David Yellin, an Associate at Ifrah Law, says the sports leagues have adopted conflicting positions on sports betting advertising as they struggle to strike the balance between risk and reward
With states now free to allow legal sports betting within their borders, there is the potential for substantial profit to be had from sponsorship and partnership opportunities with sportsbooks and casinos. The only question is whether – or, more likely, when – sports leagues will seek to take advantage of these opportunities.
Overseas, gambling sponsorships are an extremely common way to boost team and league revenues, particularly in Europe. In England alone (where sports betting is widely accepted), five Premier League soccer teams have sportsbooks as their primary sponsor, appearing on their jerseys and, in the case of Stoke City’s deal with Bet365, getting naming rights for their stadium as well.
In addition, nearly every other club in the Premiership has an official gambling sponsor as well as offering betting from booths in their stadium.
Mixed signals: US sports leagues are sitting on the fence
Although some analysts expect that as much as $7 billion will be spent on sports betting advertising in 2019, the major American sports leagues are sending mixed signals over whether they plan to tap into this revenue stream.
The one governing body that has been unequivocal is the National Collegiate Athletic Association (NCAA), which has maintained a strict, anti-sports betting stance.
This is not particularly surprising: with an entirely unpaid labor pool, many of whom are struggling financially and have no realistic expectations of playing professional sports, college athletes are particularly vulnerable to the often-significant sums available to those who engage in match fixing.
Allowing the general public to profit off of NCAA games likely would draw even more attention to the fact that the athletes are not.
But the professional leagues have adopted a multitude of approaches. The MLB and NBA both own shares of daily fantasy companies – DraftKings and FanDuel, respectively – that have announced plans to begin offering sports betting.
Both leagues are divesting themselves of their ownership stakes, apparently to avoid too-close ties with sports betting (though neither league has expressly acknowledged that this is the reason). And both leagues have been apparently of two minds on the issue.
MLB recently reminded its teams and broadcast partners that they are not permitted to enter into any relationship with a sportsbook or casino that offers sports betting; this is in the wake of an ad buy by the parent company of Monmouth Park, the New Jersey racetrack that took the state’s first legal sports wager last week.
That said, it has not opposed gambling sponsorships more generally, as fourteen teams currently list casinos as official sponsors, and nine teams do the same with lotteries. As sports betting spreads, and more casinos and lotteries come to offer sports betting, this may create significant tension that will require the MLB to choose a side of the fence.
The NBA, which has not made any clear statements on sportsbook sponsorships generally, has ten teams sponsored by casinos. And the NBA’s recent experiment with on-jersey advertising, as well as pro-gambling statements from Commissioner Adam Silver, suggest that there could be opportunities for the NBA to cash in on gambling advertising.
At the other end of the spectrum is the NHL, which moved to Las Vegas this past season with the expansion of the Golden Knights, whose home arena is part-owned by MGM Resorts, who operate a sportsbook out of their Vegas casino.
The league has allowed gambling to take place on Knights games, choosing not to take advantage of a Nevada law that would have allowed in-state teams to opt out of betting in the state’s casinos.
In addition, eleven NHL teams currently have casino sponsorships, including the Knights, whose website – hosted on the NHL’s domain – features a banner ad for Station Casinos at the top. All this suggests that the NHL is open to the opportunities presented by gambling sponsorships.
The NFL and its uneasy relationship with gambling
All this is a model of clarity compared to the NFL, whose gambling policy has been described as “a mess.” The NFL has a long history of uneasy relationships with gambling, going back to when Jimmy the Greek would provide picks and point-spreads on the official pre-game show.
More recently, the NFL forbids marketing gambling operations, which covers stadium naming rights and such stringent restrictions on players that it considered disciplining several for participating in a charity arm-wrestling tournament hosted at a Las Vegas casino just last year.
At the same time, several teams do have sponsorship deals with betting companies, including Hard Rock Stadium in Miami, named after an entity that owns several casinos, and the MGM Grand Detroit Tunnel Club lounge in Detroit’s Ford Field.
The NFL also was particularly quick to jump on the DFS train, not only entering into formal sponsorship deals and accepting significant ad buys from DraftKings and FanDuel, but also operating its own fantasy leagues and fantasy stats TV channels.
Most likely, the NFL will need to make a clearer choice as sports betting spreads across the country, deciding whether it would rather maintain a façade of opposition to gambling or to open the tap all the way and let the revenues roll in.
The minor leagues have moved to cash in
But where major American sports have been dragging their cleats, some minor leagues have not hesitated to tap into sportsbook sponsorship revenues.
The United Soccer League, a semi-pro partner of the MLS, has welcomed – or at least accepted – sponsorships from gaming companies. Lights FC, the USL’s Las Vegas Club, recently partnered with William Hill as the team’s official sportsbook.
This deal stands to benefit fans and bettors as well, with William Hill offering multiple bets for each match, in game wagering, and $5 in promotional betting credit each time Lights FC wins a match.
The reluctance of leagues to partner with sportsbooks is particularly interesting in light of their existing relationships with sports betting companies.
For example, several leagues have signed on with Sportradar to ensure match integrity even though Sportradar is, at root, a sports betting company offering its services to sportsbooks worldwide and operating its own suite of tools for bookmakers through the brand Betradar.
Of course, there also are serious questions over whether sponsorship opportunities will be as plentiful – or as lucrative – as they have been elsewhere in the world.
DFS operators DraftKings and FanDuel deluged fans with advertising during the 2015 NFL season, resulting in widespread annoyance and leading to closer scrutiny from state and federal regulators.
Particularly because advertising through leagues is likely to target the casual bettor, marketers must be acutely aware of state and federal advertising regulations, particularly as applied to advertising that may reach underage people or those with gambling problems.
It also is always possible that states may try to crack down on gambling advertising within their borders. This is unlikely in states that already have legalized gambling – even those that have yet to make moves towards legalizing sports betting have years of experience with comprehensive gambling regulation and no state regulators have shown any interest in trying to restrict or prevent casino advertising.
In fact, because gambling revenues can be crucially important in balancing state budgets, it is hard to imagine that state regulators would be inclined to undercut gambling business’s ability to attract customers. What’s more, there has been no movement even from anti-gambling states in this regard.
But, given the amount of revenue at stake, it is more likely that the question to ask is not whether leagues will tap into gambling advertising revenues, but when.
David Yellin is an Associate at Ifrah Law. He was assisted in writing this article by Levi Barry, Summer Law Clerk at Ifrah Law.