|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.
|Synergy’s recent launch in the US got me wondering whether sports marketers closer to home could learn from America’s love for stats. My search for an answer unveiled some unexpected sources of inspiration and insight. This blog shares them and, in doing so, shows the answer to my question is a resounding YES.|
|Say the word “statistics” and memories of miserable maths lessons are what flood back for most of us. Yet today, US sports fans and coaches LOVE data. Broadcasters ESPN, Fox Sports, CBS Sports and NBC Sports are feeding fans, via their websites, with a constant flow of facts and figures in every American sport going. The traditional Big Four – NBA, NFL, NHL and MLB – are perhaps the most stat-heavy sports on the planet.|
So why are US sports fans and coaches today so hungry for data? Perhaps the answer can be traced back to the US in 1950, when physicist and astronomer Professor Arpad E. Elo introduced a system to rank the world's chess players. Elo’s approach has since been adopted and adapted by sports organisations, especially in the US. FiveThirtyEight, for example, use it to predict future NFL performance. In brief, using analysis of past performance and a bit of maths, his system has been used and adapted to estimate and rank the future performance of players and teams, and in doing so has come to the attention of sports fans globally.
The power and popularity of Elo’s approach among fans lies in how it can arm them with data to help win debates with fellow fans, and potentially even cold hard cash through betting. DraftKings, which gives gamers (gamblers?) sports research before they ‘play’ is both enormously popular and controversial in the US. Whatever you think of it, it may not be long before DraftKings is the latest US to UK import. Subjectivity and gut instinct no longer rule fantasy transfer decisions and heated half-time debates. The popularity of FiveThirtyEight’s NFL Elo Rankings is just one example of how the appetite for data among US sports fans is being met. Closer to home, @AccentureRugby’s analysis of the RBS 6 Nations is an equally compelling case of how data is changing sport.
Snapshot from FiveThirtyEight’s NFL Elo Rankings
|Player turned manager Billy Beane attracted criticism when he started using sabermetrics to make decisions on trades, rosters and the like at Oakland Athletics baseball team. Success ensued on the pitch to such an extent that in 2009 Sports Illustrated placed Beane in their Top 10 sporting GMs/Executives of the Decade, and in 2011, Moneyball, with Brad Pitt playing Beane, hit the screens to critical acclaim. Whether it be sabermetrics in baseball or mathematical modelling at Brentford FC or FC Midtjyjlland, data in coaching decisions is here to stay. Data has become integral to decision-making and debate. Why? In sport, data helps you win.Data is integral to decision-making in business too. How many CEOs and CMOs do you think invest in multi-million £ or $ campaigns with no view on expected return on investment (ROI) vs. viable investment alternatives? To prove the point with data (I couldn’t help myself!), recent research from Millward Brown Vermeer’s Insights 2020 showed 51% of over-performing companies said “Insights & Analytics Leads the Business” vs. a 27% for global average. In business, data helps you win.|
The lesson for sports marketers? Yes, you guessed it – data can help you win. Sports fans and coaches realised long ago data can deliver success. The title of sports marketing’s answer to Billy Beane is still open to applications but – with such high financial gains to be made – it’s only a matter of time until the vacancy is filled.
If you want to chat about ROI in sponsorship or anything to do with sponsorship measurement and evaluation, please do send Synergy an email at email@example.com and, if you haven’t already, take a look at how Synergy think about sponsorship value in our white paper here.