The ninth edition of PwC’s Sports Outlook for North America comes while the COVID-19 pandemic is still valid, but showing some signs of depletion. The report covers 10 trends and predictions on the hottest issues facing the sports industry. The most relevant of these trends is the impressive and continuing evolution of the sports betting industry in the United States. Since the U.S. Supreme Court struck down the Professional and Amateur Sports Protection Act of 1992, U.S. sports betting has grown exponentially. In 2021 alone, Americans bet more than USD 52.7 billion on sports. Major League Baseball, the National Basketball Association, the National Hockey League, the National Football League and even the Ultimate Fighting Championship, all have official sportsbook partners. Besides, New York just legalized mobile sports betting, which might indicate that we are at the tipping point. All signs reveal that U.S. sports betting still has a lot of room to progress.
In this line, with great investment in new stadiums, race tracks and theaters, 2022 is expected to set multiple records for live entertainment attendance, as fans long for the return of the normalcy and excitement of live events.
REVENUE RESILIENCE
While the sports industry has suffered from the pandemic, the online gaming/gambling industry has continued to grow rapidly. States with legalized gambling and operations have seen tremendous success. As states look to close budget deficits caused by the economic downturn, there will continue to be significant acceleration of sports gambling legalization measures in 2022. This acceleration should create new revenue opportunities for both leagues and teams, as sports and gambling go hand in hand. In recent years, Fox, Disney and Yahoo Sports made strides in the gambling realm: Fox launched FoxBet, Yahoo Sports partnered with MGM Resorts, and Disney closed deals with DraftKings and Caesars (and subsequently launched a dedicated YouTube gambling channel).
Regardless of who enters the market, it is expected to see expanded partnerships among sports gambling platforms, professional sports teams, media agencies, traditional casinos and other non-sports online gaming/gambling platforms in 2022 and beyond. Specifically, PwC predicts:
a) Continued integration of media sports distribution with gambling sites
b) Sports gaming sites securing partnerships with professional sports teams, as additional states legalize gambling
c) Small/regional traditional casinos partnering with iGaming companies to create branded online sportsbooks to mitigate the loss of in-person revenues
d) Sports gambling platforms allowing iGaming companies to integrate non-sport gambling games for increased revenue pull-through opportunities
KEY STRATEGIES FOR SUCCESS
The sports industry has experienced multiple points of revenue disruption in 2020, but showed huge recovery in 2021. Now, consumers are engaging with gambling platforms at a record pace, and this user base continues to grow. According to the most recent research conducted by the American Gaming Association, the NFL, MLB, NBA and NHL leagues alone stand to gain a collective USD 4.3 billion annually in direct and indirect revenues from legal sports gambling. The revenues come largely from partnerships with sports gambling operators, but some also come from increased fan engagement that can augment merchandising, sponsorship, advertising and ticket sales. Further, the American Gaming Association estimates 39% of adult Americans (about 100 million people) are either current or potential sports bettors. That’s a wonderful chance for sports organizations to tap into new revenue streams, as well as improved engagement and differentiated consumer experience opportunities.
While opportunities will materialize in both the digital and analog spaces (with integrated digital experiences becoming more important than ever), an effective consumer data strategy will play a critical role in how leagues and teams can best take advantage of the growing opportunities. While multiple opportunities exist, strategy is key to success. The three top considerations for 2022 are: 1) If your organization has not yet gotten involved, now is the time to develop a strategy to help inform and shape upcoming regulation at state and local levels; 2) Sports gaming/gambling has the potential to transform both digital and in-stadium fan experiences, as well as top-line growth. To be in the best position to capture this growth, you should take a holistic look at how sports gambling plays a role across all your customer connection points, and 3) Data, data, data. It’s the critical piece that may be missing or underdeveloped within your strategies. Capturing data is one thing; but analyzing it and uncovering actionable takeaways requires a different game, one that allows the best in class to leapfrog the rest in class.
BE INFORMED AND ASSOCIATE TO GROW
Moreover, in this context, keeping track of public policy developments is smart business. Regulatory changes are not temporary, and they cannot be easily altered. So a strategic investment in government relations tied to sports gambling can help ensure that local team’s or league’s point of view is considered as legislation is shaped, helping operators get ahead of issues in order to drive ROI. Companies must take the time and effort to inform and educate policymakers and consumers alike about the benefits that sports gambling can bring to the fan experience and individual state tax revenues.
Of course, these companies don’t need to go it alone. Partnering with other professional teams, stakeholders and constituent groups in their states or adjacent states could amplify and extend their reach. Additionally, trusted advisors can provide proactive, real-time insights, as well as contextual analysis and strategies to navigate the sports gambling policies and regulatory issues that might affect the business. This allows operators to focus on how best to adjust their strategy, investment and procedures.
TRANSFORMING FAN EXPERIENCES
Shortened attention spans, coupled with an explosion of alternative entertainment options, require sports organizations to rely more on adjacent entertainment concepts that go beyond just the performance of their teams and athletes. Intensifying experiences will help expand their brands. Sports gambling creates a sticky relationship between fans and events. The organizations that will benefit the most from sports gambling will be those that go beyond simple sponsorship deals that lend brand names and logos to gambling platforms. Teams and leagues that actively seek to weave opportunities throughout their fan channels and engagement strategies (in a customer-friendly manner) will likely fare better in the long run. That’s why these organizations should consider how sports gambling fits into their channel marketing strategies, and where they can use it to pull through new fans, while giving existing fans new ways to engage with them.
One great tool to achieve could be the use of non-fungible token (NFT) technology. This will almost certainly mark a shift in fan engagement over the next five years, according to PwC. This professional services firm also forecasts that Blockchain sports sponsorship spending will reach USD 5 billion by 2026. The study of PwC also highlights the positives for sponsors of sports organization in shifting to tokenized tickets. NFTs provide authenticated access to fan activations and verification in ensuring those fans retain access to benefits in case they lose their physical tickets. The highly verifiable nature of NFTs makes them particularly valuable in tracking fan data. The actionable insights from these digital assets are potentially able to become a significant revenue stream.
Another example could be dynamic betting, a type of betting that allows for continuous change, like in-game wagers. The concept ensures full attention span and engagement, even in a lopsided game that has lost traditional competitive interest. Full attention span is irresistible to advertisers: it guarantees exposure to advertising and other forms of brand placement. Advertising is a foundational opportunity, but this type of platform could enable many more outside-the-lines possibilities. What if an organization leveraged fan engagement and combined it with a rewards program to create a personalized offer of a single game or a multi-game ticket? Continued engagement with fans will be critical in 2022, as teams will likely look to entice fans back to stadiums or arenas as the pandemic subsides. In the end, overall customer experiences, ones that differentiate an organization from the pack, will be essential in determining whether sports gambling is simply a lower level additive to revenues, or if it can grow to become a more significant contributor.