Since the May 2018 Supreme Court decision opened the floodgates on legalized sports betting in America, I have heard from every corner of the NFL world that the league would immediately and quickly reap the benefits of this multibillion-dollar industry. It has been a refrain my media colleagues have repeated over the years, and the money from potential gambling revenues was added to the collective bargaining agreement that was ratified in March.
Indeed, there are new revenue streams the league and its member clubs will enjoy for years to come that had previously been dammed. But upon further inspection, it seems the NFL is still a long way from swimming in billions of dollars from sports gaming.
“We’re at the table about to scratch the surface,” explains Sara Slane, founder of Slane Advisory Group, who has worked with several professional sports leagues since leaving her SVP position at the American Gaming Association (AGA) last year.
“The ‘multibillion-dollar opportunity’ is not going to happen overnight. You’ve got to have more states that are available to take bets. And while we’re moving in that direction, we’re not there yet.”
As of the spring, 22 states plus D.C. had legalized sports betting, but five still hadn’t actually allowed gambling. So more than half the country is still without legal sports gambling and just a third can even do it today.
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But where it is legal, money is pouring in. New Jersey had a record month in August with $667.98 million in wagers, besting the state record from last November by more than $100 million. The revenue from those bets is usually about 5% for the house. And even though gambling revenues are now written into the NFL’s CBA, the league won’t see a dollar of that directly.
Integrity fees that sports leagues were once pursuing — which would have been the big direct money-maker for leagues — have been struck down at almost every court they’ve come up in. Mandatory data requirements have gained traction in some states, and operators seem willing to pay leagues for that.
The most direct money the NFL can and likely will see any time soon is through individual team partnerships like the one the New York Giants just struck with Draft Kings for gambling, esports and fantasy. Terms of the deal were not disclosed, but there’s no doubt that one of the NFL’s most visible brands physically located in New Jersey would get a top-of-the-market deal.
Once teams are allowed to have books inside their stadiums, they’ll be able to get the revenues from wagers as well as non-sports gaming like slot machines. But still, we are years — maybe decades — away from that becoming widespread across all 32 teams.
Gambling revenues have recently been propped up as some sort of salve for the revenue deficits the league will suffer in 2020 due to the COVID-19 pandemic. The 2021 salary cap has a floor of $175 million after being $198.2 million this year, and whatever direct gambling revenues are gotten this year won’t add to next year’s cap as much as they’ll make up for the losses already incurred.
A survey from 2018 projected the direct revenue from gambling would eventually be $573 million, which is a nice $18 million-per-team bump in the salary cap but still far from the several billion dollars it has been trumpeted as.
The true major source comes from indirect revenue. That same survey projected indirect revenue counting for $1.75 billion, making for a total of $2.3 billion in total revenue for the NFL as sports betting is legalized.
“Given that their highest revenue generator is their TV contracts, obviously they want more people consuming the product for a longer period of time,” Slane says.
“It really is all about casual bettors and attracting them and finding ways for them to engage. So that’s where the race is on. Can you grow the pie from the avid bettor, which is pretty much the low-hanging fruit, to the more casual bettor and get them engaged?”
That’s what the league is counting on as it plans to re-up its TV contracts by early 2021, as our Jason La Canfora reported recently. According to the AGA, 33.2 million Americans plan to bet on games this year. With legalized gambling, the idea is that the casual bettor will not just watch his or her favorite team each week but other games as well, pushing a ratings increase that will mean more advertising dollars. (For the sake of transparency, CBS Sports has a digital partnership with William Hill SportsBook.)
But what everyone is waiting on — and what Slane calls the “holy grail” — is mobile betting with a streaming component. Watching a live game on your device while making legal bets on the same platform will show full integration between the NFL and the sports gambling world, which will mean the actualization of those billions of dollars everyone is talking about.
“There’s just going to be a lot of questions as to who owns those rights for betting purposes,” Slane says. “Are networks going to fight that given OTT (over-the-top) and cord-cutting concerns around that? I think there are very reasonable and legitimate answers as to why that shouldn’t be a concern, because there are ways to do bet-and-watch and I’m not going to cut my cord because I go on FanDuel’s app and stream football. Which by the way you can go do that for free right now on Twitter on Thursday night.
“There are complexities that have to be figured. Then you get into integrations and what are networks going to allow, what are leagues going to allow, saturation, responsibility around marketing and advertising. There are a lot of issues that we still need to address and that’s why these contract negotiations, when it comes to sports betting, are going to be very, very difficult.”
Right now only six states have full mobile betting with five others having partial betting. Even in states with legalized sports gambling, mobile betting is far from a sure thing.
So the long and short of it is, yes, gambling revenues are coming in and they’ll flow in for years to come. But the real money from gambling? We’re probably one or two decades, instead of one or two years, away from that.
Leaving money on the plate?
Bears RB Tarik Cohen raised my eyebrow this week when he told ace beat writer Jason Lieser of the Chicago Sun-Times that he didn’t squeeze all he could out of his three-year, $17.25 million extension.
Cohen said he wanted to leave some meat on the bone for Bears WR Allen Robinson, who is (im)patiently waiting for his extension from Chicago.
“Regardless of whether I got mine or not, it’s definitely time for him to get his,” Cohen said. “I even left some money on the plate. I took less so he could get more, so to say. I would definitely love to see my boy get extended.”
Cohen’s contract sneaks him into the top 15 contracts for running backs by average annual salary. It seemed like a great deal struck just inside the start of the season by agent Drew Rosenhaus for his client, who has 2,635 career yards from scrimmage and a first-team All-Pro honor in his bag from two seasons ago.
From one perspective, it’s a nice thing to say. Football is the ultimate team sport, and Cohen wants to present as though he played nice with management to help his team get back to the playoffs in any way on and off the field. But 1) I’m not sure that’s really true and 2) He shouldn’t have to take this stance.
Rosenhaus got more than $12 million of that extension guaranteed for Cohen. He’s a very good player deserving of his deal, but I’m struggling to see where he could have gotten any more money without giving up some guarantees or adding a year to his deal.
But beyond that, by now we all understand that the NFL salary cap is a myth. Teams can manipulate it as they see fit. The Rams have seemingly paid everyone in the past month but have only two players (Jared Goff and Aaron Donald) counting more than $10 million against this year’s cap. The Chiefs have nine players counting more than $10 million against the cap this season and not one of them is the quarterback to whom they handed a contract with a maximum value of a half-billion dollars. And just about every year the Saints make a mockery of the league’s “hard cap.”
If the Bears want to extend Robinson, they’re going to need to pony up about $18 to 19 million per year on a three-year extension. They can do it if they want to because that’s how this game works, and Cohen shouldn’t feel any need to say he took less or, even worse, actually take less.
I want to thank my fellow “That Other Pregame Show” co-host Adam Schein for his “absolutely brilliant” take on the Russell Wilson MVP talk.
No, not the Russell Wilson for 2020 MVP talk. The talk about how the Seattle QB has never had an MVP vote. Watch the clip below and you’ll see what I’m talking about. I’ve been noting that Wilson has never gotten a vote since the 2015 season, but I’ve since calmed down on trumpeting the fact because … it makes sense. Check out what Schein had to say.
Without question though, Wilson is the front-runner for MVP one-eighth of the way through the season.
Here are my MVP rankings right now: 1. Wilson, 2. Lamar Jackson, 3. Aaron Rodgers, 4. Patrick Mahomes, 5. Ben Roethlisberger, 6. Josh Allen, 7. Cam Newton, 8. Kyler Murray, 9. Ryan Tannehill, 10. T.J. Watt. (Dak Prescott and Calvin Ridley are honorable mentions at this time.)
Sunday, 1 p.m., CBS
Carson Wentz is fortunate that there’s a Kirk Cousins in this league or else Wentz would be the worst starting QB in the NFL through two weeks. Cousins is getting picked apart, and Super Bowl-winning coach Gary Kubiak is struggling to dust the cobwebs off his playbook.
The pick: Titans
Sunday, 1 p.m., Fox
Losing Saquon Barkley is huge for the Giants’ season-long prospects, but any given game you can play the slots with a running back. Devonta Freeman has plenty left in the tank, and the Giants have been in both games they’ve lost this year. Meanwhile, the 49ers are decimated, and I don’t believe in Nick Mullens.
The pick: Giants
Bears at Falcons
Sunday, 1 p.m., Fox
I bet on the Falcons in Week 1 and lost. I bet against the Falcons in Week 2 and should have lost. This team has been impossible to figure out since last year. The Bears entire team has been more lucky than good this year, and that luck should run out this week.
The pick: Falcons
Rams at Bills
Sunday, 1 p.m., Fox
Here’s the real first test for Josh Allen and the Bills. I liked the young QB’s moxie in Week 2 against the Dolphins in a weird, delayed game. But this is the most formidable opponent the Bills have faced, and I’m excited to see Brian Daboll’s high-potent passing attack.
The pick: Bills
Football Team at Browns
Sunday, 1 p.m., Fox
You don’t know how badly I want to pick Washington here. I do not want to overreact to how good Baker Mayfield looked in Week 2 against the Bengals, because I’m not sure that’s a sustainable standard through the season. But I also can’t ignore how good Mayfield looked at QB, and that’s why I’m taking the Browns.
The pick: Browns
Eagles over Bengals
Packers over Saints
Ravens over Chiefs