Sports, Media and Gambling Have a Common Cause By Ken Adams, CDC Gaming Reports September 27, 2018 at 6:43 pm In May, the United States Supreme Court ruled against a federal law banning sports betting. With that ruling New Jersey, Mississippi, Pennsylvania, Rhode Island and West Virginia rushed to pass enabling legislation. In June, sports betting began in New Jersey and Mississippi and West Virginia joined in August. In August, casinos and racetracks in New Jersey had 9.2 million in sports betting revenue, Mississippi recorded $645 thousand, but that was the first month and many casinos are still trying to ramp up their operations. By way of comparison, sports betting in Nevada had a $4 million win in July; but Nevada has 334 casinos, while Atlantic City has 9, plus two racetracks booking bets. Compared to other forms of legalized gambling, the numbers are not very impressive to say the least. However, don’t expect the actual revenue to affect the push for legalizing sports gambling in other states. Legislators eager for new tax sources and large gaming companies looking for expansion see sports betting as an opportunity. State legislators and casino operators are not the only ones looking to profit from the Supreme Court decision. The sports media is all over the idea. Sports Illustrated, Fox, ESPN and others have added gambling content. Other networks are in the process of adding some time for sports betting programming. In the meantime, the odds are now a regular part of any discussion on college and profession sports. The professional sports leagues are trying to get a percentage of the wagering off the top, a concept that is not likely to fly in most jurisdictions – it just doesn’t make financial sense. For example in July, the amount wagered in Nevada was $244.6 million, Mississippi $7.7 million and in New Jersey $95.6 million in bets were booked. Clearly those numbers do not support paying five percent of the wagering to the leagues. Nor are the states going to be able to tax at a very high rate, there is not enough money. All of this begs the question, who does stand to make a bundle from sports? The big sports booking firms like William Hill appear to be in the best position to make money from the expansion of sports gambling. William Hill and the others will only be getting a small amount of revenue from each operation and state, but if it has enough locations William Hill can make enough to justify its investment. Investment is another important factor in the equation. In Las Vegas, casinos spend upward of $20-30 million on building a sports book. However, casinos do have a secondary motive. If someone comes into the casino to place a wager on a game, that person can also be expected to make other bets and to also spend money in restaurants, gift shops and hotels. Wait, am I saying that the states, the casinos, sports leagues and even the bookies are not going to make much money on sports betting? Yep, that is what I think. However, there may be other ways to make money for the idea. George Pyne, founder and CEO of the investment firm Bruin Sports Capital thinks sports betting is the best way to keep sports and sports media viable. TV ratings for all sports are falling, even for championships. For example in golf, if Tiger Woods is not in the hunt, television ratings drop precipitously. When Woods got his 80th career PGA Tour win last weekend, ratings were up 206 percent. Bringing ratings up on all of the other tour events is a challenge. Pyne says that if people have money riding on a sporting event, they are 19 times more likely to watch it, either in person or on television. That gives sports media and the leagues a significant incentive to promote gambling on the games. In that analysis, sports betting becomes a key element in a symbiotic relationship between sports, media, bookies and fans. The sporting games need the media to reach its fans. The media needs the games to generate advertising revenue. The bookies need both the games and the media to have some to offer. And the fans need a little incentive to keep them engaged with both the media and the sports. Each needs the other if they are to remain sustainable.