NBA Makes A Good Bet On Gambling Sponsorship
BY ADAM GROSSMAN
One of the biggest challenges in the era of big data is monetization. How do you monetize information at a time when so much data is being created? One answer to that question is to find an immediate use case where the information an organization generates addresses a critical business challenge.
That is exactly what the NBA has done in its new deal making MGM Resorts its official gambling partner. This new relationship is generating significant attention because it is the first of its kind in a major professional sports league. Yet, that is really not the most significant component of this deal. It is that the NBA could be providing a blueprint for how leagues can monetize their official data across multiple partnerships.
In a previous post, I stated that the U.S. Supreme Court’s decision to strike down the Professional and Amateur Sports Protection Act of 1992 (PASPA), effectively making gambling on sporting events legal in the U.S., would benefit sports organizations because it would open new sponsorship opportunities. The NBA’s partnership with MGM is a good example of this new dynamic. MGM now has the ability “to use official NBA data and team logos across its domestic resorts and mobile sports-betting apps.” Gambling is reliant on having the most accurate data. Both sides of a betting transaction need to ensure payouts are based on the correct outcome of any event.
It is difficult to argue that the most accurate NBA data could be anything but the “official NBA data” provided by the league. As the NBA’s exclusive gambling partner, MGM Resorts can now position itself to current and potential customers as having the best data both in its casinos and mobile apps.
That provides a distinct competitive advantage and should help MGM Resorts generate incremental growth because of its first-to-market relationship with the NBA. Because legal sports gambling is novel in the U.S., there is a reasonable concern that sports fans would not be sure where to go for gambling to ensure that they are not “cheated” in transactions. Being the first company that has official data enables MGM to alleviate these concerns for NBA bets and maximize the probability of capturing a significant share of the early gambling market.
This is not the only reason that being first-to-market is a key distinction in this new deal. As The New York Times explains, “While MGM will be the league’s exclusive gambling partner for marketing purposes, most of the rest of the agreement is not exclusive…The N.B.A. is eager to have every company offering sports betting use official league data and work with league officials to prevent manipulation.” In fact, the NBA already had already signed a six-year data distribution deal with Sportradar and Second Spectrum in 2016 worth a reported $250 million over the life of the agreement. Sportradar is arguably best known outside of the U.S. for providing data for and monitoring gambling activity abroad.
Yet, the NBA was also able to sign MGM Resorts to a three-year deal worth a reported minimum of $25 million. Why would MGM agree to this deal given the NBA’s previous relationship with Sportradar. Both MGM and Sportradar can credibly say they have official NBA data. However, MGM can only use the data in its “domestic resorts and mobile sports-betting apps” while Sportradar can provide “data and audio-visual game feeds to gaming operators outside of the United States.”
These two agreements demonstrate how the NBA can monetize the same data in multiple relationships. This is exceedingly rare in the sports industry where exclusive deals mean that only one company can benefit from their relationship with their rights holders. While both MGM and Sportradar derive clear benefits from their relationships with the league, the NBA is arguably the biggest winner. It is a blueprint that other leagues are likely to follow to maximize revenue from gambling partnerships.