The Remote Gambling Association announced its members have agreed (under political pressure) to abide by a “whistle to whistle” ban on television betting advertisements during live sporting events (save horse racing), that begin prior to the 9p watershed hour. The 35-member collective made the difficult, but necessary, decision in a pre-emptive attempt to stave off industry crippling government legislation (see: Italy). British authorities (along with the public) have become concerned with the onslaught of betting adverts during sporting events, as the number of problem gambling cases continues to rise (to 430,000) within the United Kingdom. The ban is expected to go into effect prior to the start of the ’19-’20 football season.
Howie Long-Short: Expect all of this (advertising crisis, problem gambling, public outrage, restrictions on gambling adverts) to play out in the U.S. too, as the availability of sports betting expands. There’s far too much money at stake and far too little corporate restraint to otherwise prevent it.
Many suspect the ban will result in an earnings decline for Europe’s largest gaming companies, which is why Ladbrokes (GMVHF), Paddy Power (PDYPY) and William Hill (WIMHY) are down -10.5%, -8% and -7% since the news was reported on 12.6, but I believe the market is overreacting; gaming companies spend 5x the amount on online advertising as they do on television ads and will simply re-allocate their resources accordingly. Until the ban includes shirt sponsorships, stadium naming rights agreements and digital advertisements visible on television, fan behaviors seem unlikely to change.
95% of the English soccer matches during the 2017 season had advertisements for gaming companies, so many assume a whistle to whistle ban means “tens of millions in lost revenue” for broadcasters like Sky and BT Sport; but this is English soccer, both companies will find there are no shortage of advertisers interested in the valuable spots (and Sky had already announced plans to limit in-game sports betting ads anyway). If there’s a real concern for broadcasters, it’s the possibility that the ban could cause the value of future television contracts to “fall dramatically”.
Chris Lencheski is an experienced global sports, media, and private equity executive with c-suite stops at Comcast-Spectacor, TPG Specialty Lending, IRG Sports and Entertainment, SKI & Company and currently an adjunct professor at Columbia University. I asked Chris, if adecline in media rights values is on the horizon or if the broadcasters are simply posturing as the measure still requires ratification from Industry Group for Responsible Gambling?
Chris: I don’t think that the media rights are going to go down any time soon – and we’re talking Premier League here – by the RGA self-administering a ban on adverts on television. If you’re suggesting the broadcasters are posturing, I would say they’re closer to doing that than they are truly panicked because nearly 80 percent of the current ad-mix budget for these gaming organizations across Europe is sitting on social and digital; and it’s not just in football, but in Formula One, Rugby and Handball too. Putting it in perspective, it (the ban) only amounts to about 15% of the tv adverts and there’s plenty of available opportunity to bring in new partners or to extend with current ones in both real-time television coverage and in virtual television coverage.
Fan Marino: While on the international soccer kick (pun intended), Barcelona announced it won’t be traveling to Miami (as planned) for La Liga’s first game on U.S. soil. The match against Girona, scheduled to be played Jan. 27, 2019 in Miami, is off (at least temporarily) as the clubs failed to gain the support of the Spanish Football Association, FIFA or UEFA; Reuters has since reported that the game could be played in North America late next year. Back in August, La Liga announced plans to play at least one game/year in the United States, after agreeing to a 15-year agreement with Relevant Sports to promote the league in country.
I should mention that horse racing is exempt from the RGA ban due to the sports’ reliance on the participation of sports bettors.
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