When the Supreme Court struck down a federal ban on sports betting earlier this year, many people wondered whether widespread access to gambling would help or hurt the TV networks that pay millions for the rights to broadcast live games.
One of the networks, CBS Corp., has an early answer: The bet is paying off.
With sports books already started in three new states, CEO Leslie Moonves said CBS has seen new betting-related ad dollars flow into a station in Philadelphia and that he expects to see a similar boost in New York. "We're extremely excited," he said on today's CBS earnings call. "It's a category that has unbelievable upside."
The potential echoes what networks experienced in 2015 with the meteoric rise of daily fantasy sports, Moonves said. Rival services DraftKings and FanDuel spent hundreds of millions on marketing during football season that year, and each spent time as TV's biggest ad spender. Both are now offering sports gambling in new U.S. jurisdictions and racing for market share alongside overseas gambling giants and Nevada casino companies.
The new ad money shows one of the most direct ways legal sports gambling could influence not just networks, but also leagues and teams around the country. Media money is the primary revenue driver in sports—it's as true for the National Football League as it is for Rutgers University athletics—and if Moonves is right, more fan interest will quickly translate to more viewing in areas that legalize wagering. That will lead to higher demand for ads and probably make live sports rights, one of the few bulwarks against widespread cable cutting, even more valuable.
The NBA has already been proactive in seeking a cut of the action in other ways. The league this week signed a three-year, $25 million deal with MGM Resorts International that makes the Las Vegas casino company the league's official gaming partner.
The three new states that have introduced sports betting—New Jersey, Mississippi and Delaware—aren't among the biggest potential markets in the country. The most lucrative states for sports betting are, in order, California, New York, Florida, Texas, Michigan, Illinois and Ohio, according to data compiled by the American Gaming Association.
-- Bloomberg News