May marked the fifth year anniversary of the U.S. Supreme Court decision to overturn the Professional and Amateur Sports Protection Act of 1992. Known as PASPA, the act banned sports betting. It took a lawsuit by New Jersey to reach the Supreme Court to get rid of the ban.
Since the vote, more than half the states and the District of Columbia have approved legislation to allow sports betting, with additional states expected to join the parade.
The flood of state legislation was expected. What took many by surprise was the cozy relationship that developed between sportsbook operators and teams and leagues, groups who vehemently opposed any possible connection to the world of sports betting and all that implied. Make that, all they thought it implied.
But the times they are a-changing, and piece by piece, the walls between the betting community and the athletic community have come down.
Chris Grove, Partner, Eilers & Krejcik Gaming
“The about-face by sports stakeholders on sports betting was a classic case of ‘if you can’t beat ‘em, join ‘em,” says Chris Grove, a partner at Eilers & Krejcik Gaming. “Once the Supreme Court removed the last legal impediment to legal sports betting, sports stakeholders no longer had a path to preventing the activity, so they pivoted to profiting from it.”
Sportsbooks developed a symbiotic relationship which promised new revenue streams for the teams that struck a deal with them. In exchange, the operators became a part of the landscape. The NHL was the first out of the gate to embrace sports betting. But the ease with which the NFL, MLB, NBA, etc. embraced their new attachments was nothing short of a marvel.
The fear of taking a step towards playing for the bettors? Gone.
The worry over collusion? Gone.
The specter of the Black Sox scandal? Ancient history.
Leagues and teams tried to find what the landscape looked like after PASPA. Tentative at first. Dialogue developed on responsible gaming. They learned about the industry a little more, says Josh Swissman, founding partner and managing director of GMA Consulting.
Just to be sure, we’re talking about the pros here. The college situation hasn’t quite fallen so neatly into this symbiotic relationship. The few partnerships that were made didn’t last. Yet for the most part, bettors could wager on college teams. Some states permit betting on colleges based in the state. Others, like the standard bearer New Jersey, do not.
College Betting Scandals
At least two high-profile incidents involving college athletics and sports betting have occurred. An Indiana man who placed bets at Great American Ball Park in Cincinnati involving Alabama and LSU led to dismissals at two schools. Alabama coach Brad Bohannon and two members of the Cincinnati Bearcat staff were let go in separate investigations, according to the Associated Press.
Alabama let Bohannon go after five years as coach after his name was linked to suspicious wagers on an Louisiana State University-Alabama game. ESPN said surveillance video indicated the person who placed the bets in Cincinnati was in contact with Bohannon at the time. One of the people familiar with the investigations told the AP that Bert Neff was the person who placed those bets.
Alabama Athletic Director Greg Byrne said the university received no evidence that players were involved in the situation. Cincinnati dismissed Assistant Coach Kyle Sprague and Director of Operations Andy Nagel after the school opened an investigation of its own into possible violations.
NCAA rules bar athletes, coaches and staff from betting on amateur, collegiate and professional sports in which the NCAA conducts a championship. The rules are under scrutiny as legalized gambling spreads across the country.
PointsBet sportsbook and the University of Colorado ended their partnership in March. According to reports, the university received direct payments from the sportsbook when new customers signed up to use the PointsBet app.
Caesars Sportsbook and Michigan State University agreed to terminate their $9 million, five-year partnership just 18 months after it began.
Caesars and LSU terminated a similar arrangement shortly after that.
Growing pains? Colleges don’t seem so interested in a close relationship with sportsbooks. Not so with the pros.
Just prior to the start of the current MLB season, the league and the FanDuel Group signed a multi-year agreement. FanDuel gets to use official branding and other product designations, gets to stream a free game daily, and will work with the league to develop new sports betting products and innovations, The press release from Major League Baseball made no mention of any financial gains.
“Value is in the eye of the beholder,” Grove says. “I suspect no one among the leagues, teams or sportsbook operators signed what they believed to be bad deals.
“In theory, there’s a mutually beneficial relationship between betting and sports,” Grove adds. “More betting drives more engagement, which raises the profile of sports, which drives incremental awareness of betting. Proving and quantifying that relationship is tricky, but the logic is sound.”
League Benefits
Each of the leagues has undergone its own evolution, Brendan D. Bussmann, managing partner, B Global, says. This includes most of the professional organizations that have embraced sports betting as a sponsor.
“Plain and simply, this is another way to get fan engagement. It’s about putting people in seats, selling merchandise, and developing further fandom around the sports and an additional form of entertainment,” Bussmann says.
Regulated sportsbooks have always been the standard, and you continue to see this as irregularities may arise. This has been more about the sports embracing this additional form of entertainment and seeing the increased awareness and overall involvement by fans and spectators, Bussmann says. “Relationships will continue to expand and grow, as you have seen some states allow teams to have direct access to licensees, but the real opportunity remains in sponsorship, merchandise, and increased engagement.
“Partnerships should be win-win for both parties. But it comes down to education, compliance, and engagement for teams, leagues, and operators. If you hit that trifecta, it’s a win for everyone. Teams and leagues need to continue to educate themselves as well as all of their stakeholders on understanding how sports betting works. It’s important for the game and it’s important for the industry.”
On a simple analysis, sportsbooks get to use league logos and have a meet-and-greet with players, access to content, and the right to stream or broadcast games. Capitol One Arena in Washington, D.C., became the first with a sportsbook as part of the building. Others have followed, including the Great American Ballpark in Cincinnati. More and more teams will incorporate sportsbooks as another venue within a venue, Swissman says.
The partnerships have evolved, Swissman said. “They were at arms length at first. Tentative at first, trying to gauge what life looked like post-PASPA.”
The NFL may have had its reasons to be last to join the partnership parade, but it is the one sport which has had to discipline players. Jameson Williams, wide receiver with the Detroit Lions, and Shaka Toney, defensive end for the Washington Commanders, were among a handful of players suspended for betting on football.
Still, consolidation expected in the future could change the landscape again. The early deals get to restructure now. They also see how later ones restructure. Benefits did not exist more than five years ago. They want to stream content for exclusive access. Now it is more of a focus to differentiate themselves.
Integrity—another word that has become part of the new-world sports betting lexicon. There are even companies that specialize in providing integrity to a solution. U.S. Integrity, for example.
Sports integrity monitoring detects and discourages fraud, match-fixing, game manipulation and other unethical or illegal betting-related activity. U.S. Integrity renewed its partnership with Major League Baseball after a successful first season as partners, according to a press release. The renewed partnership will run for the entirety of the 2023 season and encompass services on all MLB events.
U.S. Integrity analyzes dozens of data sets to proactively identify irregular wagering activity and officiating patterns across baseball-related betting markets. Its mission is to grow the legal, regulated sports betting market by providing solutions that ensure sports betting integrity in every play, every game, and every sport.
Will integrity be the magic key which stops abuses, real or imagined? Probably not, Grove says.
“I’m sure you’ll see a regular ebb and flow of marketing for sports betting more broadly and an ebb and flow of the depth and breadth of sports partnerships as well,” he says.
