September 19, 2018 by

$2,300,000,000 Potential Annual Windfall to the NFL: Study

The National Football League season in the United States began last weekend and for the first time betting on the games was legal in states other than Nevada.  Before the US Supreme Court declared that the Professional and Amateur Sports Protection Act (PASPA), that had been established law since 1992, was unconstitutional, thus opening legal sports betting to the 46 states that hitherto did not have legal sports betting, betting on NFL games was legal only in Nevada.  The other three states that had some from of legal sports betting when the UIGEA was passed had very limited sports betting.


Sports betting in the United States is now a work in progress as only a few states were quick enough to get the necessary infrastructure in place to begin accepting legal sports bets in time for the start of the American football season.  The four states that were ready to establish legal sports betting quickly were Mississippi, New Jersey, West Virginia, and Delaware.   For the many other states that eventually will allow sports betting, it will take until sometime next year or even further ahead to make betting on NFL games legal.

Online Casinos

The key factor in much of the sports betting discussions in the states that would like to set up legal betting is whether sports bets should be made only through established land based casinos or also through online casinos. 

The advocates of allowing sports betting through online casinos or other online sports betting sites say that legal online sports betting will bring millions if not billions of dollars to the legal sports betting arenas.  One reason is that online casinos offer many casino bonuses.  Land based casinos have a much more difficult time offering the vast range of bonuses that online casinos can offer.

As more bettors join online casinos in order to bet on sports, they will also bet on the usual casino games.  The tax revenues that these states will realize will come, therefore, not only from legal sports betting but also from legal online gambling in general.

Windfall for the NFL

Even though sports betting on NFL games is still very much at the starting gate in all states but Nevada, financial analysts are looking at the long range benefit to the league from betting.  Until now, people who wanted to bet on NFL games either travelled to Nevada—a huge minority of bettors—or they placed their football bets illegally.  Tens of billions of dollars have been bet illegally year after year in the United States.

ESPN reports that the Nielsen global research group has done the research and says that when sports betting comes to every state that wants to legalize it, the NFL will realize a windfall of about $2.3 billion annually.  The American Gaming Association, the industry group that represents legal gambling interests in the United Sates, paid for the analysis.

The report cites four areas where the NFL will reap large financial rewards.

Television Revenue

As more people become sports bettors, they will naturally want to watch the games on television.  As a result of this increased interest in the games, the league will be able to negotiate far more lucrative television rights packages.  Even though billions of dollars have long been bet illegally, and carried the concomitant interest in following the games on television, legal sports betting will bring out many new bettors, those who were leery of placing bets illegally with bookmakers.

It is this cohort that will drive viewership up, will increase competition from the several television and cable companies that now vie for the rights to games, and will cause the value to the television station of NFL games to increase dramatically.

Another area that will likely create a rise in viewing is legal in-game betting.  In the first week of the NFL season, we already saw how in-game betting can affect the overall betting picture.  After the Chicago Bears took a 20-0 lead against the Green Bay Packers, the in-game odds against a Packers win rose to 10-1.  The Packers staged a great comeback in the fourth quarter.  Viewership stayed high as people were interested in whether the team would succeed in overcoming the deficit which in the end it did.

As in-game interest rises, the value of every minute of television advertising rises even in games where the eventual winner is no longer in doubt.

Advertising

Legal sports betting interest will become a new and very large competitor for advertising time on NFL broadcasts.  As competition for each minute goes up, the NFL will demand a share of the rising price of advertising.

Sponsorship

Although American sports teams have not yet allowed themselves to become officially sponsored by business interests, as is the case in Europe, many feel that the day when football players will wear patches advertising sponsors is not far away.  This practice is common in American auto racing but has not yet reached team sports.

However, stadiums are named for business interest.  Stadiums feature advertising through billboards or advertising on the giant screens that all the new stadiums have.

Selling Information

Sports betting needs all the information it can get its hands on.  As the demand grows, the reports saw that the league would charge the betting venues for the latest set of pertinent data.  This is supposed to be data primarily for in-game betting.  In-game betting is also expected to increase television viewership as mentioned above.

Integrity Fees

This is the industry term for a pure percentage of all bets made on games.  Thus, integrity fees apply to all team sports and may also apply to individual sports such as golf and tennis.  Gambling interests have vociferously opposed acknowledging their responsibility to pay integrity fees.  The NFL and other leagues may lobby state legislatures to make paying integrity fees mandatory in those states.  If the league succeeds in getting a state legislature to make integrity fees mandatory, the leagues’ players’ unions will also demand a share of the money wagered.

Because of the inconclusive status of integrity fees, the report did not take them into account.

Only One Week

The NFL season is only one week old but already we see how betting may eventually be worth billions of dollars to the league’s teams.