Let battle commence: American sports are set for a lucrative betting sponsorship land grab

That sound you heard on Monday was the popping of champagne corks as the US Supreme Court ruled to strike down the law that made sports betting illegal in the US outside the state of Nevada.Technically, the ruling doesn’t legalise sports betting in itself but it does allow each state to legalise it if they so wish.

Not surprisingly, most states so wish.

New Jersey brought the case to the Supreme Court in the first place so you will be able to place a bet there within a couple of weeks. Four other states passed pre-emptive legislation legalising sports betting in anticipation of this ruling, while a further 14 have already introduced bills to their legislature. Within a year or two, this will be a tidal wave that will cover the whole country — with the probable exception of Utah and Hawaii.

However, those champagne bottles weren’t being opened to celebrate any sense of justice being done. This was all about the money. Frankly, other than the illegal, underground bookmakers who are currently feeding the (significant) gambling habit of Americans, it is hard to think of anyone who won’t benefit from an enormous commercial windfall.

First and foremost, the individual states are now able to collect tax on the profits of an industry that some people estimate to be worth at least $400bn (£296.4bn) per year.

Bookmakers are the next obvious beneficiaries with over £1.5bn added to the market values of British betting firms immediately after the ruling was made public. Shares in Paddy Power Betfair soared by over 12 per cent. Meanwhile companies like DraftKings and Fan Duel, who currently navigate a loophole in the legislation with their daily fantasy propositions, already have an active database of 10m people who like to stake money on sports predictions.

The major sports leagues and their teams are chilling their champagne flutes as well. Ironically, they were fighting against the ruling, arguing instead for a Federal solution rather than a state-by-state one. But that technicality notwithstanding, Mark Cuban, the outspoken owner of the Dallas Mavericks NBA team has gone on record saying that this ruling will double the franchise value of all teams in the major US sports leagues.

Even if the - frankly preposterous - one per cent “integrity fee” that the leagues are proposing doesn’t come to pass, there are multiple ways that the leagues and teams will benefit commercially. People are significantly more likely to watch more minutes of more games when they have money on it, so that increased viewership will be reflected in the rights fees. Sports data will become the oil in the engine of the industry so expect to see significantly more deals like US Soccer’s $1.5bn deal with STATSports and Sportradar’s exclusive deal with the NFL.

Even more significantly, the ruling has also opened up a gigantic new sponsorship category. Gambling companies now account for a staggering 45 per cent of Premier League shirt sponsorships and completely dominate the commercial breaks as they compete to be front of mind in the “moment of truth” when the bet is placed. That is worth a lot of money to betting companies and they have shown a willingness to pay for it. Let the land grab commence.

But the biggest winner of all will be those responsible gamblers around the country, who no longer have to go underground to unregulated, dark markets. They will now have access to transparent odds, payouts on their winning bets will be guaranteed and there will be a route to legal recourse if necessary. Contrary to some who argue that an explosion of betting might lead to more corruption, almost all evidence suggests that this increased transparency will decrease the opportunity to manipulate the markets as irregular betting patterns become easier to identify.

Of course, there is a long way to go and there are likely to be plenty of bumps in the road before this all plays out. But the genie is out of the bottle and sports marketing in the US will never be the same again.

That’s something you can bet your mortgage on.

Fit For Kings: Is The UK The Next Big Thing For DraftKings?

In case you’ve missed it, Daily Fantasy Sport (DFS) could be one of the next big things on this side of the pond. After explosive and very rapid growth in the US, DFS is now looking to export its success to the UK, with DraftKings recently signing partnership agreements with Arsenal, Liverpool and Watford. DFS involves selecting Fantasy Sports Teams, with an entry fee and prize money that can reach millions of dollars. As I said back in 2014, gamification of sport is a huge industry, and the dramatic growth of DFS is testament to this.

DraftKings and FanDuel are the industry leaders in the USA, following an ad blitz, several high-profile sponsorships, and a number of legal battles. At the heart of these battles is whether Daily Fantasy Sports should be viewed as gambling or not. Joe Asher, William Hill CEO, feels that DFS “is gambling and it should be regulated as such”, although you can understand why an established betting firm would feel that way.

Both DraftKings and FanDuel have courted controversy in the USA through high profile advertising and sponsorship campaigns, running a TV advert every 90 seconds, spending a combined $150m in Q3 of 2015. The ubiquity of the adverts caused a backlash in November (illustrated below) from viewers and sports fans, but some argue that it has only alienated those who would never use the service, doing little damage to the business itself.

Beyond the plethora of team and league sponsorships, DFS providers have partnered with major events such as the Belmont Stakes (presented by Draft Kings) and Stadium Lounges like the Draft Ops Ice Club and the Draft Kings Fantasy Lounge, which will “give visitors an interactive place to gather and play DraftKings”. The deliberate move to partner with teams, leagues, events and lounges has caught the eye to the extent that it is hard to avoid the presence of DFS providers in the USA. Primetime sponsored shows such as NFL Insider on ESPN have been compared to “a DraftKings infomercial disguised as a pregame show“. For those in the UK who watch Premier League football, it’s similar to the pervasive presence of betting firms.

It might not be a popular, or progressive method of brand-building, but this ubiquitous brand presence across sporting and media platforms has quickly established DraftKings and FanDuel as the dominant players. As is often the case, sponsorship has been used to legitimise their brands, but this may all be in vain if they lose their legal battle in the US - it is perhaps telling that at this stage, the NFL have opted against signing a partnership with either FanDuel or DraftKings.

The expansion of DraftKings into the UK could also inadvertently jeopardise their domestic operations, due to the requirement of a gambling licence through the UK Gaming Commission. Obtaining this could be seen as an admission that DFS is indeed gambling, and that won’t have gone unnoticed by Attorney Generals across America. As payment processors step away from DFS providers, international expansion can be seen as spreading risk, in case of protracted legal battles in the US.

Whilst DraftKings and Fan Duel are available as an alternative to gambling for Americans, it will be tougher for DraftKings to cut through and at the same time differentiate their offer in a mature betting market like the UK. Given how commonplace betting adverts are, achieving both cut-through and differentiation will be difficult, as it is now possible to bet on Fantasy Football, to receive tips on your Fantasy Football team from betting firms or play Fantasy Football for cash prizes.

Having announced Arsenal, Liverpool and Watford partnership deals in February, we are yet to see DraftKings make much of a move on the UK market…and they are not even listed as a partner on the website of the latter two clubs. Given the popularity of Fantasy Football in the UK and an established gambling market, it is surely only a matter of time until we see DraftKings make their mark here. If their approach is anything like their domestic strategy, you’re unlikely to miss it.