Late Saturday night I got back from Miami, where I spent a week doing daily TV shows for FS1 and daily radio from radio row. On Saturday “Lock It In” became the first sports gambling TV show to air on a broadcast network. This comes a year after we did “Lock It In” live from a Las Vegas casino, becoming the first daily show to originate live in the afternoon from a sportsbook while games were being played.
With the NFL Draft in Las Vegas this April, the Raiders set to debut in Las Vegas next year, and the Golden Knights already playing in the NHL, clearly the barriers between sports and gambling are crumbling on a day by day basis. That’s pretty incredible because the nationwide sports gambling era officially began less than two years ago when in May of 2018 the Supreme Court officially allowed individual states to permit sports gambling.
It’s honestly staggering to think how much has changed in just 19 months.
Indeed this is just the start of a sports media revolution that many still don’t even realize we’re undergoing.
And that era was given rocket fuel when Barstool was sold to Penn National Gaming for a valuation of $450 million.
In the space of less than two years the sports gambling market has gotten so hot that FanDuel, the nation’s largest sports book according to December data, which sold for $465 million just before sports gambling became legal nationwide in 2018, sold for roughly the same amount as Barstool, a content company focused on sports gambling did. (Granted the intent is to make Barstool effectively a casino, but it’s still a remarkable explosion in value predicated on the legalization of sports gambling. Purchasing FanDuel for $465 million now looks like one of the great sports media deals of all time. The company is likely worth $4 billion or more in the present marketplace, potentially much higher).
Here by the way is the data for December sportsbook size in the five states with active online marketplaces.
— Clay Travis (@ClayTravis) February 3, 2020
It wasn’t just the purchase price of Barstool that made an impact, however, it was the stock market’s response. Penn National Gaming added nearly $600 million in market cap valuation in the ensuing couple of days. Whether that exuberance will remain or the stock price will come back down to earth, the lesson here was pretty straightforward: the market endorsed the decision of Penn National spending aggressively in an effort to acquire customers as more states move to legalize sports gambling. (Presently twenty states and the District of Columbia permit sports gambling in one form or another, but that number will grow rapidly over the next five years. Ultimately I believe virtually every state that allows the lottery will have sports gambling in one form or another).
In my lifetime there have been two seismic events that forever altered the way we talk about sports in this country: the rise of cable television — and with it the subsequent airing of virtually every game that is played somewhere on cable as well as the tremendous amount of air time now available to talk about sports — and the rise of fantasy sports on the internet, which exploded the popularity of football in particular, but aided in the growth of sports in general.
Each of these events was seismic.
But the third seismic event is the legalization of sports gambling.
This triumvirate of events will dominate sports well into the 21st century. So much so that I’m not even sure what else looms on the horizon that is anywhere near this substantial or epochal for the world of sports.
So what lessons are out there to learn so far from the ongoing sports gambling revolution?
Here are five lessons.
1. Content is king, again.
For a long time the Internet valued quantity over quality. The result was the dumbing down of overall Internet content, the rapid quest to copy whatever viral video or story was out there in an effort to drive up artificial pageviews and sell them for small amounts of money to credulous advertisers who believed these crappy ads were helping their businesses.
We’ve seen The Athletic, which takes no advertising on its articles, notch a $500 million valuation in a recent round of financing. The company hopes to hit one million subscribers this year.
And we’ve also seen the Barstool purchase by Penn National.
Both are quality over quantity plays. (Yes, The Athletic articles are much smarter than Barstool’s, but when I define quality I define it as meaning the reader intentionally is choosing a website, podcast or event. An easy way to test the quality of an audience is to ask a simple question: can you do events and will people show up at them? If the answer is yes, you’re probably making a quality product the consumer likes. If the answer is no, you’re probably in trouble in the coming sports media marketplace.)
We’re seeing is a race to quality from the sports gambling companies, who are all looking to spend their content acquisition dollars smartly. (It honestly wouldn’t shock me if a sports gambling company kicked the tires on buying The Athletic almost exclusively for its mailing list and access to consumers).
Yes, the irony of sports gambling companies embracing quality of consumer relationships sounds a bit odd when you’ve seen so many actual sports media companies dumb down their content to chase eyeballs, but the decision actually makes sense if you think about their businesses. Sports gambling companies want long range customers for their products. Think about how much casinos woo big gamblers. They will send planes for them, provide exquisite lodging, phenomenal meals, all with the understanding that gambling is, in many ways, about the seduction of the consumer, who has many options.
The same may well be true in the long range with sports gambling companies.
They need quality, long term relationships with their consumers. What’s the best way to keep them? By having people you like in the media affiliated with your company.
So what era are we in right now? We’re in the beachfront property era of sports gambling.
I’ve been making my beachfront analogy for sports gambling for quite some time because I think it’s easier for sports fans to understand this than to examine numbers in granular detail.
Think of the sports gambling consumer as the ocean and the companies and people with the best access to that ocean as the equivalent of beachfront properties. Why is the best beachfront property so expensive? Because it’s a very limited supply and very high demand.
Well, Barstool was a beachfront property for sports gambling. And they got paid very well for their company because of where it’s located, with direct access to consumers, i.e. the ocean in our analogy. Penn National believes that Barstool will be able to provide it with oodles of gamblers. Hence their purchase of the company. This business idea isn’t complicated, it’s about getting gamblers into the company’s coffers.
But there are many people — and companies — with beachfront access to gamblers.
What will happen with those companies? I predict there’s going to be a rush for beachfront property by sports gambling companies.
But it won’t just be companies like Barstool, it will also be individual talent.
For instance, let’s use a guy like Adam Schefter as an example. Is he really making the most money possible by giving away his information for free on ESPN? Isn’t there a gambling company — or a high end gambling syndicate — that would love to pay Schefter millions of dollars for access to his scoops first?
Imagine how much money you could make if you had Schefter’s scoops before everyone else did. The lines move massively when Schefter breaks injury or free agency news on Twitter. The same is true of Adrian Wojnarowski and other individual sports reporters who dominate their respective sports.
Right now they provide their scoops to the masses on Twitter for free.
But what if a sports gambling company — or a sports gambling content company with affiliate deals — paid those guys millions of dollars in guarantees and put them behind paywalls so their subscribers got first access to that information? Sure, that information would get posted on social media by others, but it might take ten minutes for it to be well known and well distributed.
Ten minutes is a lifetime when it comes to line movement.
That time is worth scads of money to the right companies.
Essentially what Penn National is doing with Barstool is using their content as advertising. So why wouldn’t other gambling companies get the best content creators and use their content to drive customer acquisitions as well?
I think it’s a no brainer.
In fact, you can make an argument that the best sports websites for content in future years should all be sports gambling company websites because it’s more valuable for them to drive people to their websites than it is for the traditional sports news sites.
2. Total numbers matter less for sports media than total numbers of gamblers.
I’m surprised that more people haven’t noticed this yet, but a sports gambler is worth 10-20x, and this might be conservative, what a traditional sports TV viewer is worth.
The same is true of, for instance, sports fan followers.
The most valuable people in the nation are sports gamblers.
In other words, for the next several years there’s a strong argument that from a revenue perspective you’d be better off having a TV show produce 50,000 gambling viewers than 500,000 non-gambling sports fans.
Because sports gamblers are worth far more to sports gambling companies advertising to those viewers than non-sports gamblers are to, for instance, Coke or Pepsi.
The advertising rates are going to be much higher depending on the gambling demographics of a program. The more an audience is full of gamblers, the more it’s worth to advertisers.
Again, I don’t think most people have realized this yet, but from a business perspective this is the premise of “Lock It In.”
Fox Sports was smart to get ahead of the gambling curve and they’ve built us a really well-crafted sports gambling program that’s designed to speak to the masses, the guy or girl who might wager $100 a game at most. There will be other programs that are more detailed and appeal to the analytical gambler. Todd Fuhrman on our show, as much as we make fun of him, is that kind of gambler.
Hell, sometimes I can’t even follow what he’s saying.
But I’m pretty good with big picture business ideas and the big picture here is this: sports gambling TV viewers are a gold mine and are worth far more than the average sports TV viewer.
The fact no one in sports media has realized this or written about it yet is mind boggling to me. Not only do I have to be on radio and TV for four hours every day, I also have to do the sports media’s job for them now too? Damn, it’s exhausting.
3. The lifetime value of a sports gambler, according to DraftKings in its most recent prospectus, is around $2500.
Right now sports gambling is in the early days of creating an entirely new massive industry.
For decades ahead people will be gambling with the industry leaders in the space.
So acquiring customers is everything right now.
Five to ten years from now it will be hard, potentially impossible, for a sports gambling upstart to compete with the advantages of scale achieved by the big gambling companies.
But for the next five to ten years, it will be a massive battle to establish industry market share.
And those battles, interestingly, will be taking place on forty or so state battlefields with different regulations and rules for competition in those states as well.
You thought the daily fantasy battle was intense? Brother, you ain’t seen anything yet. The war to dominate sports gambling is just beginning and it will be the biggest, wildest battle you have ever seen in your sports fan life.
4. You could see entire sports gambling cable TV networks.
Could it make sense to flip FS2 or one of the ESPN networks entirely to sports gambling? Certainly.
In fact, I would expect it to happen.
I’d also expect NBCSN and CBSSN to lean heavily into sports gambling as well.
Right now many of the lesser sports networks don’t have particularly strong original sports programming. Why not go after the lucrative American sports gambler with your entire programming slate devoted to him?
I think there should be a CNBC of sports gambling.
5. Sports aren’t woke. Sports gambling is even less woke.
This means, in my opinion, the era of woke sports is nearing its end.
As sports gambling companies flood the marketplace with advertising dollars, there is going to be a limited, if at all, market for the woke sports gambler. Ultimately what woke sports sells is the victim ideology. That isn’t very attractive to most sports fans already, but it’s even less attractive to sports gamblers, who are ultimately all capitalists, seeking to use their money to make more money with their bets.
The most aggressive proponents of woke sports continue to trade down in the marketplace. Look at Jemele Hill. In the space of a little over a year, the time sports gambling has risen up, she’s gone from one of the top faces of ESPN to a podcast that has almost no impact on the larger sports marketplace. As a result she mostly sits on Twitter calling everyone racist.
Seriously, that’s her entire job now.
This probably won’t surprise you, but the audience of sports gamblers who want to consume Jemele Hill content is tiny.
But it’s not just individual members of the woke media who are trading themselves down in the sports media ecosystem.
In the past few months Deadspin, a woke sports media blog, essentially shut down and Barstool, a site perpetually criticized by woke media scolds like Deadspin, sold for $450 million.
Why did that happen?
Because being woke in sports is a broken business model. The only place there’s demand for it is on Twitter and even there it’s becoming increasingly less impactful.
Deadspin’s audience didn’t care enough about Deadspin — or its writers — to make it valuable enough for purchase by any other companies. And the Deadspin writers haven’t been gobbled up elsewhere either. Deadspin may eventually re-emerge as a reincarnated version of itself, but it’s perpetual pearl grabbing and falling on the fainting couch in perpetual outrage is as past its prime as a black-and-white television.
The woke business model is about being a victim, it’s about perpetual loss, others stealing from you and leaving you with nothing.
But this is the exact opposite of what sports represent. Sports are about individual players and teams using their unique individual talents to triumph over others. Sports is about brutal capitalism and inequality of result. If every team won one and lost one all season long no one would watch. We crave excellence, we crave success, we crave dominance, we want winners and losers.
We want some people to be better than others at their games.
That’s why we watch.
And it’s also why we bet.
As sports gambling rises, woke sports crumbles, they’re like two opposite sides of a seesaw. As sports gambling rises high into the sky, woke sports is left sitting on the ground, immobile, grounded and pouting.
There are many reasons to love the coming tide of sports gambling legalization across our nation, but one of its best side effects will be its utter destruction of the woke sports universe.
I can’t wait!
See y’all on Lock It In at 4:30 today. I won all five of my prop bets and also hit the opening song for JLo and Shakira.
So I’m going to be gloating like crazy.
Should be fun.
Because, wait for it, gambling makes sports more fun. That’s why we all do it. And if we can win money while watching something we already like and have even more fun? Even better.
The end result of the coming tide of sports gambling will be re-centering sports on the reason most of us became fans in the first place — because it’s fun.
Sports is the toy chest of life.
Somewhere along the way the woke media scolds tried to turn it into the equivalent of eating broccoli.
Well, those days are over.
Get rich, kids.
But if you don’t, at least let’s have an awful lot of fun.