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Two top gaming executives have said professional sports leagues and media companies are among the biggest winners after more than three years of the U.S. sports-betting boom.
Penn National Gaming CEO Jay Snowden and BetMGM CEO Adam Greenblatt said that in terms of hard dollars, the leagues, teams and media companies have been the biggest beneficiaries of the boom so far.
“It’s been a bit of a boon,” Snowden told an online panel discussion presented by the Financial Times on Thursday. “I think that’s probably the right direction to be flowing, we’re in the first inning.
“Every one of these sports-betting operators are trying to figure out, ‘What is my position, strategically how do I grow market share and how do I build out a business model for the long-term?’,” he said.
Greenblatt added: “The support of those partners actually helps the adoption on a state-by-state basis, but also the development within those states.”
Christopher Halpin, chief strategy and growth officer for the National Football League, said in response that although the present cash flow may be heading away from operators, gaming operators are still deriving benefits from partnerships.
“One caveat: dollars may be flowing out, but [operators] are experiencing equity value increases on sports betting which merit the growth trends that [they’re] pursuing,” he said.
As for partnership deals with teams and the league itself, Halpin said both sides continue to improve on deals based on what has worked so far in crafting effective relationships.
“What we’ve seen in partnerships are the operators that have clarity on what they’re looking to do, where their brand fits, how they’re marketing, get strong ROI [return on investment] out of it,” Halpin said.
“I think you’ve got to get all elements of a partnership — brand marketing, direct marketing, responsible betting messaging in the market — and have the two brands match.
“There’s going to be some dances early that don’t work, and then there’s going to be others that are successful,” he added. “I think it’s fair, and given the growth and the valuations that a lot of operators have that they’re looking to grow into, there’s a lot of the seeds for very aggressive investment.”
Snowden’s company famously made one of the most aggressive media deals, purchasing Barstool Sports to use as its lead sports-betting brand.
“I think in hindsight, many feel like it was an easy decision, it wasn’t an easy decision to buy a media company,” he said. “We decided to do that because we wanted to have full control, and we wanted to have aligned incentives with our partner, which in this case was Barstool.”
Greenblatt cited the creation of Sky Bet as a model that many have sought to replicate in media partnerships.
But he said the success of Sky Bet was not an overnight phenomenon.
“I think what people don’t realize is that was a partnership that was conceived of in the 1990s and took the best part of 15 years to break stride and learn how to work with each other, and sometimes navigating big media companies with different claims on advertising inventory,” he said.
“At the very base level, you’ve got salespeople who have to make their targets for the month and have particular incentives, and all of those internal complexities need to be lined up and navigated in order to really derive the intended benefits of these partnerships.”
While companies like FanDuel, DraftKings and BetMGM are currently at the top of the U.S. sports betting and online casino market share leaderboard, they are also among the leaders in marketing spend to capture that share.
Snowden said the Barstool acquisition, along with other revenue streams such as market access payments from other operators, allowed the company to stay competitive without spending excessively.
“I’m not being critical, because I think BetMGM, FanDuel, DraftKings have definitely garnered market share, but there’s no doubt the level of spend today is just not sustainable,” he said. “Nobody will ever make money at these levels of spend and I don’t think anyone will dispute that.
“We have a really great margin profile that allows us to be patient today, not have to get as aggressive on the paid media, still be real players from a market share perspective.
“And when the competitive set dials back their spend, we’re going to have a lot of dry powder to figure out where we want to be more aggressive,” he added.
Snowden also expressed concern at excessive advertising and some of the marketing partnerships that competitors have entered.
“I’m looking at some of the things that are happening here and it just feels like we’re heading down a path potential of what happened in the United Kingdom,” he said.
“When I read about companies that are partnering with colleges where the majority of students are 18 to 20 years old, not 21, that concerns me.
“Watching sporting events at home with my son, who’s 12 years old, and he’s now talking the lingo of what sports-betting company is advertising, what’s the promotions, I think that’s slippery,” he continued.
“I think we need to all look in the mirror. I think there needs to be a high degree of self-regulation here, and I think if we do it and do it now and we’re serious about it, regulators won’t need to step in.”
