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Volume 23 No. 24
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Will baseball and basketball bring the same enthusiasm for live betting as table tennis?

Photo: getty images
Photo: getty images
Photo: getty images

On the day the NBA resumed its season in the Disney bubble, as sportsbook apps in 11 states and the District of Columbia lit up with offers on the Lakers and LeBron and bettors awaited the first pitch of an MLB matineé, the remnants of a lost summer played on in the background, clicking and clacking.

 

With midnight approaching in Moscow, Semyon Korolev defeated Alexey Innazarov 11-9, 11-2, 11-8 in one of dozens of table tennis matches that would play on through the overnight of Eastern Europe.

For the past three months, as much of the established sports world laid dormant, this was what Americans bet on.

Pingpong.

So thoroughly was the betting summer dominated by table tennis that the nation’s two leading sportsbooks, FanDuel and DraftKings, both streamed matches live on their apps. BetMGM built a real-time table tennis animation; the Pong video game reimagined, playing out in color on bettors’ phones. William Hill went with a simpler presentation, but an equally deep menu of matches from Russia, the Czech Republic and Ukraine.

Not all states allowed table tennis betting, and some — including New Jersey — eventually shut it down amid concerns of match fixing. But with 50 to 100 matches per day, and dozens of bets available throughout each match, it offered nonstop action for starved bettors and salvation for operators in several states.

In Colorado, which cut its ceremonial ribbon on online wagering in May, table tennis accounted for $6.6 million of the $25.6 million bet in the state, about four times the handle of any other sport, including soccer, golf, MMA and Korean baseball. When Colorado’s handle increased to $38.2 million in June, pingpong rose to $9.2 million, still more than double the take from the next most popular sport, soccer.

What curbside pickup was to retail during the pandemic, pingpong was to sports betting.

“You laugh, but it was substantial,” said Joe Asher, CEO of William Hill U.S. “That was the biggest surprise for everybody during COVID: the popularity of table tennis.”

As simple as betting red or black on a roulette wheel, the game caught on at every U.S. sportsbook that offered it.

“It was definitely real,” said FanDuel CEO Matt King. “I have not talked about table tennis or pingpong in my entire life as much as I have in the last couple of months.”

It would be easy to dismiss heavy betting on table tennis as a quirk of a sports-deprived, work-from-home nation, still gleefully welcoming the arrival of legalized sports betting. Pingpong may well recede into the background of U.S. sportsbook apps as the established properties rise to dominate the menu through the next four months. The early reports of betting volume on baseball and basketball have been eye-popping.

But there are lessons to take away from the summer of pingpong that go beyond the attraction it held for the bored and the addicted.

NBA wagering was moving toward more in-play betting before the pandemic, with bets on which team would be the first to score 20 points or which player would have the next blocked shot.
Photo: NBAE / Getty Images
NBA wagering was moving toward more in-play betting before the pandemic, with bets on which team would be the first to score 20 points or which player would have the next blocked shot.
Photo: NBAE / Getty Images
NBA wagering was moving toward more in-play betting before the pandemic, with bets on which team would be the first to score 20 points or which player would have the next blocked shot.
Photo: NBAE / Getty Images

The power of live betting

The most obvious takeaway is that a subset of American sports bettors will bet on any contest, so long as it is easy to find and follow. Once they found it, they kept betting on it, even though their only prior experience with the game was from family vacations, summer camps and rec centers.

What this means for the coming months is unclear. A Draft-Kings survey of 1,000 self-identified sports fans found that 28% began following a new sport during the shutdown and two-thirds of them plan to continue following it. But those were broader sports fans who began following esports, international soccer, MMA and golf, not bettors toggling through Russian pingpong.

The consensus among CEOs of leading sportsbooks is that bettors will segue back to the familiar, largely leaving behind summer flings with other sports. The MLB handle went gonzo through its first weekend, setting records at every major U.S. sportsbook. Expectations were that the NBA was headed for a similar stampede.

“Baseball this year is orders of magnitude more popular than it was previous seasons,” said Adam Greenblatt, CEO of Roar Digital, the joint venture that operates BetMGM. “Now, it remains a question, are basketball bettors just starting a bit earlier? We never saw a response like this previously for baseball. So it will be interesting to see now as we layer on hockey and layer on basketball, where does this go?”

The summer gap, followed by this sudden restart, sets up a dynamic unlike any previously seen in the legal U.S. market, which is in its infancy.

DraftKings CEO Jason Robins pointed to two distinct segments of customers within his sportsbook site: one that bets almost exclusively on football, attracted back to the site occasionally by marquee events such as the Masters or March Madness, but largely remains dormant through the spring and summer; and another that rolls from football to basketball and hockey and then baseball, always seeking action.

“It was that second group [that found table tennis],” Robins said. “And it was more than a sliver. It was a substantial portion that are pretty regularly active that remained active and found sports. It wasn’t all of them. There were certainly people who said, ‘If I can’t find the traditional sports, I’m just going to take a break.’ But people who were active throughout the year before kind of remained active.”

Many year-round bettors who didn’t bite on pingpong, darts or other early COVID options came back once NASCAR and the PGA Tour got going — even if they hadn’t bet on those sports before, Robins said. But there are still large swaths waiting for football. For the first time, it will play out alongside not only MLB’s postseason, but also those of the NBA and NHL, along with a stockpile of golf and tennis majors and two Triple Crown races.

“With everything going on at once, it’s really hard to predict how people are going to react,” Robins said. “Are the same groups of people that we saw participate in these events in prior years going to be paying as much attention when there’s five other things going on? I don’t know. A lot of it is going to be a real learning exercise for us.”

The most valuable takeaway from the pingpong period was not that people bet on it, but how they bet on it. The attraction of pingpong is that it is ever-present, a steady flow of matches with bets placed on each game. This, it turns out, is what the U.S. market wants; or at least is what an important segment of it wants. Already afire in Europe, the adoption of live in-play wagering now is accelerating ahead of its expected pace in the U.S.

“What happened in table tennis is really more about the power of live betting,” said King, the FanDuel CEO. “People weren’t betting on table tennis pre-match. People were betting on table tennis because it was an engaging gamified experience with a ton of live betting opportunities. We talk a lot about how much entertainment value we deliver per dollar somebody spends. And in the low-stakes, high-velocity live betting experience, you’re actually delivering a lot of great entertainment value for a relatively limited cost. Table tennis is more about the power of live betting than anything else.”

NBA bettors already were migrating toward in-play before the pandemic, betting on races of which team would be the first to 20 points, or score the next 20 points, or which player would make the next 3-pointer or block the next shot, and on and on and on. The bettor who makes his picks before a game and waits until the end to collect is an endangered species, most in the industry say. Instant gratification, with the opportunity to collect early and move on to the next rush, is the next big thing.

A summer of sampling pingpong may well have accelerated that. The first week of baseball not only shattered every metric for the sport at all the major books, it also brought a marked shift from pregame to in-play, likely driven not only by shifting habits, but also far broader distribution of official MLB data that allows books to quickly set odds and resolve bets.

“Is it as a result of the pingpong period that we’re seeing some of the learned behavior and new appreciation for the in-play experience manifest itself elsewhere?” Roar Digital’s Greenblatt asked. “Or is it that our product is better? Or better signposting or better calls to action? I’m not sure yet. But what I have seen is more than a doubling of in-play action [in MLB’s first week].

“People figured out that it’s fun.”

MLB betting handle set records at every U.S. sportsbook during its first weekend back in action.
Photo: getty images
MLB betting handle set records at every U.S. sportsbook during its first weekend back in action.
Photo: getty images
MLB betting handle set records at every U.S. sportsbook during its first weekend back in action.
Photo: getty images

Motivation for more states

The only reason that we know, for sure, the degree to which pingpong surged during the shutdown was a report issued by gaming regulators in Colorado, the only state that reports specific numbers for anything other than football, basketball and baseball.

Though entirely coincidental, isn’t it interesting that the one state to shed light on this phenomenon was not even open for regulated sports betting when U.S. sports shut down?

The sports betting map does not look any different than it did five months ago, in terms of number of states that had legalized sports betting (see research), but in terms of economic potential, the footprint has grown dramatically, with still more to come later this year.

Colorado brings Denver, a punch-above-its-class sports market that is the smallest of the 11 U.S. metros that have teams in each of the five major pro leagues. In June, only four months after the NFL cleared teams to sign sportsbooks as sponsors, the Denver Broncos locked down three of them: FanDuel, BetMGM and lesser-known Betfred, a U.K. company that chose Colorado for its U.S. launch.

That’s another important development of the past four months: the relaxing of restrictions that kept NFL and MLB franchises from signing sportsbook sponsors. That means teams in those leagues now can enter the market alongside those in the NHL, which operate under almost no restrictions, and the NBA, which already allowed teams in states with legal sports betting to sign sportsbooks that purchased official league data.

Online Sportsbooks

States in which online sportsbooks are licensed and operating online. Does not include those in which sportsbooks have access, or operate retail operations, but have not yet launched an app.
DraftKings: New Jersey, Pennsylvania, West Virginia, Indiana, Iowa, Colorado, New Hampshire
FanDuel: New Jersey, Pennsylvania, West Virginia, Indiana, Colorado
BetMGM: New Jersey, West Virginia, Indiana, Colorado, Nevada
BetRivers: New Jersey, Pennsylvania, Colorado, Illinois
William Hill: New Jersey, Iowa, Nevada
Fox Bet: New Jersey, Pennsylvania, Colorado
PointsBet: New Jersey, Indiana, Iowa
Caesars: New Jersey, Pennsylvania, Indiana
Source: Sports Business Journal research

MLB clubs in cities that have legal sports betting states as part of their TV territories also can sign sportsbook sponsors. Thus far, only the Detroit Tigers have announced a deal, but sports betting and league sources said others are in place or deep into negotiation.

Sportsbooks also were visible at unprecedented levels during NBA broadcasts, with FanDuel getting heavy exposure during the relaunch on TNT.

“We’ve always been on our front foot saying we think this is an industry that’s better off if the leagues and the operators and the teams are all working in concert together,” King said. “Sustainability is really important to us. And that sustainability comes from having sports betting integrated into the fan experience.”

While Colorado is the furthest along of the newly regulated markets, even larger ones are in the pipeline. Illinois, which is the most populous state to legalize online sports betting so far, already has one online operator up and running, Rush Street Gaming’s BetRivers.com, which went live June 20. Illinois’ sports betting framework was meant to give an edge to the state’s existing retail casinos, requiring bettors opening online sportsbook accounts to register in-person through the end of 2021.

Realizing that a pandemic made in-person registration unpalatable, Illinois Gov. J.B. Pritzker briefly lifted that restriction last month before reversing course in the face of backlash from the state’s land-based casinos. Online registration restrictions will figure mightily in who gains early market share in Illinois. The legacy daily fantasy sports brands both secured access to the state through deals with land-based casinos, but both are long drives from Chicago.

Along with BetRivers, another beneficiary looks to be PointsBet, an Australian-based operator already open in New Jersey, with plans to move next into Colorado, Michigan and Illinois. PointsBet’s access deal with Hawthorne Race Course in Cicero, Ill., puts it within easy reach of Chicago bettors.

Michigan is another big domino expected to fall soon, with regulators hustling to get online operators open in the fall, motivated by pressing budget shortfalls that already were at the root of the state’s gambling expansion. That same concern led legislators in Rhode Island to vote to drop the state’s in-person registration requirements last month. Massachusetts legislators also have gained momentum on a bill.

“Really, the question is do new states legalize quicker post-COVID,” said William Hill’s Asher. “We’re certainly hopeful that’s the case. I’m probably a little more cautious on that topic than others just because the economic situation in so many states is so dire that sports betting, while it is near and dear to my heart, is small relative to the overall size of the problems state legislators are facing. Certainly in states where the process was already underway, you would think sports betting would be helpful. Perhaps it expedites things in those states.

“I hope they all put legalization of sports betting in the priorities, but I don’t think it’s a given.”

Four months after the NFL gave the OK for teams to sign sportsbook sponsorships, the Broncos signed with FanDuel, BetMGM and Betfred.
Photo: getty images
Four months after the NFL gave the OK for teams to sign sportsbook sponsorships, the Broncos signed with FanDuel, BetMGM and Betfred.
Photo: getty images
Four months after the NFL gave the OK for teams to sign sportsbook sponsorships, the Broncos signed with FanDuel, BetMGM and Betfred.
Photo: getty images

Raising capital

July brought what could be a game-changing win for William Hill, which took over operations of all Caesars Entertainment sportsbooks as a result of that company’s acquisition by Eldorado Resorts, a $17.3 billion deal that created the nation’s largest casino company, which will keep the Caesars name. Along with some highly visible Las Vegas strip properties, William Hill expands its licensing access to 16 states. William Hill emerged victorious thanks to a deal it did 18 months ago to handle sports betting for Eldorado.

“This was always the glimmer in our eyes,” Asher said. “We thought there was a pretty good chance they could wind up owning all or part of Caesars. It’s a big deal for us.”

Along with rapid expansion for William Hill, the U.S. market has seen several other important developments among the leading players.

DraftKings went public in May via a nontraditional “blank check” merger, combining with backend sportsbook platform provider SB Tech to produce a $6 billion market cap that was at $11.7 billion at the end of July. Flutter Entertainment, the U.K.-based parent of FanDuel and Fox Bet, raised $1 billion through a private placement at the end of that month, deepening its war chest for U.S. expansion. BetMGM partners MGM Resorts and GVC Holdings increased their investment in the joint venture from $200 million to $450 million through a second-round infusion in July.

“To build a brand, to acquire users, to retain those users, to frankly step up and work with the leagues and teams and everybody else — it all requires capital,” King said. “That’s really the underlying reason [sportsbook operators are raising cash]. When you look at the combination of a deeper scale as well as competition, it just means that the cost of entry in the U.S. is really expensive.”

Once the most-watched story in sports business, sports betting returns to meet a nation still mostly homebound, and an industry largely devoid of the spectators who have forever provided its economic underpinning.

The summer of pingpong is over, soon to be replaced by a fall that is both promising, and uncertain.