Sportsbooks weigh benefits of official data
The mandate that bookmakers use official league data to settle bets has been a staple of proposals forwarded by sports leagues in states considering sports betting bills, going back to the months leading up to the Supreme Court’s landmark ruling last May.
Of the major sports properties, all but the NHL and NASCAR have asked that it be required by statute, either at the state or federal level.
And yet none of the eight states in which sports betting is now up and running have done so.
As New Jersey considered regulations last year, former Gov. Chris Christie surfaced as a vocal opponent of the leagues’ push to require official data, in large part to make sure that the state didn’t set what he saw as a damaging precedent.
“I have no problem with leagues engaging in that type of conduct with private businesses,” Christie said at a recent conference hosted by the American Gaming Association, suggesting that the leagues address the matter through deals with the sportsbooks. “My objection is to [states] telling any of the casino operators that they must get their data from the leagues or that they must pay an integrity fee to the leagues. … If they think getting the data from the leagues is an advantage, or that using the trademarks has value, have at it, make a deal.”
What once was a legislative or regulatory push is now largely a commercial one, with the NBA and MLB working to convince operators to buy their official data — league-endorsed feeds that deliver detailed game information from the stadium or arena in near real-time, typically several seconds ahead of a broadcast feed.
Leagues argue that official data helps consumers sort out which sites are legal and reliable and will allow sportsbooks to create more engaging products. Skeptics on the sportsbooks side counter that the real-time feed isn’t appreciably superior to the delayed feed they can get for less money, at least not in the still embryonic U.S. sports betting market.
A few sportsbooks have signed on but the pace has been slow.
MGM has included the purchase of official data in sponsorship deals with the NBA, NHL, MLB and MLS. FanDuel has purchased it as part of its deals with the NBA and NHL. The Toronto-based Stars Group included data and league marks in its deal with the NBA.
But the inclusion of official data has been a sticking point for other operators, most notably William Hill, which has signed only one league sponsorship deal, reaching agreement late last month with the NHL. The NHL, it is worth noting, has been the most aggressive, and least restrictive, of the leagues in courting sportsbook sponsors. It does not require they purchase official data, a decision made easier by the fact that a puck-and-player tracking system that will differentiate its official stream won’t roll out until next year.
William Hill’s U.S. CEO, Joe Asher, has been the most vocal critic of the leagues’ insistence that his company buy official data. His argument has been that making official data a regulatory requirement would give the leagues monopoly power on pricing. But even as a commercial matter, Asher hasn’t seen enough value to justify the prices set by the NBA and MLB.
“Everybody wants to use official league data,” Asher said. “There’s official league data and there’s unofficial data. The unofficial data serves as a price check on official data. If the price [of official data] becomes too high, you’re not going to buy it.”
Interestingly, Asher’s argument has resonated at the highest levels at the NHL.
“Part of what William Hill is saying is, ‘OK, we understand there may be a new kind of data coming, show it to us,’” said NHL Commissioner Gary Bettman. “‘Let’s see if it makes sense. And then we’ll talk about it.’
“Having to buy the data, that’s a vast unknown. So we want to give our business partners predictability when you deal with us. We provide value. And we don’t expect to be paid for anything that doesn’t have value.“
Eight months ago, you might not have expected there to be such debate over the value of official data. MGM included it in its watershed deal with the NBA and has accepted it as part of each of its three league deals since then.
“We don’t believe you can do it right without official data,” said Scott Butera, who as president of interactive gaming for MGM Resorts International oversees the company’s sports betting expansion. “We believe you have to have it. There are other data providers that aren’t sanctioned by the league that will give you ‘live data,’ but the question is how accurate is it and how speedy is it? With speed, you can offer more of the in-play product that somebody who doesn’t have it can’t offer. Or probably shouldn’t offer.”
In-play betting — wagering on a game as it plays out, with odds adjusting to reflect the likelihood of an outcome — is where the use of data streamed in near real-time is of the most value.
For an example of how in-play odds can move, consider a recent Philadelphia Phillies implosion in the bottom of the ninth inning against the Washington Nationals. With the score tied at 8, the Phillies allowed a single and then walked the next three batters on the way to a walk-off loss. As the inning unfolded, a bet on the Phillies went from slightly better than even odds at the start of the inning to 3½ to 1 and then 4½ to 1 and finally 8-1, ticking upward each time the Nats put another runner on base.
Because the website offering those odds did not use official, real-time data, its odds adjusted as the event unfolded on TV.
The leagues argue that this puts sportsbooks at a disadvantage, since a bettor could conceivably know an outcome and get a bet down before the sportsbook changed odds or cut off wagering. But sportsbooks generally haven’t seen that as a problem. They simply delay the acceptance of bets to match the delay in their feeds.
FanDuel has embraced sponsorships with the leagues as it rolled from daily fantasy into sports betting, signing on with both the NBA and NHL and engaging in what it says have been productive talks with MLB. Its in-play offering in New Jersey is the most varied of any by far. In play now accounts for about 40 percent of FanDuel’s volume there, and about 50 percent of its take on the NBA, where it’s the clear market leader.
While he sees the potential for official data down the line, FanDuel CEO Matt King said that for now the marketing relationship with the leagues is the real attraction, and that if using official data keeps them from being adversaries it’s generally worth the cost.
“The value of official data will partially be determined long term by the ability of the leagues to innovate on what the product itself is,” said King, who would like to see the leagues work with sportsbooks to integrate interactive products such as gamecasts into their sites. “This is the conversation we have with the teams and the leagues, because we have to make the product better. At the end of the day, if this is just a tax, you’re always going to have this tension where it’s the operators against the leagues.”
The dynamic in baseball will be particularly interesting to watch. The sport unfolds at a slow enough pace that the speed of its data isn’t of obvious value. Its value proposition stems from tracking data, like pitch and player speed and home run distance. Thus far, there’s not a viable betting market around those.
In its negotiations with operators, MLB has set a data pricing structure that would approximately mirror the .25 percent royalty that the league sought through state legislation. Based on the $1.026 billion bet on baseball in Nevada last year, bookmakers there would have paid MLB about $2.57 million.
While that is only 5 percent of the revenue baseball bets generated for the casinos, opponents argue that it’s a heavy lift for what they describe as a “low-margin” business. It’s also a cost they’ve never had to assume in Nevada, or anywhere in the world.
“The most important thing that generally gets missed in this conversation is that there isn’t a lot of official data out there,” said Jake Williams, head of legal and regulatory affairs at Sportradar, who pointed out that neither the heavily bet NFL or NCAA even offer a betting feed. “So the only option is to use unofficial data. And that’s been the way since the outset.
“What is the official feed like, if it’s available? And what’s the alternative like? I’m sure that’s how most of the companies [view it].”
The NBA was the first of the leagues to embrace sports betting and engage with state legislators on a framework. While it will continue to lobby for state mandates on the use of official data, it realizes that the commercial route has emerged as the more realistic path.
“It’s not as efficient, but that’s what I’m trying to do,” said Scott Kaufman-Ross, senior vice president and head of fantasy and gaming at the NBA. “If I can do a deal with every commercial casino, then maybe it doesn’t matter so much what happens in legislation.
“We’re doing deals. And even most of the big [operators] we don’t have deals with, we’re having productive conversations. It’s just a matter of finding the right value in exchange of assets. And that stuff just takes time.”