Professional leagues in the U.S. are looking to duplicate profitable European gambling partnerships
In recent days FanDuel announced a deal with the NHL to be a partner for fantasy sports as well as the 'Official Sports Betting Partner' for the league. FanDuel is now owned by European betting giant Paddy Power-Betfair and the deal is similar to one that the NHL signed with MGM in July. Apparently the NHL is also exploring partnerships with William Hill and Caesars for any sports betting platforms they introduce. FanDuel also announced a separate exclusive partnership with the New Jersey Devils which will provide the team separate funds in exchange for advertising at the arena and for New Jersey Devils games. Under the terms of the deal the sportsbooks would be allowed to use the intellectual property of the NHL for promotions, marketing and advertising. Along with the NHL agreement, MGM signed a sports betting agreement with the NBA. The agreement between the leagues and the sportsbooks indicate no mention of an integrity fee, so it appears the leagues have given up on the idea or more likely they will fight for the integrity fee with state gambling authorities and will simply sign marketing agreements with the sportsbooks.
While the idea of sports betting companies partnering with leagues may seem revolutionary, it has actually been taking place for almost two decades in Europe, with both sides benefiting. Everyone that watches soccer is likely familiar with the white Bwin (a German sports betting company) logo on the Real Madrid jerseys, which lasted from about 2006 until 2013, along with Bwin logos in later years on Bayern Munich, Borussia Dortmund and FC Cologne, all elite teams that play in the Champions League. And Bwin is not alone.
In the UK more than 60% of soccer teams in the two top divisions have deals with sports betting companies, the most notable being Skybet, Bet365 and Betway. Those agreements are made between the sportsbooks and the individual teams, which is quite notable given that FanDuel has a separate agreement with the New Jersey Devils. Until now all partnerships in North America including the fantasy sports partnerships that have been negotiated since 2014 were with the leagues and states and the teams simply adhered to those agreements. Even in Canada, Bet 365 signed an agreement with the CFL a few years back and all clubs adhered to the agreement placing Bet365 logos on the uniforms, on the field and various advertisements. According to European analysts I spoke to, this setup was intentional because the government and sports leagues believed they would be in a conflict of interest if they policed the rules, while also benefiting monetarily from the sports betting companies.
Along with the financial benefits to the leagues that comes with partnering agreements, the leagues will be able to benefit with the ability to put in place rules for gambling and ensuring compliance. Aside from the obvious rules like disallowing betting by minors and trying to stop betting by problem gamblers, leagues and teams can put in rules as to specific people who would be disallowed to bet. This would likely include players, managers, staff, officials and even media if they choose. In Europe some leagues disallow players from wagering on their games, while other leagues allow it, but only if they are betting on themselves. In Europe if a player or manager tries to bet on the other side in any manner they will be flagged and possibly investigated. Without question, if similar rules were put in place in the 1970s and sportsbooks weren’t at odds with the leagues, Pete Rose would have likely been flagged when he bet on baseball and both the league and Cincinnati Reds would have been notified of the possible transgression. And more recently Ted Donaghy almost certainly would have been identified and flagged had he bet with legal bookmakers under similar rules. And today, the likelihood is almost certain they would have been caught. The sole purpose of some monitoring companies today is to go through every game, bet and play with a fine-tooth comb and identify any suspicious wagering or any suspicious plays that resulted in large winning bets. The software is quite sophisticated, and these monitoring companies hire on people familiar with cheating and know every trick of the trade. And best of all for the leagues, the sports betting companies would absorb most of the costs. Any costs over and above that are incurred by the leagues could be reimbursed by the leagues, although an additional contingency fee could be added to the partnership agreements to cover such instances although in the end, however, the payment by sports betting companies to the leagues would more than compensate for that.
Of course, the final decision on what to do with anyone suspected of cheating would be at the league’s discretion. When Betfair provided almost unquestionable cheating at an ATP tournament in Poland a few years back, the ATP decided not to take any action against Nikolay Davydenko or others involved in that match, even though Betfair voided all wagers on the event and simply refunded money bet. And in several soccer games, sportsbooks cancelled wagers even though the leagues decided not to pursue charges for reasons only they can justify.
One type of partnership the leagues almost certainly allow that is popular in many European and Australian leagues is individual sponsorships with players. While it is common with poker in North America, given the nature of the game, it’s almost certain there would be too much negative publicity, scrutiny or suggestion of foul play if a specific player was viewed as benefitting personally from sports betting. This is particularly true considering famous scandals over the years, where there were questions of whether some players were underperforming or missing plays to help the other team win or cover the spread. The most famous example of that was the Chicago Black Sox scandal. Even in individual sports it would be hard to envision the PGA, the ATP, WTA or NASCAR allowing its personnel to create sponsorships with places like MGM, Fan Duel or Caesars sports betting just due to the optics. Plus, several golfers are already under investigation due to sports betting, with Phil Mickelson being the most notable. In the end everything must appear to be on the up-and-up and this may not happen with individual sponsorships.
I spoke with a former marketing director at a major UK based betting company, Simon, and asked him whether he believed U.S. leagues and sports books could reap the same benefits that European leagues do.
“Without question they could, particularly with the NFL. Aside from football (soccer) and horse racing, American Football has always been our most popular sport and we always envisioned how much money could be made if we could legally partner with the NFL for advertising, database sharing - where we use their ticket base to promote sports betting and they use our betting databases to promote ticket sales, merchandise sales and promotions - and even possibly with in-game betting. In the UK in stadia betting booths are less common due to the fact most people now wager with their mobile phones, but it is still very common to see odds posted around stadiums with the most recent offerings and promotions. I recall one bookie offered the NFL $1 billion to be the official sportsbook provider and after discussing it we said our company would likely consider that as well. Of course, that was only feasible if we could legally operate in the United States which until now was just a dream.
I have little doubt that William Hill, Paddy Power-Betfair and 888 will make massive gains in the United States as sports betting opens up in more jurisdictions. And, like we see in Europe and Australia, the leagues and fans will realize that betting enhances the game experience and doesn’t threaten it. And as bettors come out of hiding and wager legally, expect to see far less suggestions of cheating and far fewer players willing to take a chance as they know they will get caught.
All that said, it will only work if everyone plays their part. And it must start with the leagues abandoning their call for a 1% integrity fee. Sportsbooks can not be competitive with such a fee and if they implement it the lines will be horrible, and Americans will just continue to bet with illegal bookmakers who will offer them better lines. I have no problem with the leagues receiving some benefit for their cooperation, and truthfully, they should receive something, but 20% of gross profits is ludicrous."
So, with sports betting now expanding across the United States, there is a huge opportunity for sports leagues and individual teams to benefit. There is a lot of money to be made from sports betting as has been seen in Europe, but only if everyone cooperates and makes decisions to ensure value fair lines for bettors. Most American bettors still either wager offshore or with illegal bookmakers and studies have shown that they will not give up these options if they feel ripped off by legal state sponsored sportsbooks. The Fan Duel and MGM partnerships are a good start. Let’s just hope the leagues and states don’t get greedy and cause it all to blow up.