Last year the casino/gambling sector’s ad spend was $3.9 billion for local and national media, a little over half of which was spent at the local level, according to Gordon Borrell. “Could it double? Possibly,” he says. TVB's Steve Lanzano adds: "It could be a lot of money [for local TV], when you consider the money that companies like DraftKings and FanDuel spent years ago. The reality is you’ve got to keep people betting on your service.”
Local TV Could Win Big From Legal Betting
Betting on sports is off the board in most states now. But the odds are good that TV stations in some states will score significant advertising and ratings gains from its introduction over the next few years.
Those expectations come in the wake of a May 14 Supreme Court ruling that has cleared the way for states to decide for themselves whether to legalize sports betting.
Up until this time, legal sports betting has been available only in Nevada. It was exempted from the ban imposed by Congress in 1992 — the law that the high court just overturned. (The act also exempted three other states — Delaware, Montana and Oregon. It’s available on a limited basis in Delaware, but not in the other two states.)
In New Jersey, which was the focus of the Supreme Court ruling, sports-betting operations are getting ready to kick off. Other states — including Connecticut, Mississippi, New York, Pennsylvania and West Virginia — recently passed sports-betting laws. And at least a dozen others are considering similar legislation.
“I think this absolutely is an opportunity for media in general, and broadcast companies in particular,” said Jonathan Spaet, VP of network sales and development at Sinclair Broadcast Group.
Gordon Borrell, CEO of the research firm Borrell Associates, expects that legalized sports betting will significantly increase ad spending by the casino/gambling industry. “If your state allows it, it’s a big advertising category and there’s no reason to ignore it.”
Last year the sector’s ad spend was $3.9 billion for local and national media, a little over half of which was spent at the local level, according to Borrell. “Could it double? Possibly,” says Borrell, noting that $4 billion is about half of what his company expects the political category to bring in during the 2018 midterm elections.
Around 30 states haven’t really begun to consider the legalization of sports, so it’s clear this won’t be a national advertising opportunity in the foreseeable future, added TVB President Steve Lanzano.
“But it could be a lot of money [for local TV], when you consider the money that companies like DraftKings and FanDuel spent years ago. The reality is you’ve got to keep people betting on your service.”
Lanzano refers to two of the fantasy sports companies that spent hundreds of millions on TV advertising around 2015, much of it touting the huge prizes that bettors could win. Spot TV was a big recipient of those ad campaigns, even though they were national services, he said.
That big spending was dampened when a number of state attorneys general came down on the legality of the fantasy sports betting operations, diminishing the ad sector’s advertising spend.
Ezra Kucharz, chief business officer for DraftKings, is another who believes that the ruling is “great news” for stations.
Kurcharz, who is the former president of CBS Local Digital Media, said he is busy talking with stations about another way to profit off betting: partnering with DraftKings on programming focused on local teams that will appeal to sports betting fans.
Sports bettors are drawn to sports programming, according to research. A survey from The Mellman Group for the American Gaming Association in 2016 showed that 86% of Super Bowl viewers said they were more likely to watch the game if they bet on it. And 74% said they follow teams and players more closely if they place a bet.
Mellman’s research also shows that 53 million Americans participated in a betting pool last year and spent $18 billion on them.
Pre- and post-game sports shows could receive an uptick in ratings thanks to betting viewers, said Spaet.
And there’s a news angle to consider. “You’ve got to start reporting on this,” said Borrell, in speaking of sports betting. He likens it to reports on winning lottery numbers within news broadcasts.
Not so fast, says Emily Barr, president and CEO of Graham Media Group. She wants to see how the laws play out before deciding whether including sports betting reports in newscasts make sense.
And sports-betting ads will need some scrutiny too, she said. “We’re all going to have to take a look at the creative for the ads, to figure out when and where they run.”
Big questions remain. The Supreme Court left open a door for Congress to regulate sports gambling at the national level.
“There has been discussion of Congress adopting legislation that could put restrictions on sports betting where its legal,” said David Oxenford, a partner in the law firm Wilkinson, Barker, Knauer.
It might create a “uniform set of what would essentially be best practices in states that decide to legalize it,” Oxenford said,
Congress could also require sports-betting operations to fork over some of their revenue to the leagues to insure against game fixing, he said. “But I am just speculating as there has not been any specific legislative proposals put forward yet.”
As part of their TV rights deal, sports leagues may also impose some restrictions on betting spots. For example, the NFL already prohibits stations in Nevada from placing sports-betting ads within the live games, according to Spaet.
The statewide debates on whether to permit gambling may also benefit local broadcasters, Spaet added.
“Every state is going to decide what they want to do, so automatically it will become controversial,” he said. “In the short term there could be referendums on whether to pass [sports betting] or not, and there’s no better way to reach the voting population than via broadcast television.”