It’s Advertising Week in Manhattan, a place where a basic “Delegate” badge costs you $633 for four-day access to more than 350 events.
The industries that get a forum dedicated to them clearly are on the rise — so is it any wonder that there was a forum on Wednesday on the future of sports betting in the U.S.?
This was part of the New York Venture Community Sports & Advertising Week Series, and the angle was potential investing opportunities in sports tech and media for the many entrepreneurial types among the hundreds who attended.
TV personality Bonnie Bernstein was the moderator, and the result was a look at the industry from a bit of a different perspective.
The gaping gender gap
Brian Musburger (Brent’s nephew), who described his Las Vegas-based VSiN operation as seeking to become “the CNBC of sports betting,” was asked to describe the sports betting customer.
His answer was “97 percent male.” Musburger also said interest among males was distributed fairly evenly across the board from age 18 to 65.
Counterpart Noah Szubski, the CEO of The Action Network, said he has found that the 25-40 age range is “a little stronger.”
Several panelists, including Russell Sapienza, CEO of Black Diamond Global Advisors, said that it’s useful to think of sports bettors as a combination of several groups — from the casual “maybe I’ll get lucky” player all the way to someone who shops for the best lines and pounces, much the way a stock market day trader does.
Sapienza also said that “financial services,” meaning how sports bettors deposit money into accounts and then get paid, is a promising growth sector here. Ezra Kucharz, the chief business officer at DraftKings, said that it would be difficult for any new company to get in on the exponentially growing sports betting business if it had to achieve approval from state gaming regulators because of the high cost involved — a sobering point for would-be entrepreneurs.
All parties noted that their sports betting plans were underway even before the landmark U.S. Supreme Court ruling in May that allowed any state to choose to offer sports betting. Kucharz underscored the difference between “legal” and “not illegal” — the latter being how the Supreme Court actually categorized sports betting.
A long way to go
Sports betting remains illegal in all but eight states, three of which passed laws but don’t have legal offerings yet, and each state legislature has to overcome inertia before sports betting arises. Kucharz, whose company has lobbied nearly every state for years on clarifying the legality of its core business of daily fantasy sports, said it would be naive to think that a majority of states would legalize sports betting in just a year or two.
Musburger said that sports betting may get a foothold in some places for a simple reason: States like Illinois and California “are broke,” he said. New revenue has to come from somewhere.
Legalization means a huge opportunity for sports betting businesses to land traditional advertisers, but the panel agreed that many still are digesting how to do so.
Still, the numbers are there. Kucharz said that DraftKings ranks second only to Facebook in terms of total engagement time — particularly on football Sundays, when a bettor logs in that morning to finalize his or her (OK, probably his) choices, then constantly checks the page to see how the various fantasy teams or real teams are doing in real time.
The male/female imbalance, meanwhile, can be seen as an advertising advantage. Plenty of women who watch an NFL game have little to no interest in some of the male-oriented advertising. With sports betting sites, one knows that nearly the entire audience is monolithic, which creates a difficult-to-find efficiency for an advertiser.
That should attract “any brand that wants dudes,” as Bernstein put it.
When I spoke with New Jersey Division of Gaming Enforcement Director David Rebuck in August, he noted that DFS companies such as DraftKings and FanDuel — which runs the sportsbook at the Meadowlands Racetrack — had proven far more nimble than traditional casino companies at introducing sports betting.
Musburger agreed, saying many casino operators had shown “little innovation” in what they offer.
How sports betting will drive TV ratings
Bernstein, a longtime broadcaster for ESPN and CBS, lamented the fact that for networks, the hard reality is that sports betting legalization is perhaps the best way to drive ratings up. Szubski of The Action Network doubled down on that, saying that a frustrated Jets fan, for example, might bet on rookie quarterback Sam Darnold to throw an interception on the next drive. What does that do? It keeps him watching.
Another concept Bernstein suggested makes sense — but won’t work, at least not currently. She pictured Buffalo Wild Wings, for example, welcoming football Sunday customers with iPads and help on how to bet the game. Kucharz, from DraftKings, noted that would be illegal in New Jersey.
It does make for an interesting dilemma: Sports bars in New Jersey can’t promote themselves as a gambling location because only casinos and racetracks can, but any adult with a online sports betting app on his or her phone can bet anywhere they like within state lines. And some would prefer to be in a social environment while watching the game; high-fiving oneself alone in the living room is no substitute for celebrating the local team’s touchdown among fellow fans (and it’s even better if the score happens to set you up to win some money).
Bernstein pointed to a survey that had the U.S. ranked sixth among countries in gambling dollars spent (most of it illegal until now). She asked, with widespread legalization, would the U.S. ever top that chart? The consensus was that per capita, the United Kingdom’s well-established gambling culture would not be challenged by more betting-averse Americans.
Stern talk from ex-NBA commissioner
The session prior to the sports betting panel was a one-on-one with former NBA Commissioner David Stern, who in his semi-retirement at age 76 has become quite the businessman investing in cutting edge, sports-related tech businesses.
Stern was one of several top sports league figures deposed in 2012 after the leagues sued New Jersey to prevent the state from implementing sports betting. He famously ripped then-Governor Chris Christie for backing the gambling.
So now that a new era has arrived — there was almost $100 million wagered in New Jersey in August, one of the slower sports months of the year — I asked Stern if he had changed his tune.
“I have changed my tune, and I now see it as ‘not negative’ — but only if the leagues receive a fee for their exclusive statistical data,” Stern told US Bets.
And what prompted the change over a span of six years?
“Really it was when the leagues started to embrace daily fantasy sports,” Stern said of the numerous partnerships that arose even as the same leagues continued to battle New Jersey’s sports betting legalization efforts in court.
So like many, Stern doesn’t buy into the distinction between betting on a game and paying an “entry fee” to risk money on DFS.
Of course, now that the Supreme Court has ruled, that distinction pretty much has faded into memory.
Photo courtesy of JoeFavorito.com.