Posted on: Jan 27, 2021, 12:37 PM.
Last update on: January 27, 2021, 12:37 p.m.
Formerly dissimilar businesses, internet games, media and sports are now united at the waist. The result is big business with a study that predicts iGaming and sports betting revenue to be worth more than $ 30 billion by 2030, driven by operator relationships with media companies.
Business between media companies like ESPN and game companies is now common. Analysts believe the agreements will be major sales drivers. (Image: Getty Images)
This forecast was provided by Macquarie Research, which, under agreements with media companies, estimates an average annual growth rate (CAGR) of 33 percent for online casino and sports betting operators over the coming years. Led by Chad Beynon, analysts will point out that media / sports deals will also help improve the advertising industry.
The idea of media companies partnering with betting companies started with a trickle in 2019 before turning into a tidal wave last year. However, the concept used in the USA is not clear. As Beynon and his team point out, domestic operators take inspiration from a British model.
These deals have expanded well beyond traditional ads and include naming rights, click through economy, and equity holdings, ”said Macquarie. “Ultimately, we believe the ‘Grand Slam’ opportunity is to replicate the success of Sky Bet in the UK as a model for integrating media content into betting apps.”
This goal has something to offer. The average adult British man spent $ 93 on sports betting last year, almost double what Macquarie’s estimates in the US were for $ 50.
Media and sports offerings take different forms in the USA
In the United States, agreements between media companies and gambling companies come in a variety of forms and fashions, including equity investments.
This method resulted in one of the most successful pairings: Penn National Gaming (NASDAQ: PENN) and Barstool Sports. A year ago, the regional gaming company paid $ 163 million in cash and stock to acquire 36 percent of the popular culture and sports blog, with the right to eventually own the media asset for $ 450 million.
In the past year, Penn shares nearly quadrupled as the game operator applies the Barstool brand to its mobile betting app and stationary sports betting. In the eyes of some market watchers, Barstool Sports founder David Portnoy is the face of Penn despite not having an official leadership role at the casino company and many analysts consider this to be the most successful gaming / media company to date.
Other US agreements include Caesars and DraftKings with ESPN, FanDuel and Caesars with Turner Sports, NBC Sports and PointsBet, and William Hill as a partner of CBS Sports.
One of the more overt forays into the media by a casino operator was announced last November when Bally’s (NYSE: BALY) announced it was paying $ 85 million over 10 years to bring its brand to 21 regional sports networks (RSNs) of the Sinclair Broadcast Group.
“We believe these new agreements between sports betting companies and media networks can be mutually beneficial to the evolving sports betting ecosystem,” Beynon said.
“First Inning” of the game
It is clear that networks and game companies have joined forces quickly, but from an economic and moral point of view, the benefits of these agreements are only just beginning to grow.
“From a product standpoint, we are in the ‘first inning’ and expect a significant transformation in the integration of betting and media programming integration in the game over the next few years,” said Macquarie analysts.
The research firm states that 36 percent of the US population currently has access to legal online sports betting. That number will rise to 46 percent at the beginning of the 2021 football season and to 90 percent by the end of 2025.
The analysts estimate that sports betting revenues will be 47 percent from 2019 to 2025 and 25 percent by 2030.