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Startling Changes Afoot At Business Level Of Sports Gambling

October 15, 2018
Depending on your point of view, legalized sports gambling in America has been moving at a brisk pace since the U.S. Supreme Court gave the green light in May 2018 for states to offer it, or the changes have been mostly unnoticeable.

If you're a sports fan with betting inclinations in or near a state that's flipped the switch on allowing sports gambling -- New Jersey, Delaware, West Virginia and Mississippi have recently joined Nevada -- you now have some options in enlivening your football weekends.

That would include Marylanders who are within a reasonable drive of the Delaware Park casino about 90 minutes or so north of the Baltimore area.

However, if you're not going out of your way to bet on sports, there probably hasn't been any change in the way you enjoy the games.

At the business level, though, the movements have been startling.

FanDuel and DraftKings, two daily fantasy sports companies that came to prominence and occasional criticism in 2015, have become major players in the sports gambling world.

Both have staked out turf in New Jersey. 

FanDuel has partnered with the Meadowlands Racetrack in North Jersey. DraftKings is a partner with Resorts Casino in Atlantic City, N.J.

Ultimately, what the daily fantasy companies bring in a partnership with traditional gambling operators is an expertise in digital interaction with customers, especially younger ones in the millennial and Generation Z demographic.

In the not-so-distant future, the real money in sports gambling is not going to be in customers walking up to a sports betting window at a casino and wagering on the Baltimore Ravens giving three points.

Instead, the big cash in sports betting will be in fans sitting at home -- smartphone or tablet in hand -- watching sports events on television (or on a mobile device) and placing wagers during the course of the action. There's no mystery about that. In countries where legal sports wagering has been common for years, the evidence regarding the popularity of online sports betting is evident.

The early numbers from New Jersey are confirmation of the financial potential in online sports betting. Let's take a look at the sports wagering figures from August when there was no meaningful football action yet.

For traditional sports wagering, meaning at the sports book counter, and through online sports betting, the total handle (all money wagered before winners are paid) was about $95.6 million. Of that amount, about $21.7 million (more than 22 percent) was through cyberspace.

And this is still all brand new for New Jersey. Only a handful of casinos are aligned with online sports book operators so far. Imagine how those numbers will increase once the handle and revenue numbers start rolling in from NFL games and when more Atlantic City casinos get into the business

It is also understandable that sports fans have lots of questions, such as: "Hey, can I bet on the Ravens game on my smartphone?"

If you are physically located in New Jersey and you have set up an account with one of the legal sports books there, the answer is: Yes.

You don't have to be a resident of New Jersey, but you and your smartphone/tablet/computer must physically be in New Jersey.

For anyone wondering how they know where you are, be assured that in the 21st century the technology known as geolocation is actually pretty standard stuff.

Meanwhile at macro business levels, the evolving relationship between sports and gambling has been startling.

For instance, the Dallas Cowboys now have an "official" casino sponsor. In September, the Cowboys announced their new business relationship with WinStar World Casino in Thackerville, Okla., about 85 miles north of the team's stadium. And while the casino may be unfamiliar to many folks, it is by some measures the largest casino in the U.S., with 600,000 square feet of casino space.

When one considers the long-standing hostile relationship between the NFL and the gambling industry, such a deal between America's Team and America's biggest casino is stunning.

Prior to that, the NBA teamed up with MGM Resorts International for a partnership that involves a many-faceted marketing and promotional effort. The NBA is also getting a reported $25 million. The most recent promotion is one where fans get to pick one side or the other of the win-loss total for all 30 teams in the league for the 2018-19 season. Get 'em all correct and you win $1 million. Get 25 right and you win a $100 gift certificate to the NBA Store. The contest had an Oct. 16 deadline.

Another MGM-associated plan afoot is a partnership with something called the Alliance of American Football, a yet-to-play spring football league that's all about gambling. 

It's an intriguing experiment that meshes new-age data collection with gambling.  For instance, using sensors imbedded in equipment, a bettor may be able to wager on the velocity of a thrown football. 

It challenges one's imagination why anyone would make such a bet, but it would appear this is a laboratory for where sports gambling is headed -- meaning real-time betting as the event is played utilizing instantly collected data. The initial word was the spring football league would have eight teams located in the West and the Sun Belt.

So, some of these recent developments are significant, such as the evolution of online sports betting in New Jersey. Some may produce nothing but a few news articles. And exactly how quickly wagering becomes a driver in the sports universe is unclear. 

Much will depend on state legislatures approving sports gambling in their states and on whether various sports gambling products appeal to the public. Also, unforeseen events -- say a betting scandal -- could affect the trajectory of sports wagering.

However, what should be crystal clear is that in time, gambling will undoubtedly reshape American spectator sports and redefine for many people what it means to be a fan.

Photo Credit: Ed Sheahin/PressBox

Issue 248: October 2018