The growth of legalized sports betting will increase league revenues by hundreds of millions of dollars per year, with most of that money coming from higher viewership and advertising sales, a new study done for the American Gaming Association shows.
The research demonstrates that leagues insisting on integrity fees or legal restrictions on data access are “tripping over dollars to pick up pennies,” Sara Slane, the group’s senior vice president of public affairs, said Wednesday.
She cited the Nielsen Sports study, which determined the National Football League could increase its annual revenue by as much as $2.3 billion. The NFL, whose season officially starts with the Atlanta Falcons-Philadelphia Eagles game Thursday, had total national revenue of $8.16 billion in 2017, according to several media reports. Local revenue, including merchandise and ticket sales, brought the league total to almost $13.1 billion, the Nielsen study says.
The Nielsen study said the NFL could see $1.75 billion more per year from increased fan engagement in the form of more viewers, more advertising, and more sales of tickets and merchandise. That total is roughly twice as much as the additional $573 million in direct revenue from payments by gaming operators for sponsorship, advertising, and product fees.
Slane said the league’s projected 13.4 percent increase depends on a national viewing audience of 100 million people with access to legal sports betting, which could happen in 2020. So far, Nevada, New Jersey, Delaware, Mississippi, and West Virginia have sports betting operations; Pennsylvania and Rhode Island have legalized the activity but are not yet taking bets. Several other states are considering legalized sports betting.
The NFL, ranked as the top revenue-producing league in the world even though TV viewership has dropped the past two seasons, stands to profit the most from the growth generated by sports-betting, Slane said. She added that Major League Baseball, professional and amateur basketball, and the National Hockey League will benefit as well.
“The next frontier for all these leagues is in-play betting,” she said, in which bettors can wager on factors such as which team will score next or how. “That is the mechanism that keeps that bettor engaged throughout the game. Some of this just doesn’t exist and it hasn’t existed yet. That is some of the product development we hope to see over the course of the next couple of years.”
The key for sportsbook operators is to be able to offer the best odds possible and access to all bets, she said. That means states should avoid imposing high tax rates that hamper a casino’s ability with a bookie or offshore operator who doesn’t pay taxes.
“It is very short-sighted and certainly something that’s not going to end up driving more consumer engagement if the operators cannot compete with the illegal market,” she said.
Of the states that have approved legal sports betting, Rhode Island and Delaware have the highest tax rate, 51 percent and 50 percent, respectively. Pennsylvania’s is 34 percent; Mississippi, 12 percent; West Virginia, 10 percent; New Jersey, 8.5 percent for bets made at a casino and 13 percent for online wagers; and Nevada, 6.75 percent.
In addition to job creation and increased tax revenue, Slane cited indicators that will reflect the success of legalized sports betting:
– TV ratings, including whether fans watch each game longer and watch multiple games;
– Upticks at traditional casinos, especially in states that require bets to made in person; those might include more business at table games, restaurants and hotels;
– Whether online revenue increases with the addition of online sports betting, particularly in New Jersey.
