The underground Sports Betting market is estimated to generate at least $150 billion annually in the United States. My wager: I believe that yesterday’s ruling by the U.S Supreme Court to legalize sports betting will unleash a tidal wave of growth in the sports betting market, while placing a boot on the neck of bookies and other underground operators. Based on the ruling, I foresee a tripling of the legal market in ten years or less. Cash-strapped states across the country will be hopping on the band wagon, starting with New Jersey, whose political and gaming industry leaders played a key role in the ten-year fight to make sports betting legal.
The Court determined that Congress’ 1994 Professional and Amateur Sports Protection Act was unconstitutional because it trampled on states’ rights to enact their own laws in this area. Now that it’s legal and coming to a mobile phone near you, sports betting is going to affect everyone. People in leadership positions, from parents, pastors, and principals, to elected officials, doctors, and marketers, all need to understand the sports betting market and what may be appearing on the horizon.
Leading up to the decision, advocacy groups lined up on either side of the issue. The NFL, MLB, and other sports leagues were against legalization, arguing to protect the integrity of the game. Now that they’ve lost, the leagues and players associations will want to justify getting a small piece of the action. But, they have to define a rationale that is magnanimous to fans and society. Gaming companies, broadcasters, and media and data companies were behind legalizing sports betting, arguing that the free market is meeting human needs. Now, they want to compete to meet existing and latent market demand, while maintaining the belief that the downsides of the industry can be minimized. For example, they argue that big data technology can be deployed to detect fraud and prevent collusion and game-throwing behavior. Question: Who is going to pay for that, and how will that affect privacy and work-around behavior?
Technology and gaming companies and are getting ready to launch their campaigns fast. In fact, New Jersey politicians and gaming companies claim they will be ready for sports betting by Memorial Day, or July 4th. Clearly, this market is going to grow fast, and we have to ask how society and commerce will be impacted. Many casual fans who typically buy boxes at Super Bowl parties, but who never gamble in Vegas or AC, might be more tempted to bet on their favorite teams, and could lose their lunch money. How will brands react when chunks of disposable income are diverted from products to sports betting operators? How can parents and educators prepare kids for the barrage of advertising on their devices and at local convenience stores? How can the risks of sports betting be mitigated? What benefits can be crafted? Who is talking about the benefits?
Brands will have to think about how to prepare and respond to the approaching tidal wave in sports betting, too. Certain brands may appear to have a natural link to sports betting. They may see ways to leverage concepts that appeal to human nature’s desire to compete, to win, to outsmart the house. But there is more than one bettor personality. So, even appealing to young male sports fans comes with risk. For example, millennials, including young male sports fans, are very interested in sustainability, social justice, improving society, and giving back. Brands will need to be careful about their goals, their promotions, their messaging, and even the contextual environments in which their advertising appears.
In any market, there are winners and losers. State governments will be able to use tax revenues to build more parks and invest in youth education and recreation. They will also have to up their budgets for gambling addiction. After all, government has a responsibility to help its most vulnerable citizens. However, in sports betting, only the most sophisticated bettors win 55% of the time. Overall, the house always wins. That’s because on average, 19 out of 20 sports bets will be losing bets. With more cash going into media, gaming, and state governments, we have to think about the societal ROI.
May 15, 2018
Written by Tom Sullivan
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