4 Interesting Points About Sports Betting From The MIT Sports Conference

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With the emergence of the US sports betting market, experts, more than ever, are looking for ways to maximize its potential.

During the recent MIT Sloan Sports Analytics Conference, five sports betting wizards spoke in depth on how the industry can thrive.

The panel consisted of Sharon Otterman, CMO of William Hill US; Andrew Ashenden, CCO of Perform; Doug Kezirian, sports betting analyst at ESPN; Kip Levin, president and CEO of FanDuel; and Matteo Monteverdi, US president of Sportradar. The moderator was Duetto’s SVP of Product & Analytics Jeff Ma.

Titled “Skin In The Game: Sports Gambling’s Emergence In The US,” a range of different sub-topics were discussed, but here are the four most important takeaways.

1. Sports betting regulation is where it starts

The one agreed-upon point of discussion was the need for proper regulations across all states.

“The real question is, how long will it take for states to regulate, and really regulate the way New Jersey has,” Levin said.

New Jersey has what many experts believe is the ideal sports betting model. Casinos have an 8.5 percent tax on revenue with an additional 1.25 percent tacked on to help market Atlantic City.

Here is what Monteverdi had to say:

“(New Jersey) has good taxation that is not killing the bookmakers. Regulated mobile in conjunction with retail, which is an essential component and the licensing (cost) of their (sports betting) product has been quite small.”

Monteverdi is correct when he said that the online component is essential. In January, online and mobile wagering accounted for nearly 80 percent of all sports bets in the state. To put that in terms of dollars, customers bet $304.97 million via online and mobile platforms.

Online wagering in New Jersey is taxed at 13 percent, which ranks in the middle of the pack compared to other jurisdictions.

On the high end is Pennsylvania, which imposes a 36 percent tax on PA land-based and online wagering. In West Virginia, the tax rate for land-based and online wagering is 10 percent of gross gaming revenue.

Monteverdi said, if other states can replicate what New Jersey did, it will be a “significant adoption.”

2. Official data is key

When the US Supreme Court struck down the Professional and Amateur Sports Protection Act, “official data” may not have been the cause of so many headaches.

However, data has now become the centerpiece and main lobbying point for professional sports leagues.

Professional sports leagues have insisted that sports betting operators use “official league data” and have even lobbied state legislators to make it part of any sports betting bill.

“Data is a tremendous opportunity,” Monteverdi said.

Sportradar recently signed a deal to become official data partner for Major League Baseball (MLB). The data giant struck a similar deal with the National Basketball Association (NBA) which gives it “non-exclusive rights” to distribute this data to sports betting operators in the US. Its MLB deal gives Sportradar “exclusive distribution rights” for real-time statistics which it collects at every ballpark.

“Everybody says data is the new oil,” Monteverdi said. “But we produce the fuel. We take the oil — the data — and build products around this data, and then we give it to sportsbooks — the cars — so they can run their business.”

According to Monteverdi, Sportradar has a firm grip, in terms of data, in New Jersey, securing 90 percent of the market share.

Last year, the company gained new investors pushing its value to $2.4 billion. With the addition of MLB, Sportradar now has deals with the four major pillars of sports (NBA, NFL, NHL) as well as, FIFA and NASCAR.

3. League partnerships are the new norm

All the talk about official data brings up another evolving cornerstone in today’s sports betting market, the emergence of deals between professional sports leagues and casino operators.

“(Data) is why the relationship with the leagues is so important,” Monteverdi said.

Since sports betting went live in New Jersey, seven different casino operators have struck lucrative deals with professional sports leagues, including Caesars Entertainment.

MGM Resorts International opened the doors when it became the first casino operator to partner with the NBA in a three-year deal worth $25 million.

“In 20 years, (sports betting) is going to be part of our culture,” Otterman, the William Hill executive said. “The stigma will be out.”

Otterman said she expects many things to change with these deals in place.

  • Branding on uniforms
  • Games will become more analytics rich
  • More in-play betting

4. Integrity fees are not going away

The final discussion during the 45-minute panel revolved around integrity fees.

In the early days of sports betting, Indiana lawmakers, under the guidance of the NBA and MLB, attempted to introduce integrity fees. This now infamous term gave 1 percent of the handle to the leagues.

League executives said they deserved a cut of the profits for allowing customers to bet on their games.

Recently, MLB submitted a letter to the NJ Division of Gaming Enforcement (DGE) requesting that customers be prohibited from betting on their spring training games. On Wednesday, the DGE denied the MLB request.

“I think their concerns are very legitimate, but I don’t think they are as informed as we are,” Kezirian said.

Kezirian followed up by saying that professional sports leagues will always fear the worst.

“Leagues are just doing their due diligence,” he said.

To be clear, Kezirian was not advocating for integrity fees, but merely making a point on why sports leagues feared betting on practice games. MLB executives fear spring training games could be easily manipulated considering they are primarily composed of amateur athletes.

However, Otterman slightly disagreed.

“History hasn’t proven itself that this is a huge issue,” Otterman said.

“I think there are enough commercially viable options instead of getting a sum tax (integrity fee) that is going to prevent something that hasn’t proven to be a problem,” she said.

Regardless of how expects view sports betting across the board, the consensus is the market is still in its infancy. Several changes such as proper regulation, data rights, and league partnerships will be topics of discussion for years to come.

To date, 120 sports betting bills are making their rounds in 31 states.

Nicholaus Garcia

About

Nick comes from West Texas where he graduated from Texas Tech University with a degree in psychology. After a five-year stint in Chicago, where he wrote about local politics and graduated with a master’s degree in journalism from Columbia College Chicago, he moved to Washington, D.C. to write about issues related to gambling policy, sports betting and responsible gaming.

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