Monday, March 28, 2016

Sports on TV: How to save TV deals? Look to Gaming.

It's a problem that's sneaking around the edges of College and Professional Sports. Namely, what's going to happen as Millions of viewers "cut the cord" and the dollars that have been flowing into league, team and school coffers begins to dry up?

Changing TV Viewing habits threaten Billion Dollar Deals. David Barron, HoustonChronicle.com ($$$)

But networks are wrestling with recent subscriber declines as millennials reject or trim back on the cable/satellite bundle pricing system that had fueled unprecedented payouts for the rights to broadcast college sports. Investors are skittish as television executives try to read - and monetize - the whims of a generation that is as happy to watch games on laptops or smartphones as their parents are to watch on 60-inch flat screens.
On the college side, athletic directors are scrambling for new money to support non-revenue sports, pay coaches, and expand stadiums and facilities as part of the athletics "arms race," while meeting NCAA demands to increase benefits for student-athletes.
Viewers abandoning TV networks is a problem but it's not THE problem, THE problem is that the schools and leagues don't really have a viable plan for what follows.  The answer to the question is expanding sports gaming, both online and at brick & mortar locations across the country. Currently, most, practically all, online gaming is limited by the Unlawful Online Gaming Act of 2006. Ironically, this act is also what companies such s Draft Kings and FanDuel rely on to justify their business models (for a primer on why this is, see the law of unintended consequences).

Sports gaming regulation goes back even further, to the Professional and Amateur Sports Protection Act of 1992. It was that act that pretty much permitted Las Vegas to operate with a monopoly on Sports gaming, especially since New Jersey (and Atlantic City) neglected to take advantage of an election to opt in within a year after the law took effect, a mistake that the state is desperately trying to undo in order to keep Atlantic City alive.

The 1992 law carved out exceptions for Dog & Horse racing and, in a nod to Florida, Jai Alai. This is why you have horse tracks in say, Texas, that offer pari-mutual wagering via simulcast.  Fast forward to today and you're seeing (again) the unintended consequences of this act.  Now we have Bodog, and 5 Dimes and a host of other off-shore based betting sites that operate illegally, but on an unofficial gray market which the Federal Government is all but powerless to shut down due to the offshore locations of most of the books.

One option is to go after the players themselves, which would result in a disaster and, most probably, the indictment and trials of some high-profile public figures, many of whom are probably on the front-lines in the "fight" against gaming. You would have Millions of people charged, tried and (possibly) incarcerated in an already over-burdened system.  Much like online poker sites, the federal government seems content to leave the players alone, and continue to go after the operators.

They are, as we know, unsuccessful.  Since the passage of the Unlawful Online Gaming Act of 2006 (UOGA) sports gaming has boomed, and not just from Daily Fantasy Sports (DFS). Traditional spread, or side, betting has never been more popular, and even mainstream networks such as ESPN, CBS and NBC frequently mention odds (or lines) in their coverage of live events, sometimes painfully but sometimes brilliantly. In fact, despite their attempts to limit it, Congress and politicians have seen the sports gaming industry boom since 2006.

What does all of this have to do with television?

As less and less people tune into to cable/satellite/content providers who provide the networks with most of their income, the revenues are falling and the anticipation is that the TV money flowing in will as well.  The Networks are going to have to find a supplement for these incomes somewhere, and an expanded gambling network should be ready and willing to act in a manner that allows them to do so.

The fact is this. People are more willing to bet on games that they can actually watch. When ESPN airs a MAC conference football game between two-smallish schools they still draw fairly substantial viewing numbers. Why? Because a lot of gamblers are watching the games.

These online sites/brick and mortar sports books and other outlets would be willing to pay a pretty penny for advertisement, and possibly become partners in broadcasting the games to ensure they have access.

Now, imagine this dynamic greatly expanded.  Because there are casinos in multiple states who are, due to UOGA, not allowed to offer sports betting. Imagine if they could?  Imagine that the illegal off-shore casinos were legitimized and taken off the gray market into a competently regulated one?

Of course, States could still vote to limit (or prohibit) gaming within their borders, but the states that already have casinos aren't going to balk, and many states have already shown a willingness to embrace online services such as Fan Dual and Draft Kings, would sports betting be that much of a reach?

Granted, this is not going to be the golden goose that saves schools or makes the States richer than the dreams of Midas, but it would go a long way to putting a salve on the open wound that are State Lotteries and might provide the leagues and universities money as well.

Yes, there are problems inherent with big-time sports at both the professional and collegiate level. For one, almost all of them survive on the backs of the taxpayer who, in many cases, cannot afford to attend the games in the arenas and stadiums that they paid for. Second, big time college athletics, as administered by the NCAA, exploits the athletes to the extreme, not even allowing them to profit off of their visage while they are "student-athletes" (a term that is, increasingly, meaningless).  The fix for this would be complex and problematic, and it would require municipal leaders who are willing to stand up to the shake-downs by professional sports teams. It would also require reforms by the NCAA. In short, none of that is going to happen barring a disaster.

Then there's the political problem. Many politicians feel that it is their charge to protect the American populace from itself. Gambling can cause addiction and is therefore listed as something that is "bad" and should be outlawed, or tightly contained. That this containment only makes people go to greater, and often-times illegal, lengths to get their fix is something lost on most.

So the proposal I'm making is certainly a non-starter, at least considering today's political and social environment.  That doesn't mean that the conversation cannot be started.  Working (not fighting!) toward a day when sports gaming is more legal. more honest and (yes) better regulated (note that I didn't say 'more' regulated) is something that will always be worth a conversation (or three).

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