Charles Barkley has just about had it with all this sports-betting nonsense. Yes, that Charles Barkley.
Speaking earlier this week on a call to promote the upcoming American Century Championship celebrity golf tournament, the NBA Hall of Famer, Turner Sports analyst and, uh, FanDuel spokesman issued a dire warning about the metastatic spread of gambling. “There’s too much of it,” Barkley said, noting that the inevitable adoption of in-game wagering will be an incentive for shady dealings.
“We’ve got people in the stands betting on who’s going make the next free throws. I mean, think about that,” said Barkley, who in 2006 told ESPN that he had once lost $2.5 million at the tables during a six-hour casino spree. “If I was a scumbag, I’d look at my friend in the stands, and say, ‘Yo, I’m going to miss both of these free throws.’ Now, that’s cheating.”
Barkley, who bet (and lost) $100,000 on himself in last year’s American Century tourney, is arguably one of the best-known gambling enthusiasts in these United States. During last fall’s all-burly edition of Turner’s The Match (Brooks Koepka vs. Bryson DeChambeau), Sir Charles turned to Phil Mickelson—another pro who enjoys the occasional friendly wager—and declared that his long-term financial goal was to squander all his money before he dies.
“Listen, I wanna be dead broke when I keel over, Phil,” Barkley said during the Nov. 26 event on TNT/TBS. “I don’t want to leave all that money for my free-loading family. I’ve been taking care of them my whole life. I wanna be dead broke at my last breath.”
Approximately 916,000 people were watching when Barkley mapped out his posthumous fiscal scheme. It is not known if his dependents were among those who had tuned in.
After offering some insight into how a hypothetical player and a hypothetical confederate might convert a few intentional clangers into cold, hard cash, Barkley effectively threw his hands in the air at the enormity of it all. “Listen, gambling’s always been part of sports. That’s why the NFL is King Kong,” he said. “But I am concerned that you can sit in the stands and make bets in the middle of a basketball game.”
Barkley, whose image should grace all our postage stamps and currency, warned us back in 1993 that he was not a role model. He was selling sneakers at the time, but the point stands.
While in-game betting is still in the embryonic stage, the escalation of sportsbook advertising has been going on long enough for the category to be eligible to ride a Big Wheel. Since the U.S. Supreme Court struck down the Professional and Amateur Sports Protection Act in 2018, gambling dollars have all but poured into the networks’ coffers. The increased spending has been sufficient to offset cyclical weaknesses in some of the endemic categories, but sportsbook operators are increasingly facing tougher decisions about the value of local buys versus national TV investments.
According to a new report from iSpot.tv, brands like FanDuel, Caesars Entertainment, DraftKings and BetMGM plunked down some $282 million on national TV ads during the nine-month period from September 2021 through May 2022. That marked nearly a quadruple increase compared to the analogous period in 2020-21, when the leading sportsbooks snapped up $74 million in ad inventory.
Fall spending was accelerated thanks in large part to a broad endorsement of the space courtesy of the NFL, which in April of 2021 announced its first-ever U.S. sportsbook partnerships with Caesars, DraftKings and FanDuel. Ten days before the season kicked off, the league gave four other sportsbook brands (BetMGM, FoxBet, PointsBet, WynnBet) the green light to buy in-game NFL units.
Sportsbook spend was heavy throughout the fall, and CBS, Fox and NBC were happy to oblige their new customers. CBS in the last nine months notched the greatest number of sportsbook ad impressions, accounting for 22.2% of the overall deliveries, while Fox was hot on its heels with a 19.8% share. NBC claimed 13.2% of ad impressions in the category, followed by TNT (9.6%), TBS (5.2%), NFL Network (4.6%) and FS1 (3.2%). ESPN, which largely held back on booking gambling dollars, accounted for 1.9% of the share of impressions.
All told, sportsbook ad impressions in the period grew 48% to 18.2 billion.
In terms of the individual leagues, the NFL snared nearly half (42.5%) of all sportsbook impressions, while the NBA (7.9%), MLB (5.0%) and college football (3.31%) trailed at a respectful distance. Among the established spenders, FanDuel’s ads were all but inescapable, clocking 34% of the category’s impressions, while Caesars’ relentless J.B. Smoove-Halle Berry campaign seized 21.7% of the eyeballs. Caesars’ two most impactful spots netted 519 million impressions, per iSpot.
Also drawing a lot of heat were DraftKings (18.6% share) and BetMGM (13.4%). The latter caused a bit of a stir last month when chief financial officer Gary Deutsch told investors that BetMGM would hit the brakes on its investment in New York State’s heavily taxed sports-betting market.
“As rational allocators of capital… we simply cannot apply our capital against an irrational investment thesis,” Deutsch said during BetMGM’s Investors Day presentation, asserting that the Empire State’s sportsbook tax rate is too rich for his blood. “Players would never continue to play if the house always won. The house cannot continue to play if it’s always going to lose.”
While New York’s 51% tax rate is already steep, Deutsch maintains that the actual impact is closer to 100%, given that sportsbooks must report certain incentives and promotional offerings as revenue. (The “free” bets that the online books use as bait are only free for the punters.)
Although there had been talk of lowering New York’s rate to a less onerous 24% by 2024, early discussions were shelved once Gov. Kathy Hochul’s team started the cash count. Through the first five months in which mobile sports-betting has been legal in New York, the state has generated a record $267 million in tax revenue. Mobile bets accounted for $263 million of the total haul, with brick-and-mortar casinos making up the remainder.
Given its $2.9 billion budget deficit, don’t expect New York to lower its sportsbook tax any time soon, although if more of the state’s eight licensed mobile operators start having BetMGM-style misgivings, the nosebleed rates may prove to be unsustainable.
According to iSpot, 37% of sportsbook impressions were delivered via local TV buys, which is in keeping with the patchwork structure of the greater legalization movement. Currently, active sportsbooks may be found in 30 states, while another five states are cooling their heels in the limbo between passed legislation and live operations. At a certain inflection point, local campaigns will begin to give way to broader national buys, which are cheaper and less of a hassle to execute.
For rapidly expanding brands, the switch from cobbling together local buys to going all-in on national inventory can begin at around the time the advertiser has achieved 70% market saturation. Inevitably, a full-scale national TV blitz will result in deliveries to viewers in areas where gambling may never be legalized.
It’s a phenomenon familiar to anyone who’s ever sat through a Red Robin ad and thought, “What the hell is that?” Fast food is a repeat offender; for the past 15 years, Spectrum cable subscribers in the New York metro area have been regularly harangued with spots for the Sonic drive-in restaurant chain—this even though the five boroughs’ first Sonic wasn’t established until December 2021. Before the Queens Boulevard location opened its doors, the nearest Sonic came to New York was way down Route 9 near Asbury Park. But because it was cheaper for the company to make national buys, the No. 1 media market was forever being tantalized by the prospect of unattainable Chicken Slingers and whatever those big sugary drinks are that come infused with Nerds.
However things shake out on the local tax front, the sportsbooks’ national spend is expected to surge again in the fall. DraftKings has already begun to shift its spend out of local as its footprint expands. Speaking to analysts during DraftKings’ first quarter earnings call, CEO Jason Robins said, “I think we’re starting to enter the phase where national advertising is going to be more and more of our mix and we are able to… opt out of some of the local television and other local marketing that we’re doing.” Robins went on to say that national buys would intensify as more states launch legal sportsbook operations.
As much as investors are concerned that inflation—and the threat of a destabilizing recession—could cool gamblers’ passions, Robins said he hasn’t seen any evidence to suggest that DraftKings customers are holding on to their wallets for dear life. “Despite broader concerns around the macroeconomic environment, our cohort-level data has remained very healthy, and our path to profitability has become more clear,” Robins said.
DraftKings in the first quarter booked $417.2 million in revenue, against a net loss of $467.7 million. Heightened by the company’s push into 17 states, marketing expenses on the quarter added up to $321.5 million, a number that’s more than 10 times the amount Charles Barkley says he’s lost over the years on cards and golf.