The lucrative partnerships with DraftKings and others have put a turn on all of the longstanding opposition to betting and football. Read all about it from Bloomberg Opinion below!
The National Football League returned for another season last night. With its full game slate launching Sunday, the NFL’s business partners, including the gambling mavens over at DraftKings Inc., are excited.
“FOOTBALL IS BACK,” DraftKings tweeted, touting its new partnership with the NFL and a $1 million sweepstakes that customers who download its mobile app can enter for free. DraftKings, a leading operator of fantasy sports leagues and digital betting platforms based in Boston, has been on a roll. It recently said it plans to buy Golden Nugget Online Gaming Inc., a cyber-casino and sports-betting operation, for $1.6 billion.
But DraftKings’s partnership with the NFL gives it the ubiquity and marketing opportunities that only come with a ride aboard what may be the sporting world’s most lucrative juggernaut. Football fans will see more betting options on TVs, phones and in stadiums this fall, a sharp reversal of the NFL’s longstanding opposition to mingling gambling with professional sports.
The NFL’s partnership with DraftKings – and a handful of other gambling providers it announced deals with recently – also gives everyone a moment to consider what sports betting’s sprint through living rooms, phones and our brains during football season looks like.
DraftKings, along with Caesars Entertainment Inc. and FanDuel Group (controlled by an Irish bookmaking company, Flutter Entertainment Plc), will be allowed to display NFL game highlights on their respective apps or in retail outlets and casinos. They also get to air their betting lines on the NFL’s media properties, such as NFL.com and the NFL Network. In a separate agreement, the NFL agreed to let four other gambling ventures – Flutter’s FOX Bet, BetMGM, PointsBet Holdings Ltd. and WynnBET – advertise during football games.
All of this brings seductive — sometimes addictive — betting much closer to kids, teens and older students while making gambling a more explicit centerpiece of sports. Young men are particularly vulnerable. As I’ve noted before, there possibly will be social fallout, and a bigger incentive for corruption, tied to these shifts. Regulation, meanwhile, will likely be scant and left to individual states.
“We’ve been very open about our position that we oppose legalized sports gambling,” Roger Goodell, the NFL’s commissioner, observed back in 2015. “We haven’t changed our position on that, and I don’t anticipate us changing that going forward at all. We think the integrity of the game is the most important thing.”
What changed? An opportunity for the NFL to feast on fresh revenue streams emerged. The league said it expects to pull in $270 million this year from new gambling deals and as much as $1 billion by the end of this decade. Sports betting companies, freed by a 2018 Supreme Court ruling to operate in states other than Nevada, and given a huge boost by shut-ins looking for fun during the Covid-19 lockdown, have even bigger piles of money awaiting them.
A Goldman Sachs Group Inc. analyst recently estimated that the online sports betting market could grow to about $39 billion by 2033, up from about $900 million currently. Goldman, which the NFL also retained to find partners that can help it expand the reach of its media properties, thinks that cord-cutting and streaming have made it hard for sports leagues to attract younger fans. Lo and behold, sports betting skews much younger than traditional casino gambling — and thus offers leagues a way to reel in loyalists younger than 40.
One outcome of this, Goldman’s analyst posits, is that 50 million people may be betting on sports in the U.S. as the market matures. The top dogs in the industry – maybe companies such as DraftKings — will be gambling enterprises controlling apps that each reach about 15 million people. That’s roughly the same number of people who currently watch a Sunday football game. But the new overlords will be digital bookies who, the Goldman analyst says, “circumvent the entire intermediaries and be really that direct-to-consumer channel for sports media.”
Markets are duly inspired. They’ve bid up the prospects of digital gambling companies, quite massively. DraftKings’s market capitalization at the end of 2019, for example, was about $2 billion. At the end of last year it was $18.5 billion. It’s currently about $25.6 billion. Penn National Gaming Inc., which operates casinos and racetracks, has made a push into online sports betting and sports media. The market valued Penn National at $2.9 billion in 2019. It is currently valued at $13.2 billion. Flutter’s valuation was 7.2 billion pounds (or $9.6 billion) in 2019. Now it’s 25.4 billion pounds (or $35.2 billion).
There are still wrinkles to work out, of course. Users of DraftKing’s apps, for example, sometimes complain that payouts are slow on winning bets. Customer service can get savage reviews, and some say odds aren’t calculated fairly. DraftKings often responds to these concerns sympathetically or constructively, and offers an email address for sharing complaints. It also posts a phone number for users who might have a “gambling problem” or need “crisis counseling.” With business booming and football season underway, that line might get busy.