Games within games
Published: November 5, 2018
Ted Leonsis was never a gambler. An entrepreneur, a businessman, a philanthropist, an investor — but never much of a gambler. So, he’s perhaps an unlikely torchbearer for one of the biggest shifts the sports world has seen in the 21st century. But here he is, with something that feels more like a grand vision than a high-stakes bet: a certainty that legalized sports gambling will soon change the way fanatics who fill stadiums and arenas, who wave signs, who slather colorful paint on their bodies and scream themselves hoarse, will experience live sports.
In some ways, it’s inevitable, he figures. Society has become more accepting of gambling, but that’s almost beside the point because Leonsis — and much of the sports world — is starting to view sports betting as a distant relative to the dice-throwing, backroom card games and jangling slot machines typically associated with casino-style gambling.
“I liken sports betting more to Wall Street. . . . I don’t believe it’ll be considered a game of chance,” says Leonsis, the former AOL executive who heads up Monumental Sports and Entertainment in Washington.
“I think it will be a game of skill, just like you can be a day trader — you can be at Goldman Sachs, making billion-dollar bets on companies.”
Leonsis, 61, has the distinction of owning seven professional sports teams, including the NBA’s Wizards and the NHL’s Capitals. So when he talks about how legalized sports betting will change the fan experience, he’s thinking about every sports league and every sports fan in the United States.
For years, most American sports leagues have resisted gambling of any sort, scarred by match-fixing and point-shaving scandals that still stain history books. But in recent years, public attitudes have relaxed, and many of the major stakeholders slowly have shifted their stances.
In May, the Supreme Court effectively shut down the federal law that outlawed sports betting in most places outside of Nevada, allowing individual states to decide on their own whether they want in on the lucrative sports gambling business. It’s an industry that some believe topped $100 billion as an underground market and some analysts think could grow into a $6 billion to $16 billion industry, depending on how many states get onboard.
Five states have cleared the way for sportsbooks, and more than 20 others, plus the District, are debating legislation and could start taking bets in the coming year or two. As sports gambling becomes more widespread, it will become increasingly folded into the fabric of the games Americans love to watch.
It’s potentially a booming business that could bolster teams and leagues while changing the way even nongamblers engage with the action. If Leonsis’s vision proves true, it will transform arenas, intellectualize the games and beef up the statistics and data used in each sport.
Leonsis’s vision is particularly grand and notably progressive.
He thinks his 20-year-old arena in Chinatown, the home of the Wizards and Capitals, in addition to one of his Arena Football League teams, will be transformed in the near future to an entertainment super-plex of sorts, buzzing with life and action.
The arena will open in the morning and attract crowds during the lunch hour, happy hour and every hour in between. The allure: sports betting. Televisions and betting windows will abound. “Screens everywhere,” Leonsis says. The area around the arena and in many spaces inside the building will resemble high-tech sportsbooks, the kind found in high-end, Las Vegas-style casinos. There will be betting windows and sporting events from all over the world being broadcast on walls of television screens.
The sportsbooks won’t be limited to traditional wagers — winner, loser, total points scored — but will have a variety of prop bets and perhaps the biggest development of all: in-game betting options.
That means fans can bet on specific plays nearly in real time. Will the Capitals score on the upcoming power play? There will be a line instantly. Will LeBron James miss this next free throw? Fans are a couple of taps away from placing a bet. Will the Wizards make a basket on their next possession? There will be odds for that, too — and everything imaginable over the course of the game, potentially keeping fans engaged at the times when the action lulls and games turn dull.
Leonsis calls it the “gamification” of sports, a new reality in which, like the athletes in the spotlight, the fans in the stands also will find themselves rooted in competition that’s centered around the action in front of them, staking their money on informed speculation as much as a lucky hunch.
“I try not to call it gambling. Gambling to me sounds like rolling the dice, not knowing what the outcome is,” he said. “And gamification, powered by big data, you have all of the information that you need to make a very, very reasoned decision.”
IN REAL TIME
While there are obstacles to overcome, Leonsis’s vision isn’t a far-fetched, distant scenario. In fact, one professional league is on the verge of testing the gambling waters next year, which surely will draw the interest and curiosity of owners and league officials across the sports world.
Charlie Ebersol saw a huge opportunity when he began brainstorming a new professional football league. He wanted a high level of play, of course, in addition to certain safety measures and novel incentives for players. But he also wanted to engage fans in a way no American sports outfit ever has.
He felt there was an opening in the marketplace — a hungry, football-loving audience and certain avenues the NFL and other leagues weren’t exploring.
When the Alliance of American Football launches in February, it will include a digital platform that allows fans to play a fantasy-type game tied to the action on the field, and it will allow and encourage fans to place real-time bets on the action in front of them.
“Every single play, you have a 12- to 17-second pause at a minimum in which you can enter a bet on a play that has a plethora of potential outcomes,” Ebersol says, “bordering on an impossibly high number of possible outcomes.”
Leonsis loves to note that an average football game has somewhere in the neighborhood of 10 minutes of actual action, giving fans plenty of idle time between plays. He long has said legalized sports betting could save the NFL, and Ebersol’s experiment next year could go a long way toward testing that theory.
Ebersol’s team has created proprietary technology to set real-time odds and has partnered with MGM Resorts to host the gambling services on a mobile platform. The league begins play in eight cities — none of which is located in a state that offers legal sports betting, so the gambling in the league’s first season will be done at brick-and-mortar sportsbooks or via mobile in places where fans can watch only on television, such as Las Vegas or New Jersey.
“We believe we have mirrored the social experience of sitting in a sports bar with your friends or sitting in your living room with your family,” Ebersol said. “We’ve mirrored that experience and socialized it so you don’t leave our platform to go to Twitter or Facebook or wherever.”
Mark Cuban, the owner of the NBA’s Dallas Mavericks, also sees teams and leagues increasingly catering to sports bettors. He does not think it will detract from the product or affect fans whose rooting interest is tied more to the standings than their pocketbooks. If anything, he thinks, it will force more people in the arena to lock in on the action.
“To be effective betting, you have to pay attention to the game,” he says.
Chris Grove, managing director at Eilers and Krejcik Gaming, a gambling research firm, says that group is the target audience — and the one that will push the industry forward.
“Sports fans watching a game are the most valuably situated consumers from a sportsbook’s point of view,” he said.
Five months removed from the Supreme Court decision that struck down the Professional and Amateur Sports Protection Act, hints of a new direction have formed. This season for the first time, fans who attend a New York Giants or New York Jets game in East Rutherford, N.J., for example, can make wagers from their seat. When the NHL season opened this week, fans of the Golden Knights in Las Vegas could place bets from the stands. The team entered into a multiyear agreement last month with William Hill that will allow fans to see updated odds on the scoreboard during intermissions.
While Ebersol’s fledging start-up will be active in leading fans to sports gambling opportunities, Leonsis says he thinks leagues will have to remain a step or two removed from the actual placement of bets. Third-party entities and casinos will handle the money, but teams will have to beef up the infrastructure in arenas and stadiums. That’s because tomorrow’s bookie is portable, accessible via an app on every phone in every purse or pocket.
GOING MOBILE WITH BIG DATA
DraftKings built its name on daily fantasy sports but jumped headfirst into the gambling space this year. The company partnered with Resorts Casino Hotel in Atlantic City and began accepting mobile bets in August, the first online sportsbook out of the gate.
They had spent six years training fans to build fantasy lineups and to pay for fantasy sports on a mobile platform, and they wanted a betting site that was just as intuitive and user-friendly. Everyone in the industry agrees that the future is mobile, which will allow gamblers to bet on sports in stadiums, on their couches, at their jobs or sitting at a red light.
“If you think about the experience of walking up to a teller at a casino and telling them what you want to do,” says Matt Kalish, co-founder and chief revenue officer of DraftKings, “ . . . the process is slow, and it’s not really conducive to something like real-time live betting.”
Grove estimates that online betting eventually will make up about 75 percent of revenue for regulated U.S. sportsbooks. In states that permit mobile betting, virtually every fan could be just a couple of taps away from a wager. The early returns for DraftKings suggest that most gamblers might rarely feel the need to set foot inside a casino or horse track.
Already, 90 percent of gambling activity on DraftKings is coming through its sportsbook app. It’s averaging 53,000 bets per day, beating the company’s projections by 300 percent. It already had hit 2 million sports bets just six weeks after launching and is easily topping 100,000 each football Sunday.
Across New Jersey, more than $95.6 million was wagered in August, the latest figures available, accounting for gross revenue of $9.1 million — and that was before the football season began and other casinos had fully launched their mobile and online platforms. Seven other outfits are accepting mobile wagers, and analysts expect the handle — the amount of money wagered — to increase as users get familiar with the variety of in-game options and realize the virtual betting window doesn’t close when the game starts.
Nearly every sport has undergone a statistical revolution in the past decade or so. Every part of an organization, from the fan to the general manager, is armed with more information than ever before. But the analytics explosion is only just beginning; sports gambling could force open an untapped treasure trove of data.
Gamblers don’t flip coins; they crunch numbers in ways that casual sports fans don’t fully appreciate. And leagues will collect more data than ever as they look to spot betting trends and identify suspicious activity. All that data will become a resource for gamblers, too, especially those betting in real time. It’s something that teams could package and make available to season ticket holders or — for a cost — to fans and gamblers in a subscription service. A Nielsen report, commissioned by the American Gaming Association, released last month suggested the sale of league data could net $30 million per year in revenue for the NFL alone.
Sports betting will be the meeting point of the monetization of that data and ramped-up technology. Teams and leagues already are racing to collect proprietary data, and Leonsis hypothesizes that someday even the basketball court itself could be an “interactive, real-time piece of glass” that collects and crunches information as the players run from one end to the other.
But with technology comes concerns. While algorithms and artificial intelligence will be used to set real-time odds, the sharps — highly skilled professional gamblers — can run their own models and potentially place automated bets with little human involvement. Cuban calls technology the “biggest wild card” that sports betting faces as the gambler and the house wrestle for an edge.
A quarter-century ago, every American sports league was adamantly against sports betting. Following public sentiment, they have slowly come around. While the NBA and Major League Baseball have been leaders in this space, all the leagues recognize the potential for new revenue streams and new ways to engage with their fans. Basketball — and owners such as Leonsis and Cuban — might be first in some areas, but others won’t be far behind.
“As an entrepreneur, I’ve always been shocked at how long it takes for some of these things to take off,” Leonsis says. “And then, once they hit, how fast and how big they become.”