In 2013, the National Football League said no to Las Vegas. Owners wouldn’t even consider holding an exhibition game in the city, due to the presence of legal sports gaming. They argued it was bad for the league’s image. But that was the time before. It was before Oakland Raiders owner Mark Davis met with city officials in 2014. Before those city officials made a strong sales pitch, convincing him to draw up plans to move his team after the 2019 season and before NFL owners signed off on the move. Now that the NFL will have a team in Vegas, what does that mean for the future of sports gaming? Some experts believe it’ll just tie the two concepts closer together.
“Football, at least in the United States, is the best betting sport,” said Dr. Richard McGowan.” This just confirms pro football’s marriage with gambling.”
An honest discussion about betting
McGowan, who works as an associate professor at Boston College’s Carroll School of Management, is an expert on gambling and the gaming industry. He says the Raiders moving to Las Vegas just makes the discussion about sports gaming a little more honest.
“I’ve always found it funny that on the NFL pregame shows they show the points spread, but said they didn’t want to encourage gambling,” McGowan said. “If anything, (the Raiders moving) basically announces that pro football now acknowledges gambling and that gambling is part of what keeps people interested in football.”
And when people are interested, they spend money. In 2018, the American Gaming Association estimated that Americans wagered $4.76 billion on Super Bowl 52 alone. Overall last year, $150 billion changed hands, both legally and illegally. While sports betting isn’t something new, it’s been driven underground in the last 26 years. In 1992, Congress passed a law banning the practice in all states except Nevada. That changed in 2018 when the Supreme Court struck down the law and now, one at a time, states are putting the question to their voters.
New operations increase profits
Rhode Island, Delaware, New Jersey, Pennsylvania and West Virginia are just some of the states who have opened their doors in the last two years to legalized sports gaming and more plan to follow. That’s been a profitable decision so far. For example, in the first six months of 2018 alone, $23 million was wagered in Delaware. In 2019, that revenue rose to $89.3 million, according to the state’s sports lottery track data. As more states legalize the practice, it looks like one worth investing in. In fact, despite the league’s officials stance, two NFL owners have already done just that.
New England Patriots owner Robert Kraft and Dallas Cowboys owner Jerry Jones both own stock in DraftKings, according to this ESPN report. Both own less than 5 percent of the company, either on their own or through other operations. That’s a key point. Despite the league’s official stance opposing sports betting, the NFL allows owners to “own equity in an entity that generates less than a third of its revenue from gambling-related operations,” according to a statement given to ESPN by an NFL spokesperson. DraftKings qualifies as such an operation because the group’s main focus is still fantasy sports. Both DraftKings and its competition, FanDuel, already have deals in place with 28 of the league’s 32 teams for advertising, something that wouldn’t have even been considered five years ago.
Will changes be coming?
But as any good investor knows, you don’t focus just on what’s popular now. Instead, you look to the next big thing. When it comes to sports gaming in the U.S., it looks like the future involves taking a page from current practices in Europe. It’s not about placing the wager on your phone as much as it is about creating an experience.
“I think most people who gamble enjoy that physical experience,” said Dr. Craig Depken, a professor with UNC Charlotte’s Belk College of Business and sports economics expert. “If you see March Madness, if you see an NFL game, you make decisions in that environment. I think we’ll soon see betting live in the stadium like they do in Europe.”
In Europe, it’s normal to see more than 500 different betting lines on a single game. Companies customize options too, so that people can design their own bets. Let’s say you went to a Premier League soccer game and wanted to place a bet that there would be three yellow cards and two red cards given out. In less than 20 minutes time, the companies put together a line, take your wager and wait to see what happens.
European players making moves
While this market isn’t established yet in America, some of the larger European companies are already looking for a piece of the pie. Paddy Power Betfair, for example, purchased a piece of FanDuel in anticipation of the group’s switch from a fantasy focus to sports betting. We already mentioned the interest in DraftKings, led by the investment by Jones and Kraft’s two groups. We’re also seeing a model take shape in Europe when it comes to partnerships, which experts say will likely be adopted here as well. Half of the 20 Premier League teams have an official betting partner, much like NFL teams now have specific sponsors for food or merchandise in the stadium. That means one company controls all of the betting at the Premier League stadium, regardless of what bet is made. Depken says to expect this to continue.
“The argument against gambling historically has been morality, a focus on the problematic gambler,” Depken said. “But it’s no longer the seedy off-track betting places that we’re seeing. Vegas already markets itself as an “experience” not just about the wager. You could see that happen in stadiums. You could also see bets where gamblers compete against each other. Let’s say you bet the Redskins but that bet’s not taken until someone picks the Giants to beat them. That’s where sports gambling appears to be headed.”
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