While California voters dashed the hopes of TV networks and other media outlets hoping to reap advertising revenue from legalized sports betting in the Golden State, the industry is taking some solace from sports betting launches planned elsewhere.
Mobile online sports betting has been legal in Maryland since November 23, nearly a year after sports betting became legal in that state. Ohio is set to allow legal sports betting starting January 1, 2023. The American Gaming Association appreciates that 90% of sports betting are made online.
The Maryland and Ohio launches follow a Nov. 8 election in which California voters were adamantly defeated two proposals that would have opened the door to sports betting in the most populous US state.
“We would have preferred to drop the sports betting vote in California, but we have Maryland,” and soon Ohio, said Steve Lanzano, president and CEO of the Television Bureau Of Advertising Inc., a trade organization for the US local broadcasting industry.
Simplebet CEO Chris Bevilacqua said that launching new states requires significant marketing spend, with customer acquisition spend often being in the $800-$900 range. Simplebet is a business-to-business development company that uses machine learning to power real-time micro betting for sports bettors.
With the launch of sports betting in California and Texas delayed by at least another year or two, operators can better rationalize their cost structures and push for profitability in states where they’re already established. said Bevilacqua.
Launch support will be welcome news for broadcasters and other media companies in Maryland and Ohio. The rise of sports betting has come at an opportune time amid pandemic and supply chain issues that have stalled ad spending by auto dealers and manufacturers, which have historically made up TV networks’ top advertising category.
Spending has shifted as the sports betting market has matured. Sinclair Broadcast Group Inc. COO Rob Weisbord said Nov. 2 that some advertising budgets are now being channeled to national outlets and regional sports networks such as Bally Sports-branded channels operated by Diamond Sports Group LLC Subsidiary. The shift reflects the fact that sports betting is now available in more than half the country, meaning ad purchases no longer have to be as narrowly targeted.
Some media groups are also going through harsh comparisons as adoption is slow from state to state.
Brian Lawlor, president of local media at The EW Scripps Co., said at the company’s third quarter earnings call on Nov. 8 that advertising spend in the gaming category was down more than 50% year over year.
At Nexstar Media Group Inc., the sportsbook and gaming category saw a mid-single-digit million decline year over year in the third quarter, which executives attribute to fewer states opening up for business. COO Tom Carter also pointed to a general move by larger sportsbooks to place their advertising dollars nationally while reducing spending in more established markets.
Charles Gillespie, CEO of Gambling.com Group Ltd., a provider of digital marketing services to the global, regulated online gambling industry, said money is being allocated to national outlets and performance marketers can also be more targeted to drive customer acquisition.
Operators try to buy players from Gambling.com, which receives a conversion fee from the sportsbook after customers sign up, deposit, and then wager. Gillespie said the platform allows operators to better maximize and identify their return on investment, rather than spending $100,000 on a TV campaign that could bring in $50,000 or $150,000 in customer bets. It’s just more difficult for sportsbooks to estimate the return on traditional TV advertising spend. Gillespie said.
Maryland is moving
Sports betting in Maryland is available through five casinos and four off-track bookmakers, according to a spokesman for the state Lottery and Gaming Authority. Sports betting revenue is taxed at 15% in the state, with revenue supporting public education.
As for mobile betting, the state is Examination Board for Sports Betting Applications or SWARC, has approved 10 companies, including leading sports betting companies DraftKings Inc. and FanDuel Inc. for licenses. Three local establishments said they will not be ready when sports betting ends on November 23.
The state agency spokesman said another 11 companies are at various stages of the application and review processes.
According to estimates by SWARC, the 10 licensed mobile sports betting operators are expected to provide $131.8 million in marketing support for their businesses in 2023, with spending falling to just under $96 million in 2027.
Baltimore is Maryland’s largest television market. Its Big Four stations are WMAR, the ABC (US) affiliate owned by EW Scripps; WBAL, the subsidiary of NBC (US) owned by Hearst Television Inc.; WJZ, subsidiary of CBS (USA), owned by Paramount Global; and Sinclair’s FOX (US) subsidiary WBFF. Sinclair and other groups also operate stations in markets such as Salisbury and Washington, DC/Hagerstown, Md.
The Nov. 23 launch of mobile betting in Maryland is well-timed for a robust sports calendar marked by an NFL tripleheader on Thanksgiving, the ongoing FIFA World Cup, and a key college football match between Ohio State and Michigan on Nov November is highlighted.
A spokesman for the Ohio Casino Control Commission said the state has 25 mobile sports betting licensees, 16 of which have already received conditional approval. A “good portion” of the other nine will receive such recognition at an upcoming meeting.
The state also licenses sports betting windows and terminals at brick-and-mortar establishments, such as restaurants and bars, and kiosks with more limited wagering options in retail outlets, including grocery stores.
That speaker said licensees must express an interest beginning December 2 to have their equipment and systems inspected and inspected by the end of the year to meet state requirements for New Year’s Day debut.
Sports betting income in Ohio is taxed at 10%, with most of the income going to extracurricular activities in both private and public schools. Other funds are allocated to veteran initiatives and problem gambler programs.
TV marketing and pre-registration of betting accounts are underway in the country, according to the commission speaker.
In California, defeating Proposition 26 would have allowed for more gaming activity and online mobile sports betting at Native American casinos; The rejected Proposition 27, backed by major sports betting companies, would have allowed online and mobile sports betting across California. The defeats of the measures keep the door closed to sports betting in the state – for now.
“California obviously drew the line and certainly didn’t cover the scoring,” said Steve Passwaiter, vice president and general manager for North America at Kantar Media Intelligences Inc.
Kantar estimates that during the 2022 mid-election cycle, around $380 million was spent on advertising for election campaigns in the state, with the vast majority going to sports betting offerings.
California’s voting errors were “a spectacular mess,” said Gambling.com’s Gillespie, who believes the operators who supported Proposition 27 should have promoted it with better and more direct messages.
“‘Would you like to bet on it [Los Angeles] Rams game on your phone?’ That might have worked a little better,” Gillespie said.
Gillespie expects that if the operators and tribes don’t reach an agreement to work together, a ballot initiative backed by other embassies will resurface in 2024.
Kantar’s Passwaiter also believes both sides will seek cooperation. But even if not, the operators are not giving up.
“They will change tactics,” Passwaiter said. “It won’t go away.”