The wagering way: As gambling matures in U.S., what pitfalls are … – Sports Business Journal

Stop us if you think weve written this story before.

Oops, wait, we wrote on this topic in 2020. Back when sport practitioners werent howling about generative artificial intelligence, the Taylor Swift factor or World Series ratings.

Three years ago, we noted neither of us were gamblers nor prepared to act as experts on sport wagering. We simply wanted to explain this sectors rapid growth.

Back then, laws had changed, states were adopting handles, technology was facilitating easy access and big brands like FanDuel and DraftKings were advertising heavily. The easy money, like milk and honey, had started flowing into team coffers.

All were pleased.

This time around, were thinking more counterintuitively, watching the warning signals flashing in other countries where betting is culturally common and more mature as a business vertical. These are places where gambling always existed and the punters were never restricted by North Americas Puritanism.

Sound interesting? Well, here are a few nuggets to ponder:

1) As pro leagues and teams become reliant on sponsorship revenue from betting entities, will the day come when sport wagering income becomes overtly addictive for some teams and leagues the way tobacco was for NASCAR and F1?

2) Are there global trends emerging suggesting sport wagering has a downside? Will the sport wagering downside force state or federal politicians to alert their constituents of the risks? Will New Jersey (which just announced it enjoyed an annual increase of 50% to reach $1.29 billion in revenue) someday find it must intervene on behalf of habitual bettors who are underwater? Will legislators start weighing in on the dangers or will a gambler beware approach (with links for pre-betting education and helplines for compulsive gambling disorders) suffice?

In Australia, the Guardian reported in June that an Australian parliamentary inquiry had recommended ads for online gambling be banned across all media and at all times, within three years, to combat the manipulation of an impressionable and vulnerable audience.

In fact, the story continued, after months of debate about betting ads, including the prime minister, Anthony Albanese, labeling them annoying and the opposition leader, Peter Dutton, calling for a ban on ads during sports matches, the inquiry has provided a blueprint to shut them [the advertisers] down entirely.

The Australian Institute of Health and Welfare cited research and included in a recent report these findings: Gambling is a major public policy issue in Australia, affecting the health and wellbeing of individuals and families in a range of ways. Estimates suggest Australians lose approximately $25 billion on legal forms of gambling each year, representing the largest per capita losses in the world. The social costs of gambling have been estimated at around $7 billion in Victoria alone. Gambling-related harms affect not only the people directly involved, but also their families, peers and the wider community.

Makes you wonder what the behind-the-scenes data looks like. Are real people losing real homes, cars and marriages?

3) Where the University of Colorado once gladly took money from PointsBet (note: U.S. operations of PointsBet were recently acquired by Fanatics for $150 million), will an AAU basketball club or USOPC governing body take sponsorship money from FanDuel? Is there a perceived age cutoff on who DraftKings can sponsor? You might think they would never sponsor a Little League team, but can they advertise on ESPNs Little League World Series? Is the day coming when well need tobacco-level legislation?

4) Will North American athletes start taking endorsement deals from groups trying to counter the negative ramifications created by pathological gamblers? NCAA athletes cant represent betting firms. But could they represent anti-betting groups as part of their NIL freedoms? Weve seen this dynamic before with social issues like climate change and marijuana. Why not sports betting?

As an abstract to No. 4, innovative revenue generation technology is already appearing on the global horizon, and one of the ways underfunded groups can address financial gaps for community sport is via technology drawn from sport wagering. One such example is an Australian firm called Clubfunders that has developed technology aiming to address imbalances (in youth sport settings) and designing contactless payment transactions to underscore needed funding.

So, lets do a pro-con analysis.

The upside includes notable revenue for sport entities, dynamic brand building, higher levels of fan engagement via social channels, ticket sales and increased merchandising. In fact, sports betting has reached such an elevated level its hard matching this value from any other sponsor/advertiser category. Almost overnight, sport wagering has become essential for holding spectators attention for an entire game.

Now, the cons. In Australia, policymakers are addressing the gambling downside and because of that, much like American tobacco in the 1980s, the sports betting sector recently offered to make significant concessions including the removal of logos from match-day jerseys of sports teams.

We know the world is always changing, borders are digital, and fans love wagering on games, regardless of handle advertising, sponsorship or encouragement from Kevin Hart, JB Smoove or Jamie Foxx. But as English author and poet Lewis Carroll once warned, beware the Jabberwock, Jubjub bird and frumious Bandersnatch.

You wont see them often, but their jaws bite and claws can catch.

Rick Burton is the David B. Falk Professor of Sport Management at Syracuse University and COO, North America, for Playbk Sports. Norm OReilly is dean of the University of Maines Graduate School of Business and a partner at the T1 Agency. They are co-authors of Business the NHL Way (University of Toronto Press).

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The wagering way: As gambling matures in U.S., what pitfalls are ... - Sports Business Journal