A Blog by Jonathan Low

 

Feb 17, 2019

How Long Before Big Media Companies Become Big Sports Gambling Companies?

The revenues and profits are too big to ignore - and once firmly legal, this can be linked to the media companies' regular programming. JL


Peter Kafka reports in Re/code:

Media companies that are hoping to profit from the billions of dollars gamblers are going to bet on sports. The easiest way for media companies to play in this is to simply take ad money from sports bookmakers, and/or develop programming aimed at sports gamblers.Big Media has already been touching sports gambling from NFL pre-game shows that mention betting lines, to the March Madness brackets companies produce, or fantasy sports services. Getting into sports betting by taking bets and making payouts isn’t an unheard-of idea. Sky, the UK satellite TV business recently acquired by Comcast*, owned its own betting business for 15 years.
Sports betting in the US used to be illegal, for the most part. Now it’s up to individual states to decide if they want it. Besides Nevada, which has always had legal sports betting, a handful of states have authorized it, with only New Jersey jumping in completely. But with estimates of US sports gambling hovering around $150 billion annually, it won’t be long before many states decide they want a piece of that action.
So here’s the question for media companies that are hoping to profit in some way from the billions of dollars gamblers are going to bet on sports: How do we get a slice?
I’ve been talking to people who make money in sports betting and media, and this looks like the way it’s going to play out:
  • The easiest way for media companies to play in this is to simply take ad money from sports bookmakers, and/or develop programming aimed at sports gamblers. We’re already seeing plenty of people getting into this, from ESPN to WarnerMedia’s Bleacher Report, which just announced a deal with Caesars Entertainment to produce a gambling show hosted in Caesars’ Las Vegas casino; in return, Caesars will buy ads on Bleacher Report and on other properties — including TV networks — owned by WarnerMedia. One complicating wrinkle: The overwhelming majority of sports gambling happens via illegal/offshore operations. Do media companies want to take money from those guys, the legal/US guys, or both?
  • Trickier: Making more money via affiliate advertising, where the media companies make money by sending viewers and readers directly to casinos and sports books, and getting paid for each referral. Affiliate revenue is increasingly important to all kinds of publishers (including Vox Media, which owns this site), so this isn’t a difficult idea to grasp. But it does link the media companies more directly with betting, which may give some of them pause. Maybe because they’re worried about liability issues that could arise when problem gamblers end up looking for someone to sue once they’ve lost all their money, or perhaps because they simply don’t feel great about embracing gambling, period.
  • The most involved: Actually getting into the sports betting business by taking bets and making payouts. This isn’t an unheard-of idea. Sky, the UK satellite TV business recently acquired by Comcast*, owned its own betting business for 15 years. And yesterday an executive from a sports betting company told me they are reasonably confident we will see it happening with one or two US-based companies in the coming years — but wouldn’t tell me who they will be.
You can argue that Big Media has already been touching sports gambling in lots of different ways, from NFL pre-game shows that mention betting lines, to the March Madness brackets CBS and other companies produce, or the fantasy sports services run by ESPN, Yahoo, and others.
But none of those toe-touches into gambling offer the media companies a direct way to benefit from people directly wagering on sports. And when media companies have bumped against more traditional gambling in the past, they’ve been skittish about it. In 2015, for instance, Disney was set to invest in Draft Kings, a “daily fantasy” betting operation (that is now morphing into a real betting operation), but backed out.
But now we are talking — in theory — about big media companies actually running their own sports books. Who might that be? We can rule out AT&T’s WarnerMedia, per AT&T CEO Randall Stephenson: Onstage at the NBA’s Tech Summit event in Charlotte, North Carolina, I asked him whether he’d be in the sports betting business directly and he responded with an emphatic, “No.” (But, per above, his company’s Bleacher Report is indeed going to be taking other gambling operations’ sports money.)
My uneducated hunch is that Rupert Murdoch’s Fox will be up for it, given that they’ve already been exposed to it via Murdoch’s operations in the UK and other territories where sports gambling has been legal for years.

4 comments:

Anonymous said...

I definitely like gambling, but not sports betting.

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3WE said...
This comment has been removed by the author.
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