Legalized Sports Betting to Benefit Television Networks, Analyst Says
Posted on: July 11, 2018, 07:10h.
Last updated on: July 11, 2018, 07:10h.
With the federal sports betting ban a thing of the past, and states now possessing the authority to dictate their own laws regarding the gambling activity, television networks that broadcast sporting events stand to reap the rewards of increased advertising revenue.
Morgan Stanley media analyst Ben Swinburne tells Awful Announcing that major sports betting companies will spend heavily in advertising to reach their new market. He predicts FOX and CBS will see ad revenue increase as much as two percent.
By 2025, Swinburne believes sports betting companies will spend between $5 billion and $10 billion annually on marketing in the US.
That’s a welcomed outlook for the four major television networks, CBS, ABC, NBC, and FOX. All four broadcast NFL games (ABC through its subsidiary ESPN), and ratings for professional football have been declining over recent years.
ESPN reports that NFL ratings were down 9.7 percent during the 2017 season.
Ad Inundation
It was only a couple years ago that commercial breaks during sporting events were flooded with advertisements from daily fantasy sports (DFS) leaders DraftKings and FanDuel. The incessant spots attempted to convince viewers just how easy it was to win large sums of cash simply by playing the online contests.
It’s estimated that the two DFS operators spent $400 million on ads in 2015 alone.
The advertising was criticized by many state attorneys general, none more so than former New York State Attorney General Eric Schneiderman. The AG, who resigned in May amid numerous allegations of sexual misconduct, threatened the DFS companies with $3 billion in fines for what he determined to be illegal internet gambling.
Schneiderman said the fantasy sports commercials deceived customers into thinking they could win, while the vast majority of purses went to so-called “sharks.”
It isn’t too far-fetched to believe that sports betting companies might also present sports gambling as a fun way to increase one’s excitement in watching such programming. National ads might be forced to come with disclaimers that sports betting isn’t legal in all 50 states. In fact, it remains illegal in the vast majority, as only Nevada, Delaware, and New Jersey currently have legal sportsbooks.
That will likely change soon, as Pennsylvania, West Virginia, New York, Rhode Island, and Mississippi have all passed sports betting bills, though operations aren’t yet live. An additional 13 states have legislation introduced to regulate sports wagering.
DraftKings and FanDuel are both transitioning into the sports betting space.
Benefit to Many
Television networks aren’t the only entities that stand to profit from legalized sports betting coming to states across the country. Analysts believe wagering will increase fan interest, and therefore lead to higher earnings for the leagues as well.
The American Gaming Association estimates that Americans bet $150 billion annually on sports, with almost all of it illegally. States with authorized sportsbooks hope to bring much of that money into a regulated environment that can be monitored and taxed.
Dallas Mavericks owner Mark Cuban said following the Supreme Court’s repeal of the longstanding sports betting ban that the decision doubled the value of his NBA franchise.
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