The NFL season is less than two months away.
That should be an unquestioned positive for US sportsbooks.
But this year there’s a new wrinkle to contend with: soaring official league data costs.
What’s the situation?
Genius Sports won the rights to distribute official NFL data back in April. But it paid handsomely for the opportunity thanks to a competitive bidding process.
The deal was worth a reported $120 million a year over six years, with half paid in stock warrants.
That is a huge chunk, considering US sportsbooks made $278 million in NFL betting revenues in 2020, according to state-by-state data.
That cost is now being passed on to operators.
Inflation for NFL data
The company is asking for around 4% of operators’ pre-match NFL betting revenues and 6% of in-play, according to industry sources. That’s approximately four times the 1.5% that Sportradar, the previous official data provider, was charging.
One operator source, speaking on condition of anonymity, said his company balked at the increase when the promised product was not yet noticeably different.
“Just because [Genius] made a bad deal, does not mean we are going to bail them out,” said the source.
“They don’t really have anything new,” said another operator exec. “They are charging 4x for the same dataset.”
Genius has offered other services in its data deals to help justify the premium pricing.
That includes advertising and engagement tools to find and keep players, Genius recently said.
Genius declined to comment when approached on multiple occasions by LSR.
Live vs. pre-game NFL data
Operators are particularly opposed to paying for pre-match data when most trade their own pre-match lines.
“It seems they want 4% of pre-match revenue just for the use of NFL logos,” a source said.
Genius has yet to announce any clients for the data feed, even as the season draws closer. Brand-new data integrations typically take two to three months, meaning time is potentially getting tight.
However, operators might have no choice but to pay up. Such is the power of the NFL.
FanDuel, DraftKings and Caesars are official partners of the NFL, and therefore are bound to use official data. Other sportsbooks have partnerships with individual NFL teams that likely tie them to official data.
Elsewhere, operators also have deals with the TV networks that show NFL games like NBC, CBS and Fox. The NFL might not allow books to advertise around those games unless ops take the official data feed.
Finally, multiple states legally require books to use official league data.
Limited alternatives to official NFL data
“It’s a monopoly,” said a senior operator exec. “You are negotiating against a monopoly.”
That said, Genius is also heavily incentivized to reach agreements, thanks to the aforementioned timeline.
What are the options for US sportsbooks?
There appear to be three choices:
- Books could complain to state regulators. States that impose official data say those deals must be “commercially reasonable.” Firms could argue that paying 4x for a similar product is not commercially reasonable.
- Operators could try and take solely the in-play feed. This is the preferred option for several books given the growing importance of in-play betting.
- Take an unofficial feed. Sportradar is said to be offering an unofficial data feed that will be around five seconds behind live. This is only really an option for books without NFL partnerships.
“Most books will end up paying, I guess, as there’s no great options,” an exec said.
Indeed, we’ve seen similar discontent around data costs several times in the past for other sports. The books always end up paying up for the best data, especially if a rival firm takes the feed.
Genius has leverage
“We are on the right side of history,” Genius CEO Mark Locke told Barrons, in a recent article about the high-risk NFL data play.
“There is a narrative out there that you don’t need to partner with the sport. That’s nonsense.”
Locke added: “Our business is all about leverage.”
Legal battle looming?
One of the only alternatives for operators then, is the aforementioned unofficial feed. But that too could be on shaky ground.
Genius and Sportradar are locked in a legal dispute in the UK over a similar issue: official data in UK football.
There, Genius is also the official provider, while Sportradar has been offering an unofficial feed.
The legal dispute centers around whether the data is IP-protected and therefore whether Genius can enforce a monopoly over it and eject Sportradar scouts from stadiums. Sportradar argues that having a single source of data is anti-competitive.
NFL data might prompt a similar dispute in the US.
“Now we’ll see if an operator, regulator, or data firm will walk to the courthouse to file suit,” said Ryan Rodenberg, an associate professor at Florida State University. “These types of issues about access to news and information will be more prevalent in non-NFL contexts moving forward too.”