The 2013 Question…Worth The Gamble?

There is a battle going on in the State of New Jersey that, if played out in favor of the state, will open up and endless trough of marketing and spending dollars for professional sports going forward, one that could help keep costs down for tickets, ease burden on stadium improvements and in many ways enhance the fan experience. It is sports wagering, especially in the digital space, and like other taboo subjects before it…lottery advertising, events at casinos, advertising for hard liquor, even brands on uniforms…would be a huge boost for clubs and those selling media as they seek to find alternative places for cash other than the traditional means.

Now this is different than all the other topics mentioned above…the biggest reason being Federal Law in the US currently prohibits sports gambling outside of the State of Nevada, and no professional organization is going to buck the Federal Government to challenge or push along sports wagering in the States. The leagues and the NCAA, as has been widely documented, are actually doing all they can to battle New Jersey’s challenge to sports gambling. However if New Jersey does win, and other States follow, the revenue that can be had from LEGAL and Federally regulated wagering can probably dwarf most of the marketing revenue currently brought in by teams and leagues. Why is New Jersey challenging the Federal law? Simple. The State needs the income that a sports book can bring to casinos in places like Atlantic City, or to racetracks that offer various forms of legal wagering. The percentage of tax that could come from legal wagering in the United States, it is said, would go to fund an infrastructure that has been suffering with a down economy and made worse by the dollars lost with problems like Hurricane Sandy. They argue that their casinos and racetracks can operate within the law and be both profitable and innovative with sports gambling, just as their partners  in Nevada have been for years.  It’s not “The Sopranos,” it’s smart, legal and forward-thinking business.

Proponents of legal wagering point to the millions brought in across the world by legal gambling, many times without incident. Premier League teams could betting organizations as their biggest brand supporters, with the revenue share that goes on being some of the largest cash streams coming to clubs. The advances in mobile technology, it is argued, will make fan engagement at games that much stronger as well. with fans being able to legally bet on any number of analytic permutations that can occur in the course of a sporting event. A more engaged fan means more dollars spent on traditional revenue streams like food, and all that helps grow the pie for clubs. The other argument that is made is that whether leagues admit it or not, the gambling transactions are taking place illegally now, and those dollars, and the innovation that could come from a formal gambling play, are being left on the table by leagues and teams.

Now the other side is the spectre of fixing games, scandal and shady dealings that could arise from introducing legal sports gambling into America. The argument by the pro-legal gambling side is that those arguments were made with many other innovations that could bring down sport, and once they were introduced, no one suffered and public opinion was accepting and encouraging.

So where will this all go? New Jersey will continue to force the issue and bring about change, while the leagues and the Federal Government will continue to fight against for the short term. The issues on the horizon…will the NFL condone a legal bet when the Jacksonville Jaguars play in London each year…will soccer clubs playing friendlies in the US be allowed to engage with legal betting organizations in sponsorship when they tour the States…how can the NCAA allow college teams to play IN casinos and take appearance fees when they say that the supporting infrastructure is against the rules…will all be used as fodder for and against as the issue grows in the coming months.

The precedent for legalized gambling abroad is already established. Clubs in the US need to grow revenue streams and for sure there is no way the leagues will go against Federal Law with an issue as touchy as legalized gambling. Either way this goes, it will certainly be one of the bigger issues to watch in 2013 from a sports business perspective.