Sports betting heats up with NFL season, legalized state launches

To everything, there is a season, and that includes football and sports betting.

With the NFL completing its second week of regular season play, sportsbooks are ramping up advertising and promotional activities. Based on recent survey results, the American Gaming Association estimates that 73.5 million Americans may make a wager on NFL action in some form during the pro football league's 2023–24 campaign, up almost 58% from association's estimate last season.

Several factors are driving the increase. First, more states continue to legalize the practice: Betting is legal in 35 states and the District of Columbia. About 142 million American adults, or 58%, now reside areas where sports wagering is allowed, up from 1% in 2018, American Gaming Association (AGA) Vice President of Research David Forman said.

The market is also being reshaped by new, deep-pocketed sportsbook players. In August, ESPN Inc. and PENN Entertainment Inc. struck a $2 billion, 10 year-licensing and stock deal Fanatics Holdings Inc. recently closed on some of the US assets it is acquiring from PointsBet Holdings Ltd.

"The sportsbooks' marketing initiatives have done a good [job] of creating awareness and getting more people interested overall and moving them into legalized sports betting," Forman said.

Fanatical financials

Looking at one of the two newer entrants in the sportsbook arena, Fanatics Betting and Gaming is licensed to operate in 11 states. These include eight acquired as part of its $225 acquisition of PointsBet USA and three where the company had previously launched its own online sportsbook.

While additional states will eventually come online, a company spokesperson said Fanatics initially will be focused on marketing in the first 11 states, deploying billboard, digital and TV media and tapping attendant databases to build awareness and secure customers.

Max Bichsel, vice president of sports of Gambling.com Group Ltd., expects Fanatics to "play hard" overall during this football season in terms of marketing. Leveraging the Fanatics Commerce business, for example, Fanatics Betting and Gaming ran a combination merchandise/sports betting promotion from Sept. 2–18. As part of "The Fanatics Jersey Drop" initiative, a first-time bettor making a cash wager of $50 or more received a reward credit to purchase team merchandise worth up $150 through www.fanatics.com.

Bichsel said Fanatics could be using initiatives in its first 11 markets to learn what works before rolling out to other states.

ESPN BET

Meanwhile, PENN will rebrand its Barstool sportsbook to ESPN BET this fall. The new ESPN BET will include a mobile app, website, mobile website and potentially some retail locations.

Over the course of the 10-year strategic alliance, PENN plans to spend about $1.5 billion in advertising on ESPN outlets to support the new brand. While PENN will retain operational control, ESPN provides it with odds attribution, promotional services and access to network talent to generate brand awareness.

ESPN BET is slated to open before Thanksgiving. The November kickoff and launch commitments could spark another wave of spending in the sports betting category in mid-football season.

Bichsel anticipates plenty of messages airing on ESPN's TV properties but also believes that PENN will look to more efficient uses of marketing dollars, perhaps taking aim at ESPN's expansive fantasy football league roster. The deal also gives PENN access to ESPN's more than 370 million social media followers and more than 100 million monthly digital unique users.

Ad spending trends

As more states have come on board, sportsbook operators have shifted more dollars to national outlets.

The AGA's Forman reported that while ad dollars supporting betting grew in 2022, the number of spots that ran decreased 16%. This is indicative of the shift to national outlets, Forman said.

Analytics firm EDO reported that just under $274 million was spent on ads supporting sports betting from September 2022 through January 2023, a span coinciding with the NFL regular season and playoffs. Those outlays represented a 57% jump from about $174 million in the corresponding prior-season period.

CBS (US) was the top network in the category, according to EDO, garnering some $51.7 million. Amazon.com Inc.'s Prime Video followed with $44.2 million, while FOX (US) tallied $43.5 million. ESPN/ABC combined to collect some $38 million, and NBC (US) registered $31.9 million.

CBS Sports is expecting category strength from a year ago with most of the ad action coming from FanDuel Inc., DraftKings Inc., BetMGM LLC and Caesars Entertainment Inc. Those were the top four category spenders last season, according to EDO data.

The Blue Grass State

While some dollars may be shifting to national spots, local station operators are still bullish on the category, especially in states where sports wagering is new.

The most recent state to legalize sports betting is Kentucky. Wagering there kicked off at a number of retail sportsbooks Sept. 7, the same day the Detroit Lions and Kansas City Chiefs opened the NFL season. Online betting in the state is scheduled to begin Sept. 28 via eight companies, including DraftKings, FanDuel, Caesars, BetMGM and Bet365.

Kentucky is not home to any pro sports team in the NFL, NBA, MLB or NHL, but Bichsel said the state has a significant sports culture. In particular, there is strong interest in the University of Kentucky men's basketball team, one of the sport's bluebloods. Bichsel also noted that there are a number of mid-majors with solid football and basketball programs and that Kentucky abuts a number of states where legal sports betting has been active.

According to Kagan, part of S&P Global Market Intelligence, Gray Television Inc. owns the leading stations in terms of ad sales in Kentucky's two largest markets with WAVE, the NBC affiliate in Louisville, and WKYT-TV, the CBS affiliate in Lexington. Gray also owns stations in the Bowling Green and Paducah markets.

The broadcaster has already received orders from multiple sportsbook operators, said Kevin Latek, Gray TV's executive vice president and chief legal and development officer.

Latek anticipates a marketing blitz during the first couple of months of the college football and NFL seasons. He expects campaigns to run through the playoffs and the Super Bowl on Feb. 11, 2024, as sportsbooks look to establish awareness and initial market shares in Kentucky. From there, Latek anticipates there will be maintenance spending to retain customer loyalty and seasonal pushes to add new customers.

Sports betting companies may have to compete this fall for units on Gray and other stations from the political aisle, according to Latek. The Kentucky gubernatorial election is set for Nov. 7, with Democratic incumbent Andy Beshear looking to stave off Kentucky Attorney General Daniel Cameron, who is seeking a return to the office he held from 2016–19.

Asked whether Gray stations could receive a mid-football season sports betting boost from ESPN BET, Latek replied, "I'm all for it."