×
You will be redirected back to your article in seconds

The Big Gamble: Is Sports Betting Really a $7 Billion Media Windfall?

Updated. The Supreme Court’s decision to effectively legalize sports betting could be a big boon for media companies, according to a forecast from Evercore ISI analyst Anthony DiClemente. “Sports betting could drive $7bn incremental US ad spend in 2019,” DiClemente wrote in a note to investors this weekend, estimating that about half of that money would go to digital advertising.

DiClemente isn’t alone with his assessment. Barclays analyst Ross Sandler told investors in a research note last week that he “wouldn’t be surprised if the online and offline casino and betting brands ‘scorch the earth’ with marketing spend right out of the gate.” Sandler estimated that sports betting ads could contribute as much as 4% to Google’s 2019 revenue and 7% to Facebook’s alone.

These forecasts come on the heels of the last week’s U.S. Supreme Court decision to strike down The Professional and Amateur Sports Protection Act (PASPA), a 1992 law that banned such wagers.

With that decision, the judges paved the way for States to institute their own local laws to regulate sports betting — and the chips have been falling quickly ever since the court published the ruling early last week. A mere week later, Ireland-based bookmaker Paddy Power Betfair confirmed that it is acquiring fantasy sports giant FanDuel to get a foothold in the U.S. sports betting market.

FanDuel was valued at $1.2 billion in 2017, and generated revenues of $124 million that year. Together, the two companies now want to get ready to take on the U.S. sports betting market. “The Group has leading sports betting operating capabilities globally and strong operations on the ground in the US,” said Paddy Power Betfair CEO Peter Jackson Wednesday. “Together with our substantial financial firepower, we believe we are now well placed to target the prospective US sports betting opportunity.”

FanDuel has made no secret of its desire to get in on the action once states legalize online gambling. “We have the product design, we have the tech team working on it and we are gonna be ready to go,” FanDuel CEO Nigel Eccles said on CNBC last week.

The fantasy sports start-up isn’t the only media company excited about the future of wagering. Competitor DraftKings is also preparing a sports betting product to launch in time for the NFL season, and a number of media companies are hoping to cash in on the opportunity as well.

These include The Action Network, a Chernin Group-backed subscription-based online service that gives sports fans tools to track betting odds alongside other data and analysis. The company clocked record downloads for its mobile apps the day the Supreme Court decision came down, said CEO Noah Szubski. “This validates our mission.”

To prepare for the new interest in wagering, The Action Network has been hiring seasoned sports commentators like veteran golf journalist Jason Sobel and former MLB catcher Paul Lo Duca. “It is an entire culture,” said Szubski about sports betting. “No one is doing what we are doing.”

The benefits of the court decision will extend beyond dedicated sports betting sites, argued The Action Network head of media Chad Millman, who was previously editor in chief of ESPN The Magazine. “Fans who have money on a game watch more sports,” he said.

This could also lead to the emergence of online video services dedicated to streaming niche sports events, said Jim O’Neill, principal analyst at video platform provider Ooyala. “It could be a collection of sports leagues in the U.S., or international plays, but there’s a strong likelihood that we’ll see a burst of new events,” he said.

And then there is the ad windfall, which could benefit the entire industry, if recent history is any indication. Back in 2015, DraftKings and FanDuel were battling for the No. 1 spot in fantasy sports. Together, the two companies bought $305.5 million worth of TV advertising that year, according to estimates from iSpot.tv. Ads from both brands aired more than 80,000 times in 2015.

The fantasy sports ad revenue came to a near standstill in 2016, as the two companies came under regulatory scrutiny and explored an ultimately failed merger. FanDuel ads have been virtually absent from TV since early 2017. DraftKings continues to run spots, but at a very low level. Many are now waiting for the two, and other contenders, to turn on the ad spigot again.

But not everyone is as optimistic about the size of the U.S. sports gambling market as DiClemente, who estimated that sports betting operators could net $13 billion in 2019.

One reason to be cautions: It may take time for the court decision to have a material impact, as legislators will have to come up with legal frameworks for sports betting on a state-by-state basis. GamblingCompliance, a company that tracks the activity across the U.S. and Europe, estimates that in addition to Nevada, five states will have legalized sports gambling before the end of the year. In five years, the number could grow to as many as 38.

GamblingCompliance has a more conservative revenue estimate than DiClemente and others, forecasting that sports betting will generate about $1 billion this year and between $2 billion and $6 billion per year in five years. As a comparison: Traditional casinos bring in $40 billion per year. “It’s quite a low-margin business,” cautioned GamblingCompliance analyst James Kilsby.

How much the industry will ultimately bring in also depends on coming legislation. Some states may only allow sports betting at casinos or race tracks. Others may offer online wagering as well, which is estimated to bring in much more revenue. “There are many moving parts,” said Kilsby. “This is early in the game.”

Update: 10:10 a.m. PT: This post was updated with details on Paddy Power Betfair’s FanDuel acquisition.

Popular on Variety

More Biz

  • Barron HiltonBarron Hilton 1990

    Famed Hotelier Barron Hilton Dies at 91

    Barron Hilton, a famed hotelier who helped expand the Hilton Hotels empire and a founding owner of the Chargers NFL football team, has died, the Conrad N. Hilton Foundation announced. He was 91. “Today the world of hospitality mourns for one of the greats. Barron Hilton was an incredible family man, business leader and philanthropist. [...]

  • Patrick Whitesell and Ari Emanuel WME

    Endeavor Targets Sept. 27 for Stock Debut, IPO Video Tells Company's Origin Story

    After years of preparation, Endeavor is set to make its formal Wall Street debut on Sept. 27, when its stock will begin trading on the New York Stock Exchange. Endeavor has targeted Sept. 26 for the final pricing of its shares. The stock will trade publicly the following day. Earlier this week, Endeavor said its [...]

  • Netflix - Apple TV

    Netflix Stock Drops After CEO Acknowledges 'Tough Competition' Coming From Disney, Apple

    Netflix shares fell as much as 7% Friday to a nine-month low, coming after CEO Reed Hastings commented that the November launches of Disney Plus and Apple TV Plus will introduce a “whole new world” of competition. Hastings, speaking at the Royal Television Society conference Friday in Cambridge, England, said, “While we’ve been competing with [...]

  • Charlie Rose Sexual Harassment

    Charlie Rose Sued for Sexual Harassment by Longtime Makeup Artist

    A makeup artist who worked for Charlie Rose for 22 years has filed a sexual harassment lawsuit, accusing the former CBS and PBS host of years of unlawful behavior toward female employees. Gina Riggi alleges that Rose was verbally abusive with her and would often make derogatory comments about her weight. She also alleges that [...]

  • Rob Stringer

    Sony Music Chief Rob Stringer on Sustaining Growth and Recovering From the 'Dark Times'

    The Goldman Sachs Communacopia conference, now in its 28th year, gives top executives at major companies the opportunity to make their case to investors — and the Goldman analysts the opportunity to keep things on the up and up. While the analysts don’t necessarily grill the executives, they don’t lob softball questions either. That was [...]

  • Frank Grillo'Avengers: Endgame' Film Premiere, Arrivals,

    Matt Phelps Tapped as President of Joe Carnahan, Frank Grillo's Warparty

    Frank Grillo and Joe Carnahan’s Warparty productikon banner has appointed Matt Phelps president of the company. Phelps will head the Los Angeles office and be responsible for overseeing all film and television projects. “We searched long and hard to find the right fit for Warparty and felt that Matt embodied everything that we were looking [...]

  • Jack Gilardi, Longtime ICM Partners Agent,

    Jack Gilardi, Longtime ICM Partners Agent, Dies at 88

    Jack Gilardi, a longtime ICM Partners agent who represented such stars as Burt Reynolds, Sylvester Stallone, Jerry Lewis, Charlton Heston and Shirley MacLaine, died Thursday at his home in Los Angeles. He was 88. Gilardi was known for his gentlemanly style, love of the Los Angeles Dodgers and his skill at representing top actors. He [...]

More From Our Brands

Access exclusive content