Betting on March Madness™ 'highlights' opportunities for TV sports has been saved
Betting on March Madness™ 'highlights' opportunities for TV sports
Will media and entertainment companies use sports gaming to boost fan engagement?
Media and entertainment (M&E) companies are under constant pressure to attract paying audiences. Loosened restrictions on sports gambling across the United States, however, could provide welcome relief for some M&E companies—and drive overall growth for the sector.
This week, nearly 24 million people will fill out their paid-entry brackets for the National Collegiate Athletic Association® (NCAA®) Basketball Tournament1, known as March Madness®. Betting operators are expected to haul in over $10 billion from fans wagering on the three-week event, only a fraction of which is done legally.2
But given a 2018 ruling by the US Supreme Court to overturn a federal betting ban, sports broadcasters and leagues might be wondering if legalization could help boost revenue and contribute to the next phase of growth.
Traditionally, leagues have opposed sports gaming based on potential risks to integrity. Although the decision to allow states to permit gambling on professional and amateur sports initially triggered similar apprehension (including from the NCAA), today’s sports business environment is changing.
Although sports viewing remains one of strongest pillars of the TV entertainment ecosystem, sports rights can be expensive. Broadcasters and cable networks face dual pressures of skyrocketing sports rights costs and the structural decline of traditional TV—the latter led by consumers opting for streaming services. The increased scope for gambling opportunities, and its related effects, provides an interesting counter to consumer trends.
Research shows a correlation between gambling and TV sports viewing. According to a recent Deloitte report, among those who watch sports on TV, 78 percent of US men and 64 percent of US women said they were more likely to watch an event on TV if they had bet on it.3 Further, the gaming catalyst translates to viewing hours: The average TV sports viewer watches 12.1 hours of TV sports content per week, while fans who gamble at least annually view 15.2 hours per week. By contrast, non-gambling sports fans watch just 10.3 hours per week.4 Further, heavy gamblers, who bet at least weekly, view 20.4 hours of TV sports per week—almost double the viewership of non-gamblers.5
While many states with funding deficits will welcome the prospect of increased taxes from gaming revenue, leagues can earn revenue from advertising related to increased viewership, advertising revenue from gaming operators, data rights, and other licensing opportunities.
The National Football League® (NFL) has benefitted from fantasy football leagues, which have grown rapidly over the past decade. The emergence of daily fantasy football competitions has helped boost fan engagement and viewership of games by neutral fans. Total NFL fantasy competitions comprise 50 million to 60 million users and account for between $7 billion and $15 billion in revenue.6
Although leagues have viewed sports gaming as a threat to their integrity, increasing margin pressures could limit demand for sports rights. As a result, both sports organizations and M&E companies might become more open-minded about taking advantage of more lenient sports-betting regulations to create new revenue streams.
This charticle authored by David Ciampa on March 18, 2019.
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1 “97% of Expected $10 Billion Wagered on March Madness to be bet Illegally,” American Gaming Association, March 12, 2018.
3 Duncan Stewart, “Does TV sports have a future? Bet on it,” Deloitte, LLP, December 11, 2018.
6 Ashley Rodriguez, “How the $7 billion US fantasy football industry makes its money in 2017,” Quartz, September 3, 2017.
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