COMMENTARY: Legalized sports betting will juice interest in events such as the Super Bowl

After several years of declining viewership, Super Bowl LIII promises a pronounced spike in audience — and not just from viewers hoping to learn whether the ageless Tom Brady can bring home a historic sixth ring for the dynastic New England Patriots. This is the first Super Bowl since the U.S. Supreme Court opened the door last spring to legalized sports wagering — now we’ll see the impact of that ruling on the Big Game. For states, and professional sports leagues in particular, the new gambling rules could mean a financial bonanza.

Wagering isn’t available everywhere — yet. To make a legal bet, you have to be in the District of Columbia or one of the seven states — Nevada, Delaware, New Jersey, Pennsylvania, West Virginia, Mississippi, Rhode Island — where gambling has been sanctioned. Since the Supreme Court struck down the federal law outlawing most sports betting, these states have reported sizable tax revenue increases.

The revenues generated from Super Bowl Sunday will be another indication of the strength of the legal sports betting business. If the seven states and D.C. witness a super-sized boom in gambling, it won’t be surprising to see other states pass their own sports-wagering laws. Bills are on the agenda in 12 legislatures already.

What about that gamblers’ paradise, Las Vegas? Should businesses and local officials be worried? The short answer is no. While legal sports wagering will spread beyond Las Vegas, this expansion should not have a significant impact on the gambling capital of the United States.

Las Vegas has established itself as one of the safest places to bet in the world. In theory, the expanded opportunities to place legal sports wagers in other states could reduce the number of people traveling to Las Vegas to gamble. But Southern Nevada has created a popular entertainment ecosystem, including live performances and sporting events, which most likely minimizes any chance that the expansion of gambling to other states will negatively impact the Las Vegas casinos.

The biggest winners in the new regime are likely to be sports leagues themselves. With bettors fully vested, media viewership in every sport will trend upward. This season the NFL’s audience increased about 5 percent, at least partially as a result of new gambling opportunities. Legal wagering could cement live sports broadcasts — the big revenue generator for all the major sports leagues — as the “must-see TV” of the future.

Professional leagues are still trying to determine how to best monetize this new revenue opportunity. They have secured official data deals and sponsorships and are exploring how to further expand upon these initial transactions. In addition to league-wide revenue opportunities, individual teams are beginning to see opportunities for gambling sponsors and media advertising. Leagues and teams may also capitalize on exclusive streaming or media rights with media networks, who may be willing to pay more for these deals as viewership increases.

That’s because devoted gamblers bet on most anything. Nowhere is this truer than the Super Bowl, a one-shot festival and entertainment extravaganza into which there is somehow shoehorned a football game. Bettors wager on which way the coin toss goes, which team scores first, who posts 100 rushing or passing yards, and virtually anything else — the “game within a game,” in the gambler’s parlance. These arcane and myriad bets keep self-interested viewers spellbound down to the final seconds, no matter the final score — which in turn satisfies sponsors and advertisers.

If football will benefit, baseball could hit the jackpot. The nuanced strategies, measured pace and sheer number of games will attract bettors. Will the next pitch be a curve or slider? What are the odds of a squeeze play? An intentional walk? The opportunities for digitized gambling add a new dimension to the game that should drive, and keep, viewership up.

And down the road will come further gains. Gambling revenue should lead to the next leap in franchise valuations, which will become apparent once the first team is sold after gambling revenue data is factored in. It will be interesting to see how proceeds from wagering influence the prices paid for pro sports teams.

The forecast isn’t entirely sunny. Gambling brings with it increased potential for corruption and criminality, such as money laundering. The digital nature of modern-day wagering makes it vulnerable to data theft and other forms of hacking. Protecting sports wagering from bad influences, such as match fixing, will be paramount. Any scandal could lead to calls to reinstate restrictions.

However, unlike in the past, businesses, including teams and leagues, are refining and fortifying their compliance functions to ensure the integrity of the sport remains intact. Companies want to protect themselves — they know that in order to stay in business they need to remain good citizens and shield their business from liability or enforcement.

The Super Bowl may represent the ultimate in “must-see TV,” with viewership and ad rate numbers to match that title. But this year represents the first time that gambling numbers will begin to pull their weight. This may be the 53rd Super Bowl, but for teams and leagues, legal gambling may make this the first game of its kind.

Irwin Raij, co-chair of the Sports Industry Group at the New York law firm O’Melveny, is also an investor and part owner in both a professional baseball and soccer team. He can be reached atiraij@omm.com

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