It has certainly been a busy week for those things once thought as not cool enough for the New York sports scene. New Jersey brought back online poker, while pay daily fantasy players got a blowback not just from both Fan Duel and DraftKings but Yahoo as well. Then on Tuesday came the news that Mixed Martial Arts had finally cleared the hurdle and would be legal in New York going forward, a final state victory for promotions like Bellator and the UFC.
All of that, as well as the next big national hurdle, sports gambling, was on tap for discussion Monday night when NYVC Sports (New York Venture Community Sports) convened their semi-monthly meetup on Park Avenue. Now several years old, the group, which gets attendance of several hundred for its events and has grown to be a community of several thousand engaged participants in the sports, media and entertainment business in the New York area, looks to host an evening discussion on some of the biggest topics in sports business, from wearable tech and athleisure to eSports
“Our goal is pretty simple: create a forum for the sports and business community to come together and share ideas and best practices in a pretty informal setting, and it seems to be working pretty well,” said one of the organization founders, Jeff Volk, whose day job is Senior Vice President, Business Development Major League Baseball Advanced Media. He and co-founder Deepen Parikh, a partner at Courtside Ventures, came up with the idea after realizing there was no New York-based community where like-minded people in the sports and entertainment space could learn and share ideas peer to peer. Judging by Monday night’s crowd, which mixed senior executives with rising college graduate students and drew people from as far away as Washington, DC and Philadelphia, the idea seems to be working.
The topic on Monday night was equally as intriguing as the audience. It was a frank discussion on where sports gambling and gaming can go in this country; it was not a look back and rehash of where things have been, it was an interesting look into the reasons and the value of where the revenue and the opportunities may be going forward, and dispelled many of the myths that exist in the space today.
“In the UK, where sports betting is part of the culture, the average consumer spends less than $1 a day on sports wagering, and it’s a very successful and safe business,” said Eamonn Toland, North American President for Paddy Power, one of the largest legal bookmakers in the world and one of several that have set up formal operations in the United States in anticipation of Federal, and state laws being amended in the coming years. “We are not talking about some dark, back door business, like people perceive it to be because of what they sometimes see in the movies. This is a vibrant, safe and engaged industry that is going on around the world and can bring a huge amount of money into the local economy in the U.S. like it does elsewhere.”
How big is the business and how would it work? “There are all kinds of estimates but the number you see mentioned is somewhere in the neighborhood of $20 billion,” said attorney Jeff Ifrah, who participated in the discussion and has worked in the space for decades. “That isn’t just people gambling, it is all the ancillary businesses; analytics, marketing, restaurants, digital, that would have to be created to support a legal, monitored consumer facing business across the United States.”
One of the key issues, and fears, that the consumer has is with legitimacy. One of the issues Daily Pay Fantasy ran into late last year was the problem of unregulated insider trading, where executives at bigger companies were making deals, and gaining an edge, through information they were getting before the public. The specter of match fixing and the sanctity of professional sports apparently has been a key factor in keeping sports gambling from growing. How will that be handled? Deep, Wall Street-like security, which several of the professional sports in the United States, as well as those around the world, are already deeply invested in.
“Our business is all about the integrity of the data and making sure our partners, some of the biggest leagues in the world, know if there is a potential issue before it becomes an issue for the public,” said Chris Dougan, a Washington-based vice president at SportIM, which tracks the global data and gaming industries for everyone from Major League Baseball to FIBA and LaLiga to make sure any transactions in this booming legal industry are on the up and up.
Are they effective? Toland pointed out that Paddy Power, in the global legal betting market, had bets taken on 700,000 sports events in 2015. The number of events flagged for issues? Less than 100, and of those almost all were resolved before there became an issue in the public. Adam Steinberg, an executive at Spectrum Gaming Capital and another member of the panel, also pointed out that at one point casino gambling as a whole faced the same stigma, and now nine out of 10 American consumers, according to the American Gaming Association, have no issue with casino gambling. Could the same happen with legalized sports betting?
It seems like the tide is steadily tuning in that direction, but no one can say when. The challenges that New Jersey have put forth for state legalized gambling continue to get beat back, and there remains a heavy lobby from Nevada, led by Senator Harry Reid, to keep the federal law right where it is, with that state remaining as the one full-fledged place where gambling can be legal.
There is also the issue of mobile gaming vs. going to a brick and mortar casino to bet, and should the windfall of profits and tax money that comes in be regulated by the states, which is what the lottery has in most places, or by the federal government, which would be more uniform but could be less profitable, or a hybrid of both. Then there is legal daily fantasy, and where that will fall in the mix, not to mention online poker, the formal approval of professional sports and their place in the mix and a host of other challenges. Oh and then there is also a Presidential election coming, which can swing the issue one way or another depending on who he or she is inclined once the change takes place in D.C.
One thing is for sure, though: the interest and incentive to find a way to make sports gambling legal in the United States is growing and the resistance is shrinking. If online poker and MMA, once thought to be pariahs in states like New York, can clear the hurdle, can a potentially billion dollar business like legal sports betting not make it there? Hard to see how it won’t, but when that will be and what it will look like is anybody’s guess. The debate will continue with an event in Washington in April that could shed more light on what is becoming a very bright topic, and maybe one of the biggest to watch, in New York or elsewhere, in the coming months.