyone’s guess. Almost $5 billion was bet on sports in Nevada last year, but that figure is dwarfed by the amount bet on the illegal betting market, estimated to be anywhere from tens to hundreds of billions of dollars. In Britain, home to just 65 million people and a far less diverse sports market, bettors wagered nearly $20 billion for the fiscal year ending in March 2017, the last year for which figures are available, according to a report from that country’s Gambling Commision.
The revenue generated from that betting quickly finds its way to the sports broadcasters, as well as leagues and teams. British betting companies are estimated to put 20-30 percent of revenue back into advertising, mostly on television.
Consider Bet365, one of Britain’s largest bookmakers, which generated $3 billion in revenue (and $666 million in profit) for the fiscal year ending in March 2017. In addition to spending hundreds of millions of dollars on media advertising, the company also has had a sponsorship with the soccer club Stoke City, which had the Bet365 name on its jerseys and stadium.
“If Bet365 invest 25 percent of their revenue back into sports, that’s $700 million per year” said Laila Mintas, the deputy president of Sportradar, a sports data company that distributes instant statistics and other information for professional sports.
Even less high-profile events are likely to see a boost in interest. That would likely benefit ESPN, which recently introduced ESPN+, the company’s long-awaited sports streaming service, that will feature thousands of live games and original programming for $4.99 a month.