Sports media companies are betting on gambling.
Yahoo Sports launched sports betting in November 2019 with MGM Resorts. SB Nation and DraftKings are collaborating on an editorial website for fantasy sports and betting analysis. In February 2019, Caesars Entertainment joined Turner Sports to open a Bleacher Report-branded content studio that operates within the casino’s Las Vegas betting venue.
And, on Wednesday, Barstool Sports sold a minority stake to casino operator Penn National Gaming for $163 million. The cash deal values Barstool at $450 million.
That might sound like a lot of money, but not when you think about the opportunity.
Barstool’s valuation is driven less by its revenues or business model, and more by its potent combination of community and content, said Rich Antoniello, CEO of Complex Networks, speaking Wednesday at AdExchanger’s Industry Preview conference in New York City.
Not everyone’s a fan of Barstool’s rough-and-tumble style, but it’s done a “tremendous job” of developing in-house talent, and “the corresponding communities they’ve been able to develop were off the charts,” Antoniello said.
“To me it makes a lot of sense because of the depth of that connection to apply it on a verticalized basis to gambling,” he said.
The Supreme Court lifted a federal ban on sports betting in 2018, and the activity is now legal in a growing number of states, including Nevada, New Jersey, New York, Delaware, Indiana and Pennsylvania.
And there’s a lot of bank to be made.
Record US sports betting revenue – aka, the amount of money kept by sportsbooks out of the total amount wagered – nearly reached $1 billion in 2019. Morgan Stanley gaming analyst Thomas Allen predicts revenue will reach $7 billion by 2025.
Roughly $6.8 billion will be bet – both legally and illegally – on Sunday’s Super Bowl game between the San Francisco 49ers and the Kansas City, according to the American Gaming Association.
For Verizon Media, which owns Yahoo Sports, sports betting is part of a revenue diversification plan for advertising, transactions/commerce and subscriptions, said Verizon Media Group CEO Guru Gowrappan on stage at Industry Preview.
One of the biggest mistakes many media companies have made, Verizon Media included, is not focusing on how to participate in the entire consumer lifecycle, from content consumption through transaction, Gowrappan said.
“You read a travel article and in 10 days you go and buy a vacation package – you do something that is transactional – but we don’t get to participate, and that’s not right,” he said. “That is part of the reason we said, ‘Hey, we want to close the loop.’”
Closing the loop in sports betting means engaging consumers at the top of the funnel with content – sports scores or the NFL live stream via the Yahoo Sports app – and keeping them engaged as they build their Fantasy Sports teams and place bets on Fantasy games and live events.
“We don’t want to lose that funnel going somewhere else,” Gowrappan said.
Yahoo Sports has launched betting in New Jersey with plans to expand to states where it is legal. Sports betting could become legal in around 30 states by 2030, according to market intelligence firm H2 Gambling Capital.
Verizon Media also sees 5G boosting the sports betting business as sports leagues and stadiums think more about data. The NHL, for example, is considering embedding data-gathering sensors into pucks.
Although Verizon has stepped back from its grand advertising business plans to focus on its 5G rollout, the media group will benefit from Verizon’s investment in wireless tech.
Faster access to data will facilitate a faster feedback loop for Verizon Media’s sports betting operation.
“[The 5G] game changes everything from a latency perspective,” Gowrappan said.