Sports Betting Could Grow NFL Revenues by $2.3 Billion Annually


Nielsen projects (based on a fan survey) that a fully mature (i.e. nationwide) U.S. sports gambling market could be worth up to $2.3 billion annually in new revenue to NFL teams. The report (commissioned by the American Gaming Association) assumes media rights fees continue to rise (projected: +18%) because of increased fan interest/engagement, that sponsorship (think: team-casino partnerships) and ancillary advertising revenues will grow (projected: +7%) and that the league will be successful in striking “official data partnerships” with sports betting operators (projected: worth $30 million/year); it’s also assumes ticket sales will increase (projected: +6%). It’s important to point out that “integrity fees” were not included the projections.

Howie Long-Short: The American Gaming Association has called the $2.3 billion projection “conservative” and they’re not the only ones who believe that. Morgan Stanley analyst Ben Swinburne pegged the potential for new advertising and sponsorship revenue alone at nearly $2 billion.

While it’s fun to talk about a nationwide, legal sports betting market, the reality is that we’re years away from realizing it; if ever. As it stands today, just NV, NJ, DE, WV and MS are taking bets on individual sporting events. Even the most aggressive of estimates have just 35 states legalizing sports betting within 3 years.

Regardless which of those 35 states NFL fans reside in, it’s likely they’ll have the opportunity to place a bet at a William Hill (WIMHY) sportsbook; the company already operates in NJ, MS & WV and maintains 31% of the Nevada sports betting market share. It’s now being reported that the company has established a partnership with Eldorado Resorts (ERI) and two have plans for an online JV. The deal gives William Hill distribution in the 13 states where ERI maintains brick and mortar casinos, in exchange for 20% off WIMHY’s U.S. business; ERI will also receive $64.5 million in restricted stock (vests over 5 years) in the U.K. based parent company. WIMHY shares rose 6% on Wednesday, closing at $13.70; ERI was up 1% (to $47.35).

The English bookmaker’s aggressive approach to entering the U.S. market has been motivated by a government crackdown on gambling in the U.K. New regulations on FOBTs (fixed odds betting terminals) has resulted in company shares treading water over the last 12 months. GVC Holdings (another U.K. company, owns Ladbrokes) announced a similar partnership with MGM back in late July. U.S. gaming companies with brick and mortar properties in multiple states, which offer the access and reach new players to the space require, are well positioned in the current sports betting market.

Fan Marino: The NFL has reversed a long-standing ban on casino advertising, opening the door for teams to ink deals with local casinos (it’s unclear if casino partners be required to purchase the league’s official data). Don’t expect to hear of team-casino partnerships spreading across the league this season though, New Jersey remains the only state home to NFL teams and with legalized sports betting legislation on the books. Expect both the Jets and Giants to take advantage of this newfound revenue stream before the end of the ’18 season.

That’s not to say fans in the NYC market are going to be bombarded with casino advertisements when watching the home teams play. While the league will now allow its teams to take gambling money, regulations are in place to limit casino advertising to pre-and post-game programming; sports gambling ads are also prohibited.

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