Do recent sports gambling scandals mean the end of leagues’ deals with sportsbook apps? It’s a longshot

By Chris Isidore, CNN

(CNN) — American sports suffered another black eye after the arrests this week of an NBA coach and a current NBA player for their alleged ties to illegal sports betting and rigged poker games.

It’s the latest example of gambling and players breaking the rules. But for those who think this means leagues and teams will step back from their ties to sports gaming apps, here are four words for you: don’t bet on it.

Direct sponsorship deals between various legal sports books and the top American sports leagues are worth billions of dollars spread over several years and likely more than $1 billion annually, said Victor Matheson, an economics professor at the College of the Holy Cross and an expert on the business of sports and gambling.

Such sponsorship deals are “clearly very important” to the finances of sports leagues and teams, Matheson said. No matter how rich leagues are, the gambling sponsorships are “not something that anyone wants to turn down.”

Once states started legalizing sports gambling following a 2018 Supreme Court ruling, sponsorship deals soon followed. Now, all of the major US sports leagues and most individual teams have such sponsorship deals. Numerous teams, including the NFL’s Arizona Cardinals, MLB’s Arizona Diamondbacks and the NBA’s Washington Wizards, have signed deals to put physical betting shops inside their stadiums and arenas, Matheson noted.

Legal wagers on sports grew to $160 billion last year in the United States —far more than the just over $100 billion spent on lottery tickets, according to Matheson. Gross gambling revenue, which is the amount wagered less than the amount paid out on winning bets, grew to $13.7 billion, up 23% from 2023, according to the American Gaming Association, an industry trade group. Most of that is wagered online, not in physical casinos.

Big money beyond sponsorships

Sports gambling has become a huge industry in less than a decade, and it’s still growing. It’s not surprising that much of that money is spilling into the sports teams’ coffers.

“The raw numbers (of sports gambling) — I don’t think — are eye-popping yet,” said Michael Lewis, author of “Moneyball” and “The Blind Side,” and whose podcast “Against the Rules” just did a season about sports gambling. “But the fact that it’s new revenue — and new revenues are hard to find — has got everybody way excited about it.”

But that direct support brought in via sponsorships is only a fraction of the billions that teams and leagues get because fans are betting on games. The sports books spend hundreds of millions on advertising annually, primarily during games, along with pregame and post-game shows, according to MediaRadar, which tracks and estimates ad spending. That lifts the networks’ or streaming services’ revenue — and thus the rights fees they’re willing to pay.

Betting drives more overall revenue for sports, thus further lifting broadcast and streaming rights deals into the tens of billions. And that’s all the more important in this age of declining viewership, when all forms of entertainment are fighting for the public’s attention.

“It’s a way to keep fans engaged in meaningless games,” said Lewis. “In an era when people’s attention spans seem to shrink by the moment … this is like the future of the way that a fan engages with the sport.”

Unlike professional leagues and teams, the NCAA doesn’t have sponsorship deals with sports books. In a case of bad timing, just before Thursday’s news broke of the NBA scandal, the NCAA announced it would allow college athletes and staff to bet on professional sports starting November 1.

But even as the NCAA continues to keep its distance from sports gambling and prohibits players from betting on college sports, the NCAA benefits from the huge fan interest and viewership in its “March Madness” basketball tournaments. Even casual fans have money riding on the games’ outcomes, bringing in an estimated $3.1 billion in wagers in 2024, according to the American Gaming Association.

“How do you convince networks to pay a billion dollars a year for college basketball? It’s because a ton of people tune in,” Matheson said. “And why do so many people tune in to college basketball during March Madness? It’s because obviously everyone builds out a bracket, right? So that’s a perfect example of indirect benefits.”

A different kind of wagers

Legalized sports gambling was mostly limited to Las Vegas casinos until a Supreme Court decision in 2018 opened the door for it nationwide. But there has always been gambling in sports, Matheson said.

“We have clear evidence of gambling in the ancient Olympics that started in 776 BC,” he said. “So, sports betting is basically as old as organized sports itself.”

But this is a form of gambling that wasn’t available in the past, with fans having the chance to bet on small occurrences within a game through what is known as prop bets, and not just on the final outcome.

“This is way different from the seventh century BC,” said Lewis. “This is having a casino in your pocket.”

Thursday’s criminal charges suggest that the leagues weren’t prepared for the risks of bad actions by some of the players, said Jonathan D. Cohen, author of “Losing Big: America’s Reckless Bet on Sports Gambling.”

“Leagues sort of wandered into this sort of not really knowing what they’re getting into, just knowing that they could make a lot of money off of it,” Cohen told CNN’s Omar Jimenez on Friday.

“It just speaks to this sort of recklessness with which we dove in,” Cohen said. “I think we should have legal sports betting. We should maybe even have legal online sports betting. But it didn’t have to be this way if we had just taken a more careful approach.”

Thursday’s arrests and charges involving the NBA follow suspensions of two Cleveland Guardians pitchers this summer from an MLB probe of sports betting, and suspensions in 2023 of six NFL players for gambling on league games.

All of these incidents pose risks for leagues that have come to love and depend on the revenue they get from betting apps.

“I think that (leagues) are going to poison their sports if they don’t watch out,” said Lewis. “We’re not at the place where people are genuinely questioning the integrity of the sport. But we’re not that far away.”

CNN’s Auzinea Bacon contributed to this report

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