The New Sports Betting Industry: It’s Time to Get Your “House” in Order
Instead of remaining relegated to the black market, sports betting is poised to enter the mainstream after the U.S. Supreme Court struck down a federal law that previously made it illegal to bet on sports events in any state other than Nevada. Calling the 1992 Professional and Amateur Sport Protection Act (PASPA) unconstitutional, the ruling opens up massive opportunities for a multitude of players as each state is now positioned to develop their own laws around the legalization, regulation, and taxing of sports betting.
The Benefits Abound
With some describing the Supreme Court decision as being the catalyst for one of the biggest gold rushes in many years, a wide range of interested parties are itching to jump into the lucrative fray of a legal sports and gaming market.
Sports media and broadcasters stand to experience a massive rise in revenue derived from online and offline betting operators running an increasing amount of ads to bring in new consumers in each state once sports betting is legal. Fantasy sports companies, such as DraftKings and FanDuel, are also certain to benefit greatly from this change, provided that a significant percentage of states develop regulations that fit well within their existing framework. And the list of likely future beneficiaries goes on from there to include rights holders, bookmakers, sportsbooks, teams, and leagues. In fact, Bank of America Merrill Lynch analyst Shaun Kelley believes that the industry’s gross gaming revenue from sports betting will skyrocket from its current size of $200 million to reach $5 billion — $10 billion in the next five years.
What Will It Take To Succeed?
Before we all start counting our new revenue streams, it’s essential to realize that sophisticated technology requirements must be in place before entering the world of sports betting.
1. Legislation and compliance
As of today, full-scale legalized sports betting is available in Nevada, New Jersey, and Delaware. A few other states that already have laws on the books include New York, Mississippi, Pennsylvania, West Virginia and Rhode Island, which has announced the Oct. 1 launch date. California, Kentucky and Illinois have sports betting laws currently under consideration, but as all the other states either have laws that are dormant or haven’t considered new sports betting bills altogether.
If each state develops their own regulations, the market will be massively fragmented, with convoluted compliance needs that require agile frameworks, platforms, and extensions to work efficiently while staying within the different laws. From payment processing to software tools that prevent fraud, underage gambling, and interstate betting, the new opportunities come with many responsibilities for companies that get involved in this sector.
2. Content delivery and enhanced viewing features
With the rise of legitimate sports betting, virtually everyone in broadcasting and sports media expects a boost to televised sports, with a major increase in LTV (Live Television Viewership). According to the 2016 study by Nielsen, NHL bettors watched more games than non-bettors, and they watched TV for longer periods. Forty-four percent of NFL bettors, the study says, are avid sports fans, the most coveted group among sports leagues.
And so the competition between traditional and online television, streaming services, and even social networks is going to be fiercer than ever before, as all players on the market try to capitalize on the promise of sports betting revenue. Even companies like Facebook, Twitter, YouTube may see new revenue streams.
The battle is clearly on, and the winner is that who can provide scalability to satisfy the growing viewership and give betting fans an enhanced viewing experience. I expect AR for sports, live video solutions, the ability for the platform to analyze in game action (ML, AI) and immediately create a highlight clip, and countless other marketing tools will become a significant part of the rapidly growing sports betting industry.
3. Data aggregation and real-time analytics
Perhaps more than anything else, data aggregation and visualization will be incredibly important for all parties. Through mobile and IoT tools, teams and athletes are producing more data than ever, and much of it is readily available to fans. While platforms, sports books and sports media leverage data to increase customer acquisition, engagement, segmentation and player profiling, bettors strive to combine their knowledge of the game and assisting analytics to help them beat the odds.
Sports betting analytics is growing, from its current valuation of $125 million, it is poised to reach $4.7 billion by 2021. The focus of the analytical solutions is also shifting from the qualitative data that was traditionally used to forecast outcomes, to quantitative data and mathematical analysis instead. Advanced algorithm find patterns in the often misleading sports data and build accurate stats and predictions based on real-time fitness tracking and performance data, game action analysis, and even weather conditions.
Although the technology requirements are certainly high, the recent legislation may very well provide the biggest U.S. gold rush in recent memory, with a multitude of companies ready to dive head-first into the lucrative and exciting world of sports betting. As Greg Bettinelli, a partner at Upfront Ventures, said in his recent piece, “I have a harder time thinking about who won’t want in on this”. It is a high time indeed to get the “House” in order.
What are your thoughts about the new sports betting industry? Please share your opinions in the comments below.