It’s the digital version of the Shot Heard ‘Round the World.
On Monday, the US Supreme Court struck down a federal law that had banned betting on sports events in every state except Nevada. As six of the nine Supreme Court justices saw it, the 1992 Professional and Amateur Sport Protection Act, or PASPA, was unconstitutional.
With PASPA gone, states will now be able to come up with their own laws to legalize, regulate and of course tax sports betting, setting up what could be one of the biggest gold rushes the American economy has seen in recent memory.
While it could take several years for that gold rush to fully materialize, a good chunk of that gold rush will likely take place through digital channels and moves are already being made to capitalize.
Here’s a look at how.
Fantasy services and betting operators will vie for billion dollar jackpots
Operators of popular online fantasy sports services such as FanDuel and DraftKings are extremely well positioned to enter the sports betting market as states adopt laws permitting sports betting. In fact, prior to yesterday’s Supreme Court ruling, DraftKings had already set up shop in New Jersey and hired a head of sportsbook. New Jersey was the lead plaintiff in the Supreme Court case. It had sued the federal government after it was blocked from legalizing sports betting.
In addition to fantasy sports services, existing betting operators, such as casino operators and non-US online betting services, will also almost certainly jump into the legal sports betting fray. In fact, some, such as the UK’s William Hill plc, are ready to pull the trigger.
Up for grabs: the billions upon billions of dollars that will inevitably be wagered each year by the millions Americans living in states that are likely to embrace legalized sports betting.
Googlebook is house money
The vast majority of every new dollar invested in digital advertising today goes to two companies – Google and Facebook – and as betting operators and firms that provide services targeting bettors seek to take advantage of the new regulatory environment, Google and Facebook will capture the bulk of the new ad spend.
Sports media will have lucrative new opportunities
As states implement laws that allow sports betting to occur within their borders, online and offline betting operators will no doubt seek to woo consumers in those states through advertising. While much of the marketing dollars will go to Googlebook, publishers that focus on or have significant exposure to American professional sports will also find that they have a lucrative new pool of marketing dollars to tap into.
Depending on how markets shape up in each state, some of the advertising opportunities could be of the performance marketing variety in which publishers are paid fees for each new customer they deliver. Some online bookmakers even offer their affiliates commissions on the net revenue generated by customers they referred.
To fully exploit this new opportunity, expect publishers to launch new properties that are dedicated to betting-related content. For example, ESPN already operates a fantasy sports channel and such a property could easily be extended to sports betting.
Tech giants and publishers could get into the act directly
While major tech companies and sports media players will no doubt earn fortunes from the newfound ability to sell sports betting ads targeting users in the US, there’s also the potential that they could seek to develop their own sports betting platforms or partner with existing operators to integrate sports betting into their platforms.
To be sure, such moves would carry with them significant risks, especially for companies like Google and Facebook. For this reason, there’s no guarantee they’ll pursue this path, but given just how lucrative sports betting in the US is going to be, all bets are off.
Nobody should count their chips before they have them
There is little doubt that legal sports betting is coming to the US but it’s important to keep in mind that there are still far more unknowns than knowns at this point.
For starters, before legal sports betting becomes ubiquitous on the other side of the pond, each state will have to create laws to legalize sports betting within their borders. Some states could, for instance, limit sports betting licenses to a few companies, such as existing casino operators. And states could place significant restrictions on internet-based betting, if they permit it at all.
There’s also the potential that the federal government could pass legislation to regulate sports betting at the federal level. While the Supreme Court decided that PASPA was unconstitutional, that doesn’t mean there’s no potential for the federal government to regulate sports betting constitutionally.
With this in mind, it’s clear that the opportunities created by the Supreme Court’s ruling will not offer instant victories to every company that shows up for the game. Those who want to cash in will first need to place winning bets.