Sports betting: Media companies will need to get in the game

Sports betting, now legal in a handful of states, is opening up faster than expected. In the year since the federal ban on sports betting was lifted, fantasy sports players (i.e. DraftKings and FanDuel), various casino operators and European bookmakers have raced ahead to pursue new opportunities. At the same time, media companies have adopted a hesitant approach – we expect this to change.

It’s not every day that a $10B+ adjacent revenue opportunity presents itself — not including significant additional revenue opportunities from advertising, sponsorships, and affiliate fees. Media and gaming are set to converge – there are too many synergies – and gaming will become increasingly important for traditional media companies to compete and defend. Players with a better monetization model will control NFL, MLB, NBA, NHL and other sports rights.

How do consumers feel about sports betting?

In assessing how sports wagering will develop, it’s important to start with the consumer. While critics of gambling worry about the theoretical social impact of sports wagering, consumers generally do not have a negative perception of the practice. By a factor of more than 2:1 consumers strongly support/somewhat support sports wagering (43%) vs. strongly oppose/somewhat oppose (18%). A large percentage of the population (39%) is neutral about the possibility of sports betting becoming legal in one’s state, a signal that a sensitive and responsible approach will be required.

Currently, sports wagering is a broad behavior. Our research indicates that 24% of consumers wager more than $1 per month and 53% of consumers are interested in participating. Sports wagering is also a recurring behavior – 65-70% of bettors place wagers at least 1x per month with average monthly wagering of $179.

How will legalization impact behaviors?

Sports wagering is set for significant growth. Live-stream betting and more simplified types of bets will be important accelerants. Currently pushed to the fringe by traditional media companies, sports betting content will move to the mainstream driving awareness and participation. Our consumer research indicates that with legalization, 64% of sports bettors expect to increase the amount bet and 7% of sports non-bettors expect to begin wagering when state legalization comes to pass. Increased wagering will also have follow-on benefits to sports viewing: 83% of consumers are likely to watch a game live if they have placed a bet.

How will media companies get a slice of the pie?

Sports betting will change the way consumers engage with and consume sports. Opportunities abound for media companies that want a piece of the action and we see at least four distinct strategies evolving:

1. The “all-in” strategy
2. Licensing, white labeling, and partnering
3. Sponsorship
4. Editorial

Media companies will need to choose a strategy which aligns with their culture/values, organizational capabilities, brand permission, and risk profile. Identifying the right market players to work with (e.g. operators, leagues, data providers, physical local market access players) and anticipating potential moves by major platforms will also be critical. With sports wagering just starting to gain traction, it’s a great time to evaluate where to play and how to win.

*Magid Sports Betting/Wagering 2018 – Fielded June 18-27, 2018; 999 total completed surveys averaging 10 minutes each. Main sample of 699, ages 18-64 balanced by gender/age/race/region. Oversample of 300 sports wagerers, matched to the gender/age composition of wagerers found in the main sample.