Give Us Spring Football - Operators (Probably)
A Fun Look at Externalities
From those of in the College World, it’s a rough Monday returning back from Spring Break this week. We hope you all had a lovely week. But to celebrate the movement toward summer, we’re going to be talking about spring football and gambling from a unique perspective.
As always, The Handle is presented by Wagers.com. Check them out for all of your gambling content.
This week’s article was inspired by our desire to see success for a professional Spring Football League, both as sports fans and gamblers. We’re partial to all of the leagues that have attempted to make it, with my favorite being the doomed American Alliance of Football. Granted, it’s hard to call them rag tag when these leagues usually come in tow with celebrities and deep pockets (but the pockets haven’t been quite deep enough), but they certainly aren’t the NFL. The quality is also clearly below the NFL, but that didn’t stop me and 3.25 other million viewers from tuning into the debut game for the American Alliance of Football. In short, having these games give us more football at a time when we otherwise have no football. Giving us more football gives us more opportunities to gamble on football.
Increasing the number of games that consumers are interested in is one very simple way of expanding the wallet for the most basic American consumer. Many people like football but aren’t big baseball fans. They may have disposable income to spend in the summer, but simply aren’t serious enough baseball fans to be making additional deposits and gambling once the Super Bowl ends. These are seasonal gamblers, almost like an ice cream shop in a beach town. They are only valuable to operators when football is on. Let’s take a closer look at how many of these fans could exist
If spectatorship is a proxy for casual gambling, which we would think is a relatively fair assessment, we can look to Sunday Night baseball vs Monday Night Football. Obviously, it would be ideal if both were on the same night of the week, but it’s more important to line up broadcast network vs cable. As of this year, ESPN broadcasted both Sunday Night Baseball and Monday Night Football. Sunday Night baseball averaged about 1.5 M viewers early in the 2021 season. In comparison, Monday Night football averages around 13.5 M viewers, or a full order of magnitude more than baseball. That was a bit of a brief digression to remind us both that the NFL is king of American sports, and that indeed when football ends, it is no surprise that handle follows. Operators love and need football, and functioning sports more generally.
Nowhere was the dependence on sports leagues more obvious for operators than in March 2020 where everything shut down as a result of the Covid-19 pandemic. Operators (not necessarily the legal ones) were reduced to offering Belarusian soccer (now off limits because of the war in Ukraine), simulations of video games, and eventually Korean baseball. The pickings were slim. As a result, it’s abundantly clear that sports books are entirely dependent on the functioning of sports leagues. That means that sports leagues must function for sports books to operate well. There’s always labor issues on the horizon, or other potential issues that operators themselves have no ability to resolve! This is entirely different from casino based gaming where everything is in the operator’s control.
Anyway, the point is that currently the sheer existence of major American sports generates a positive (at least we think so) economic externality for operators. There’s billions of dollars wagered, thousands of jobs created, and lots of money moving into state coffers. All that has to happen for those machinations is for sports to be played at a professional level! Of course, the leagues try to get their hands in the pie of the gambling operators in the form of official data sources and selling sponsorships to the various firms. But in reality, gambling on football existed long before the repeal of PAPSA and is fundamentally independent from whether or not the behemoth that is the NFL is able to get its hands on some of the revenue. It is a peripheral to the existence of the NFL.
This brings us to a spring football league. There is no reason that a league’s existence has to be an externality from the perspective of an operator (unless you are worried about operators rigging games). Most of the large operators are exceptionally well capitizled. They could invest equity in some capacity into a new spring football league (in the event the USFL fails or needs more money) to help make sure the leagues continue to exist. In addition, they could offer viewing of the games on their own mobile apps to help the league reach additional fans. It is hard to get advertising dollars in the first few months of a league. If operators could go with viewership numbers from their mobile apps, they would have fantastic data demonstrating interest in the league. Additionally, the games could be promoted in the app, emphasizing that football is back and encouraging users to check it out. This could bring off the sideline those seasonal gamblers and would actually expand the wallet of consumers who might not prioritize betting on baseball to any degree. Besides, if the league worked out, it would likely be a productive use of capital anyway for who anyone who invested early for the very reason that football is so popular. We’re not saying that any operator should cut the check to sponsor a brand new league, that’s too much money and rife with issues. Rather, some version of what Penn and Barstool looked at with the Waterdogs and the Premier Lacrosse League could be used to help jumpstart a spring league into the mainstream.
What we care about at The Handle is thinking of creative ways to expand the wallet. One way to do that is to bring NFL gamblers off the sideline in what can otherwise be a pretty boring sports summer. An easy way to do that is to bring them more football. Operators are in a unique position where they have a lot of cash, the ability to reach those sidelined bettors, and the ability to gather data on how much interest was generated in the game. The interest generated in the game could be used as a metric to sell the television rights in a way that would promote growth in a nascent league. The TLDR here is that functioning and popular sports generate an externality that allows operators to exist. It doesn’t have to be an externality. Operators can and should take proactive steps to ensure that there are always fun things to bet on. (The other fun, if under explored insight here is that operators have the potential ability to drive traffic to certain sporting events by promoting bet types)
Miscellaneous Content Consumption
Another shout out to our friends at Sharpr!
https://rapidcityjournal.com/news/local/two-deadwood-casinos-fined-for-illegal-sports-bets/article_e512ea7f-46e4-59a1-a212-a3096b11bfcd.html
Tsk tsk! Don’t accept unlicensed bets!
The Philadelphia Inquirer @PhillyInquirer
Want to bet on Saint Peter's? You can only do that out of state. There is a constitutional restriction in New Jersey prohibiting wagers on colleges located within the state or college games played in Jersey. https://t.co/AvMIAyu7JUThere were likely a non zero number of people who voted against allowing betting on in state teams who wanted to bet on Saint Peter’s yesterday. That is all.
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The main headwind for spring football becoming popular is the economic principle of scarcity. Football is so popular in the fall because it's only available in the fall--boosting supply by adding offseason football won't stimulate demand meaningfully.