Sports Betting Effect On Local Teams

Sports Betting Effect On Local TeamsWhile Arizona likely won’t be instituting sports betting in 2018 (the legislative session for the year is over, and all five of the proposed sports betting legalization bills died in committee), there’s basically a 100% chance (or, for you statistical sticklers, a 99% chance) that the pastime will be legalized and regulated sometime in the first half of 2019. There’s simply too much revenue and economic stimuli at stake for the state to ignore the popular, lucrative activity for much longer. So with that in mind, both bettors and sports purists (and, of course, the overlap between them) are wondering how legalized sports betting will affect Arizona’s major teams.

Well, the easiest answer is that, as far as “the integrity of the game” goes, it won’t. Remember, AZ is right next to Nevada, and NV has had legal sports betting for generations. With that kind of access, any fraud resultant directly from legal sports betting on outcomes of games themselves probably would be evident in Arizona and surrounding states. That simply hasn’t happened.

However, the economic impact of legalized sports betting should have tremendous effects on the sports clubs in the state, and these should all be markedly positive in nature.

Though the leagues themselves are clamoring for “integrity fees” to guarantee that government-regulated sports betting with massive oversight won’t provide an easier avenue to corruption than gray and black market betting, that’s a brazenly absurd thing to ask for. If the leagues didn’t believe that “integrity” was important before, adding multiple levels of governmental oversight shouldn’t make things more corruptible. And it won’t.

But the leagues want money. And the leagues will get it. The question, then, is how exactly legalized AZ sports betting will make the Cardinals, Diamondbacks, Suns, Coyotes, and various NCAA teams richer without gouging the sportsbooks (and thus the sports bettors) with significant added fees.

There are several ways that legalized AZ sports betting will increase the coffers of the state’s professional and amateur teams. Most of these avenues are universal. From a practical standpoint, if someone has skin in the game (i.e. they are betting on the outcome), they are more likely to watch the game. Further, with in-game live betting where the odds are always changing and you can wager on individual events as the game unfolds, you’ll see more people than ever before sitting through entire games, even when their team is getting clobbered.

More people watching the games for longer durations means more ad revenue, higher ratings for the broadcast companies, and more money – and contractual leverage – for the teams themselves. It is not hyperbole to suggest that legalized sports betting – particularly in a huge sports market like Arizona – could add upwards of a billion dollars a year to the revenue generated by local clubs. Even in the high-dollar world of professional sports, that’s huge. Add to this the opportunity for the leagues to license their logos and trademarks (with the players’ associations potentially doing the same thing), and the opportunities to make bank get that much more substantial. On top of that, consider the implementation of the European model whereby teams and sportsbooks/casinos have sponsorship deals, thus making the teams even more valuable.

Down the road, it’s conceivable that major sports venues themselves will offer sports betting kiosks where fans can place bets while actually attending games, and this will generate even more income for the teams that play in these venues, as the product will be worth that much more. To put it another way, look at how much the teams in Arizona are currently worth (with the league average team value in parentheses):

  • Arizona Cardinals: $2.15 billion ($2.5 billion)
  • Arizona Diamondbacks: $1.21 billion ($1.3 billion)
  • Phoenix Suns: $1 billion ($1.65 billion)
  • Arizona Coyotes: $300 million ($505 billion)

These major Arizona teams are all below their league averages in terms of company value, with the Suns and Coyotes having the most to gain from the baseline. However, a high tide raises all boats, so though their numbers will increase dramatically in the next few years, so too will the league averages. Sports betting, in this way, will prove itself a robust and legitimate revenue source for professional teams in AZ and the rest of the country.

One outlier to all this, and perhaps the league with the best notion of how to capitalize on legal sports betting going forward, could cause a further groundswell of cash to flood into all the leagues’ coffers. The NFL, instead of campaigning and lobbying for a nonsense “integrity fee,” are pushing for data rights to their product. Namely, they wish to be the sole live statistical provider to all US sportsbooks offering NFL action.

There is precedent for such a stance, as well, as the PGA Tour was ruled more than a decade ago to be the valid rights-owner of their athletes’ statistics. While the merit of this argument is, to many analysts, vacuous at best (after all, the results of sporting events are considered news, which can be freely aggregated and reported), the legal precedent helps, and it’s likely that the NFL – and then all the other leagues – would be granted the same deal, possibly by federal law. knows that what exactly will play out is certainly unclear at this point. But even if no league got its own data rights or sportsbook sponsorships or any integrity fees, if they just kept doing what they’ve always done, they’d still reap massive rewards from the increased fanbases and revenue that comes with legal sports betting. Why that’s not enough for the leagues is something nobody can answer, but the leagues will obviously do what they can to maximize their profit potential as the new US sports betting industry rolls out.

And Arizona’s teams – perhaps even more than most states’ clubs (due to the fact that the state has representation from all major US leagues) – will certainly come out on top, no matter what.