Gambling ads and sports – a tale of two directions
In today’s competitive advertising marketplace, trying to promote vices has come with lots of resistance around the world. In many countries, it is illegal to advertise things like cigarettes and alcohol, but for some reason gambling has managed to slip through the cracks. Countries like the UK have a long history with sportsbook gambling, with most of the major soccer teams sponsored by online and land-based gambling properties.
However, the two huge potential markets of the UK and the U.S. are in a state of flux, so we wanted to take a brief look at how gambling and advertising work in each.
With the repeal of PASPA in the U.S. in May 2018, there is a renewed fervor to bring gambling ads back to television and sports arenas. The NBA has a long-standing relationship with MGM, with the casino giant owning one of the WNBA franchises. Recently, a study revealed that the NFL could stand to reap an additional 2 billion USD in revenues as a result of gambling being legal, due to increased television ratings and sponsorship deals amongst other things. The league just announced that it was going to allow its teams to pursue partnerships with gambling companies.
Where we may see some real change is with the smaller professional leagues. This week, the fledgling AAF, a football league that will run from February to April, announced a deal with MGM as well. This is a serious cash infusion to this startup league, and will no doubt bring eyeballs (and betting dollars) to the sport. Leagues like the NHL, which trail behind badly in advertising revenues, could find strong partnerships with local casinos or sportsbooks as sports betting makes its way across the U.S.
Now, this isn’t new – the leagues and sporting arenas have been finding ways to take gambling advertising for years. In the early 2000s, it was the big poker sites like Party Poker and Poker Stars that dominated the advertising airwaves, finding their way onto television and in-arena ads even though these sites were definitely not legal. When the Department of Justice decided enough was enough and shut these sites down, it wasn’t long before Daily Fantasy Sports found another loophole and took over those precious ad spots.
In 2014 and 2015, the two largest companies – Fanduel and Draft Kings – Spent upwards of a billion USD on ads, including sponsorships with the majority of sports franchises. Once again, the concern that what these companies were offering was illegal caused the decline of the ad spends over the last couple of years.
However, in the new era of legalized sports betting, we can expect to see a full set of operators fighting for the ad space during football games on TV and sponsorship deals inside stadiums. The bottom line is that these leagues want to find their piece of the pie somehow, and while leagues like the NBA think they deserve a cut of the action for providing the product, the more realistic scenario is that they get their money through these partnership deals.
A different story in England
Strangely and conversely, some changes are happening in the traditionally gambling-friendly market of the United Kingdom that has some people scratching their heads. Gambling, especially on sports, is engrained in the culture of that country. A walk down the high street of every small town and big city demonstrates that with a betting shop like Ladbrokes or Coral almost always found. As we mentioned before, the English Premier League is a walking billboard for betting companies and online gambling sites. It seemed like this was just part of the fabric of the UK.
However, a recent report on gambling seems to have rattled the industry. This report claims that there are almost half a million UK residents with a gambling problem of some sort. These numbers are staggering, and while the methodology of the evidence gathering is in question, it still begs the question of whether there need to be more controls in place. To that end, the government had imposed a major change recently when it reduced the maximum bet on an FOBT from 100 GBP to 2 GBP. These machines, which can be found in almost every betting shop in the UK, generated so much revenue for companies like William Hill that reducing the bet size by 98% could put thousands out of work with shop closures.
Also in the news recently was a report that the FA was planning to sell Wembley Stadium, the iconic English football venue. However, as part of that sale, a ban on gambling advertising would come into effect. This is a bold move for a league that has received so much revenue from gambling companies in the past and could be a sign of things to come around both the league and the country as a whole.
It will be interesting to see what other steps the UK government takes to curb what appears to be a significant gambling problem amongst its citizens. As this happens, all eyes will be on the U.S. to see if making sports betting legal across the country props up league revenues while also adding to the long list of people with gambling issues in that country.