Sports activities Betting Media Deal Economics Are in Early Innings

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Posted on: January 27, 2021, 12:37h. 

Last updated on: January 27, 2021, 01:41h.

Internet gaming, media, and sports are now joined at the hip. The result of these formerly disparate enterprises joining forces is big business, with one research firm forecasting more than $30 billion worth of iGaming and sports wagering revenue by 2030, all attributable to operator relationships with media firms.


Deals between media companies such as ESPN and gaming firms are now common. Analysts expect the accords will be big revenue drivers. (Image: Getty Images)

That projection is courtesy of Macquarie Research. It estimates a compound annual growth rate (CAGR) of 33 percent over the coming years for online casino and sportsbook operators by way of agreements with media companies. Led by Chad Beynon, the analysts note media/sports accords will also contribute to improving advertising economics.

The idea of media outlets partnering with betting companies started with a trickle in 2019 before morphing into a tidal wave last year. However, the concept being deployed in the US isn’t unique. As Beynon and team point out, domestic operators are inspired by a UK model.

These deals have expanded well beyond traditional advertisements to include naming rights, click through economics, and equity stakes,” according to Macquarie. “Ultimately, we believe the ‘grand slam’ opportunity is to replicate the success of Sky Bet in the UK as a model for media content integrations with betting apps.”

There’s something to that goal. The average adult Briton spent $93 last year betting on sports, nearly double the $50 Macquarie estimates in the US.

Media, Sports Deals Take Varying Forms in US

In the US, agreements between media enterprises and gaming companies come in different forms and fashions, including equity stakes.

That methodology gave rise to one of the most successful pairings: Penn National Gaming (NASDAQ: PENN) and Barstool Sports. A year ago, the regional gaming company paid $163 million in cash and stock to acquire 36 percent of the pop culture and sports blog, with rights to eventually own the media property outright for $450 million.

Over the past year, Penn shares nearly quadrupled, as the gaming operator applied the Barstool brand to its mobile betting app and its brick-and-mortar sportsbooks. In the eyes of some market observers, Barstool Sports founder David Portnoy is the face of Penn. That’s despite not occupying an official executive role at the casino firm, and many analysts view this as the most successful gaming company/media tie-up to date.

Other US agreements include Caesars and DraftKings with ESPN, FanDuel and Caesars with Turner Sports, NBC Sports and PointsBet, and William Hill partnering with CBS Sports.

One of the more overt pushes into the media landscape by a casino operator was announced last November, when Bally’s (NYSE:BALY) said it’s paying $85 million over 10 years to apply its brand to 21 regional sports networks (RSNs) owned by Sinclair Broadcast Group.

“We believe these new agreements between sports betting companies and media networks can be mutually beneficial for the evolving sports betting ecosystem,” said Beynon.

‘First Inning’ of the Game

Clearly, there’s been a brisk pace of networks and gaming companies teaming up. But from the standpoints of economics and ideas, the benefits of these agreements are just starting to accrue.

“From a product standpoint, we are in the ‘first inning,’ and we expect future in-game betting and media programming integration to transform (sic) significantly in the next few years,” said the Macquarie analysts.

The research firm says that at the moment, legal online sports betting is accessible by 36 percent of the US population, a figure that will rise to 46 percent by the start of the 2021 football season and 90 percent by the end of 2025.

The analysts estimate sports betting revenue will notch CAGR of 47 percent from 2019 through 2025 and 25 percent through 2030.