The American Gaming Association (AGA) is reporting that the NBA and MLB will get a $1.7 billion revenue increase from legal sports betting.
In total, the AGA anticipates legal sports betting will boost profits for the four major pro leagues by $4.2 billion.
Sara Slane, AGA senior vice president of public affairs:
“The four major sports leagues will earn a collective $4.2 billion from widely available legal sports betting, further proving that working together with the gaming industry will pay dividends for all sports stakeholders. Legal sports betting will also create substantial opportunities for state and local economies, generating tax revenue, jobs and supporting small businesses across the country.”
Each report was based on a survey of more than 1,000 people over the age of 18. The results provide a convincing rationale that the benefits of legal sports betting will be huge.
Where will the money come from?
The leagues themselves won’t make money directly from legal sports betting. That would introduce a conflict of interest that no regulator would permit. Rather, the cash will flow from the secondary effects of state-regulated sports betting.
The Nielsen Sports study breaks the additional revenue down into two categories:
- Increase in Revenue from Fan Engagement: Revenue not incurred directly from betting operators, but rather as a result of increased consumption and engagement with the league and its content/products
- Gaming-Related Revenue: Revenue paid directly from betting operators, in the form of sponsorship, advertising, and product fees.
How much money can each league expect?
The first study estimated that the NFL will make the biggest bucks. No surprise there.
Broken down by league:
- The NFL should see total revenues rise by $2.326 billion. Increased fan engagement should generate $1.753 billion of that, with an extra $573 million coming from gaming related revenue.
- The NHL figures are $216 million in total: $151 million from more fan engagement and $65 million from gaming-related revenue.
- Additional fan engagement will provide an extra $425 million to the NBA. Gaming-related revenue of $160 million takes the NBA total up to $585 million.
- MLB can expect another $1.106 billion in total revenues: $957 million from extra fan engagement plus $154 million from gaming-related revenue.
Fan engagement and gaming-related revenue details
Nielsen Sports breaks down the additional revenue by source. As one example, for MLB, the extra $957 million in fan engagement revenue comes from:
- Media rights increase by 11.1 percent to $4.2 billion
- Sponsorship increases by 6.8 percent to $952 million
- Merchandise sales increase by 3.4 percent to $683 million
- Ticket sales increase by 12.2 percent to $4.109 billion
Additional gaming-related revenue will come from three primary sources:
- TV Advertising: $64 million
- Sponsorship: $62 million
- Data and Product for Third-Party Gambling Services: $28 million
The effect of potential integrity fees mandated by states are not included in the survey.
AGA selling sports betting to the sports leagues
Sports leagues have historically been opposed to sports betting. Now that the Supreme Court has overturned the Professional and Amateur Sports Protection Act of 1992 (PASPA), leagues must come to terms with a new reality.
The AGA surveys showing large financial gains for the leagues are one way of shifting the oppositional mindset. The group wants leagues to see the opportunities and embrace them.
Rep. Lou Lang, who is a strong proponent of legal sports betting, testified that he’s not opposed to the idea:
“I don’t have a problem giving major league sports a fee, but I want to give them a fee for something. Not a fee for nothing.
“I have proposed to them … that any fee they get ought to be in exchange for information we need — data, pictures, videos, demographic and marketing information …
“That would help us market sports betting in Illinois, and that would give us something for anything we might pay them. I don’t want to pay them for nothing.”
The AGA’s members are the operators who will end up paying for such a fee, so naturally they are against it. In using survey evidence to show how much the leagues will benefit financially, the AGA is making the case that leagues don’t need integrity fees.