NBA Commissioner Adam Silver’s jolting opinion piece in The New York Times pushing for more legalized sports betting was the result of the league being asked to clarify its views related to the continuing New Jersey sports gambling lawsuit.
According to an industry source, Silver wrote the column, published Nov. 13, after he commented publicly about regulating sports betting recently. The media and others had subsequently requested that the league spell out its views on legalizing gambling as they relate to the New Jersey sports betting litigation.
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Photo by: NBAE / GETTY IMAGES
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In early September, at the Bloomberg Sports Business Summit, Silver said he expected that there would be legalized sports betting in states other than Nevada and that the league would consider participating in it.
While the opinion piece was printed soon after the NBA announced that it had taken a stake in daily fantasy game operator FanDuel, the timing of Silver’s column was not related to the FanDuel deal, according to the industry source. Instead, it ties more directly to the lawsuit that was filed by the NBA, NCAA, NFL, MLB and NHL in New Jersey to stop sports
betting in the state. The leagues filed the lawsuit against New Jersey after the state approved a plan to legalize sports betting at racetracks and casinos. The case was back in court Nov. 20.
“The NBA is very creative in finding ways to maximize its assets, and [Silver] wants to get in front so that the NBA will have the ability to derive revenue from it,” said Dan Etna, a sports law expert and a partner in the New York law firm of Herrick, Feinstein. “By getting out there, he is going to cause the other leagues to take a position on it sooner rather than later.”
But Etna also questioned the stance and timing of Silver’s piece.
“I find it very curious given that the NBA is party to the New Jersey gambling lawsuit,” he said. “It is kind of Silver double dribbling.”
After Silver’s column, NHL Commissioner Gary Bettman said publicly that any effort to legalize sports betting would require more discussion before any decisions are made.
NFL Commissioner Roger Goodell and MLB Commissioner Bud Selig have not commented publicly on the issue since Silver wrote his piece, but the leagues’ anti-gambling stance hadn’t changed. While Silver’s piece surprised many and created both positive and negative reaction, the NBA is not sure of the next steps to drive the sports gambling issue forward, according to the industry source.
Others, however, see opportunities ahead should the leagues remain engaged collectively but change their position.
“If the sports leagues got behind this as a united industry along with us in the gaming industry, there’s a real chance to introduce legislation to make this activity a reality within a few years,” said Ty Stewart, a former NFL marketing director who is now vice president of Caesars Interactive Entertainment in Las Vegas, which owns the World Series of Poker. “We wholly support licensed and regulated online gaming, and you need to look no further than our sports books in Nevada or the regulated European markets to see that effective regulations and legislation can lead to a multibillion-dollar opportunity for all constituents. The United States is the No. 1 market in the world for unlicensed, unregulated and untaxed sports betting. We support the NBA’s position and believe there is a huge opportunity to build a meaningful business if this activity becomes legalized broadly in the U.S.”
Certainly, revenue implications would have to be meaningful for any sports property to suffer through the public relations issues that would accompany a push for legalized gambling. Most likely, those would come in the form of increased sponsorship dollars from signage, naming rights, or any other marketing asset that a team or league could sell. Broadcast rights holders would presumably reap windfalls from widespread legal sports betting that would stand as a new category of ad sales. Betting kiosks at sports venues, as is done in the U.K., would be another new revenue opportunity for teams, as they would likely earn rental/commission fees from installing the kiosks. Sports properties, however, would not receive a license fee from organized sports books to conduct wagering.
The question is whether those additional revenue streams would total enough to make opening the Pandora’s box of legalized wagering worthwhile for large sports properties.
“There are more questions than answers,” said David Schreff, the former president of the NBA’s marketing and media group and former COO of the Americas for Sportech, a U.K. gambling company that processes more than $13 billion in legal bets annually across 30 countries and includes a large presence in American horse racing. “Will it be straight bets against the spread, or would a pari-mutuel system, with a Pick 3, or Pick 6, reduce concerns about point shaving?”
Schreff, who now heads Bedare Sports & Entertainment, a Greenwich, Conn., consultancy, cited a 2008 PricewaterhouseCoopers study that estimated the illegal sports wagering market at $400 billion to $500 billion.
“Some form of enhanced and legal sports betting will occur in the U.S. within the next three to five years,” he said. “Whether or not it’s in every state and what form it will take, those are complex questions. There was a period when the leagues and teams would not take ads from state lotteries; now they license them. Those partnerships you’ve seen recently between DraftKings and the NHL and FanDuel and the NBA would not have been consummated five years ago, but today, they are acceptable.”
