In 2018 PwC Outlook for the sports market in North America through 2022 PwC focuses on the impact of the legalization of sports gambling on various revenue streams during the Outlook and beyond.
The conclusion of PwC work is that while we are only a few months into legalized sports wagering in certain states, it is clear that the opportunity for teams and leagues to monetize it can be great. Whether it is through media or sponsorship, combining wagering with increased fan engagement could also increase ticket revenue or retail revenue. In the long run, the stakes are high.
According to a September 2018 Nielsen sports study, commissioned by the American Gaming Association (AGA), NFL media rights are projected to increase by nearly 18 percent because of the appetite of bettors looking to consume live sports events.
Teams, fan engagement and participation
- In addition to receiving their portion of any league wide integrity fees or sponsorships, teams are free to enter into sponsorships with sportsbooks (subject to any league restrictions). Initially, these opportunities may be limited to teams in states where sports gambling is legalized; however, as national/international gaming companies become involved, sponsorship opportunities may arise for all teams (whether sports wagering is legal in their states or not).
- There is the potential for teams to adopt more of a European approach to sports gambling in the future. In the English Premier League, a number of casinos are shirt sponsors. Casinos also have sportsbooks located on the premises of the venue allowing for wagering on the match.
- Teams are able to participate in revenue sharing with the sportsbooks. Online gaming is also available. All of this has the potential to lead to increased fan engagement and participation.
Fan engagement, Apps
- With the increased quality of the in-home experience, together with the rising cost of attending professional sports events in person, leagues in the US face the challenge of incentivizing fans to continue to attend live sports events. Imagine a future scenario in which a sports gaming company pays to sponsor a professional sports team.
- The gaming company partners with the team to design a world class app that allows fans to wager on a variety of team and individual outcomes during a game. Further, to incentivize fans to attend the game live and use the app, the app could apply a dollar credit to the fan’s individual account to be used for wagers.
- The team could also offer food and beverage credits, or retail credits, for fans who arrive early and wager, or stay after the game and wager.
- This unique experience could be made available only to those attending the game (or at higher incentive levels to fans attending in person versus those fans watching at home). Fans could wager from their seats in the stadium.
- The opportunities for additional partnerships with technology companies to improve the digital experience are significant. Sports wagering has the potential to increase fan engagement, provide benefits to fans who participate and offer additional entertainment to fans on game days and beyond.
Continuing regulatory battles
- Post-PASPA, Congress has slow-walked potential federal legislation dealing with sports gaming, leaving legalization to the states.
- Each state has its own unique approach to the issue, and leagues and gaming interests may be forced to navigate fifty separate legislatures while fighting to secure the most advantageous regulatory environment.
PwC, PwC Sports Outlook (October 2018), At the gate and beyond, Outlook for the sports market in North America through 2022, October 2018, link: https://www.pwc.com/us/en/industries/tmt/library/sports-outlook-north-america.html.
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