Phil Knight, Sabrina Ionescu Launch NIL Marketing Firm at Oregon

Phil Knight, Sabrina Ionescu Launch NIL Marketing Firm at Oregon

Legal sports betting is currently active in 26 states (plus Washington D.C.), with more than half of those states having legalized online gambling. Experts such as the NBA’s Senior VP of Fantasy and Gaming Scott Kaufman-Ross told SportTechie this week he believes, in five years, that number could grow to between 45 and 48 states.

The profitability for a sportsbook and partnered sports teams in these states is not all created equal — as some states are enacting much higher tax rates than others. 

For example, Pennsylvania has a relatively high tax rate of 36% imposed on all sports betting operators, while neighboring New Jersey taxes 9.75% on retail sports betting and 14.25% for online revenue. The average sports betting tax rate per state is currently about 20%. 

Chris Grove, a partner at market research firm Eilers & Krejcik Gaming, warned Thursday at SportTechie’s Sports Capital Symposium that states encroaching on a quarter-percent tax rate of betting revenue could hinder the development of the regulated U.S. sports gambling industry — which Grove expects to reach about $20 billion in revenue for betting operators this year. 

“Once you start to get above 25%, you really start to see the ability of sportsbooks to spend as aggressively on promotions and marketing start to get constrained,” Grove said during SportTechie’s panel discussion. “Then the ability for legal sportsbooks to capture the maximum demand from illegal, offshore sportsbooks also gets constrained.” 

Of that $20 billion in annual revenue taken in by sportsbooks, Grove expects operators to spend roughly $8 billion on customer acquisition and retention through marketing partnerships with sports teams or media platforms — as well as paid media ads on sites such as Google and Facebook. He says, on average, teams should expect to net in the high-seven to low-eight figures through marketing deals with a sportsbook. 

But the most lucrative aspect of betting for sports teams will come in states that pass legislation similar to Arizona. Teams in the Copper State struck gold with Arizona’s decision to let pro teams and venues become authorized sports betting operators. Earlier this month, the Phoenix Suns partnered with FanDuel to become the first NBA team with a sportsbook inside their arena, while both the NFL’s Arizona Cardinals and MLB’s Arizona Diamondbacks plan to open sportsbooks at their venues in 2022. The Diamondbacks have already opened betting windows at Chase Field.

“We’ve seen some other states [such as] Illinois, Maryland, and Virginia give some right or economic advantage to sports stakeholders, but Arizona is definitely the standout in terms of the model that gives the most power to sports [teams],” Grove said. “If you’re in a state that has yet to legalize sports betting, you really want to be looking at Arizona as your model when you’re thinking about what we want to advocate for when this legislation is being written.”

Credit: Source link