Today’s guest columnist is Jed Corenthal, chief marketing officer at Phenix Real Time Solutions.
On May 14, 2018, the world of sports betting changed forever. The U.S. Supreme Court voted to overturn the Professional and Amateur Sports Protection Act of 1992, also known as PASPA or the Bradley Act, arguing that the law violated the anti-commandeering principal. The Supreme Court clarified: “Congress can regulate sports gambling directly, but if it elects not to do so, each state is free to act on its own.”
Congress did not, so it has been left up to each individual state to decide how to regulate sports betting.
Today, 37 states in the U.S. (plus Washington, D.C.) have some form of legalized sports betting, and another nine states are in various stages of legalization from proposed bills to legislative votes coming later this year (e.g., Maine and Minnesota), proving there is undeniable interest in legalized sports betting. And it’s showing no signs of stopping or slowing down.
But who is winning the sports betting game? Sportsbooks who have something to gain from the continued legalization of sports betting? Sports broadcasters and leagues? Fans who stay with games longer if they have a vested interest? The answer is all the above.
Research from CRG Global shows 50% of fans will stay with a “blowout” if they have placed bets on the game. That number is a staggering 30% increase over fans without a betting interest. Thus, broadcasters have an incentive to integrate sports betting into their coverage, perhaps with an alternative betting stream with separate announcers and graphics.
In 2022 alone, almost $96 billion in handle was taken in by all the U.S. sportsbooks; in 2023, this will top $120 billion or more. The sportsbooks’ margins, however, are razor-thin, estimated at ~5% for NGR, or Net Gaming Revenue.
As sports betting becomes national, the desire for fans to watch the game and bet in the same sportsbook app will dramatically increase.
Yet the technology required for a true “watch and bet” experience is notably absent from the conversation. Because of their notoriously tight margins, sportsbooks in the U.S. must manage their technology costs aggressively and often forgo video streaming altogether, or use legacy technologies that bring significant delays, or latency, for viewers.
A lot has been written about latency over the years, with the issues in the recent Super Bowl being a particularly hot topic. Several firms, including Phenix, measured latency from a variety of streaming providers, but only Phenix measured it from the field of play to a user’s device. Unsurprisingly, the numbers were disappointing, with up to 60 seconds of delay and up to 2 minutes of drift on average.
Owing to the technical limitations of legacy technology, most bets are placed based on real-time sports betting data coming into the sportsbook. Bettors place a bet in the book and are then forced to watch the game elsewhere due to the lengthy delays in the video stream—a “bet-and-watch” experience.
But real-time video streaming has improved dramatically over the past several years, and in Europe, watch-and-bet experiences are common. For example, rights holders and data aggregators like Racecourse Media Group, Stats Perform and SIS partner with Phenix to deliver real-time video (less than 1⁄2 second delay from the racetrack to the betting app) for approximately 80% of all horse racing in the UK and Ireland, which is second only to soccer in terms of overall betting handle.
There are two main reasons I believe watch-and-bet experiences will increase in the U.S. First, increased betting leads to longer view times, and broadcasters will reap the rewards of this from additional advertising revenue. Sportsbooks will gain handle from the increase in “micro-betting”—where bettors can bet on every play in a game.
Second, sportsbooks will slowly but surely acquire rights directly from properties and offer a real-time watch-and-bet experience. Rights fees will be costly, but the volume of bets placed will offset the rights fees. This is already starting to happen: FanDuel recently made a deal with MLB for a “free game of the day” to stream on its app. As more rights become available, sportsbooks will invariably enter the negotiations and secure rights for themselves. It might be for smaller packages of games to start, but going direct leads to more handle.
Another example of how the sports rights landscape is shifting comes from India and the popular Indian Premier League in cricket. For its recent tender, the IPL decided to split the video rights into two packages: selling linear rights to Disney/StarIndia and streaming rights to Viacom18. Betting is illegal in India, but the concept of splitting up linear and streaming rights is significant. We’ll see more of this in the coming years as increasing numbers of fans continue to cut the cord and move to streaming applications to watch their sports.
Real-time sports streaming, based on the improvement in technology, is something the sportsbooks and broadcasters must now entertain to drive handle and revenue, respectively. Imagine the powerful insights one could glean if sports betting data and the video streams were fully synchronized, in real time and delivered from the same digital app. This would dramatically enhance the user experience by providing all bettors with an even playing field. When everyone sees the same thing at the same time (with less than ½ second of latency), no bettor has an unfair advantage over the others.
Not only would this enhance and streamline the experience for sports fans, but it would also deepen user insights for sportsbooks and broadcasters by keeping more of the user experience on its own channel.
Sports betting is starting to mature, but many in the U.S. are just starting to plan a video strategy for their app. Now is the time to implement real-time video streaming and avoid the messy delays and out-of-sync experiences that currently plague the broadcasting landscape.
Corenthal oversees marketing and business development and spearheads the sports betting business for Phenix, which delivers real-time video to broadcast-sized audiences around the globe.
