US Leagues Could Reap $4.2BN Annually From Legal Sports Betting

The four largest pro sports organizations in the United States could see their collective revenues grow by as much as $4.2 billion per year as a result of legalized sports, according to an industry survey commissioned by the American Gaming Association (AGA) and carried out by Nielsen Sports. The nation’s four major leagues, the NFL, MLB, NBA, and NHL, are expected to derive the bulk of that amount from a vastly increased level of fan engagement, while advertisements, sponsorship deals and merchandise sales will also contribute to the overall figure.

Nevertheless, the positive news doesn’t end just there as there are expected to be many other indirect economic benefits resulting from the U.S. Supreme Court’s landmark decision in May. As Sara Slane, the AGA Senior VP of Public Affairs, explains:

“Legal sports betting will also create substantial opportunities for state and local economies, generating tax revenue, jobs, and supporting small businesses across the country.”

NFL Biggest Winner

The report shows that the National Football League stands to benefit the most from legalized sports betting, with the professional association forecast to receive an additional $2.33 billion in annual revenue, or almost 55% of the projected $4.2 billion total. Next biggest beneficiary will be Major League Baseball with a predicted $952 million revenue boost, followed by the National Basketball Association ($425m), and National Hockey League ($216m).

Breaking the overall figure down further, these four professional sports leagues are forecast to derive an extra $3.3 billion from indirect revenues, including media rights, as well as merchandise and ticket sales. Meanwhile, the AGA study foresees an extra $596 million derived from gaming services buying up television advertising space, $267 million from an increase in sponsorship deals, and an additional $89 million from data and video revenue.

Increased Fan Engagement

For the NFL in particular, this could result in its indirect revenues growing by 13.4% to $14.8 billion per annum as more fans are drawn into watching games and visiting stadiums. This corresponds to an earlier AGA study conducted by Nielsen Sports and released in August which concluded that the spreading of regulated sports betting across the country will provide a significant boost to fan engagement in the sports world, and specifically help grow participation among the younger 18-34 demographic.

According to the study, a huge 44% of all sports bettors are currently under the age of 35, which broadly fits within the widely accepted 1981 to 1996 birth date range for millennials. With five more states having already joined Nevada in offering the full package of sports betting products, and their numbers expected to surge in the coming months, interest in millennials is expected to soar correspondingly.

“Expanding access to legal sports betting will bring millennial audiences back to sports broadcasts and stadiums, which is a huge benefit for sport enterprises across the country,” explained Sara Slane.

Integrity Fee Not Included

It’s important to point out that the four major sports leagues mentioned in the report are set to benefit by an additional $4.2 billion per year even without being granted a cut of wagers via their controversial “integrity fees” proposal. The sports organizations have long campaigned for a 1% share of the total amount of money bet on their games, lobbying relentlessly at both the state and federal levels. The AGA, on the other hand, is an ardent opponent of integrity fees, and last week tensions flared up between the AGA’s Sara Slane and Kenny Gersh, the MLB Advanced Media’s (MLBAM) Senior Vice President, while attending the annual Global Gaming Expo in Las Vegas.

At the international gaming trade show, Gersh told a panel that such fee should be thought of as similar to paying a “royalty”. He also stated that sports leagues were prepared to lower their initial integrity fee suggestion to just 0.25%. In response to his proposals, Sara Slane shot back:

“You want a cut of the revenue without any of the risk. We have to go through a regulatory process. We invest billions of dollars in buildings and our licenses. You want us to take that risk, pay you, and then you’re going to benefit on the back end as well.”