The New York State Gaming Commission approved four licensed mobile sports wagering operators to begin taking mobile bets in the state beginning at 9 a.m. on January 8, and cable networks are gearing up for what they hope to be a big financial windfall.

Caesars Sportsbook, DraftKings, FanDuel, and Rush Street Interactive, which operates the BetRivers Sportsbook, got the green light from the Gaming Commission on Jan. 7, about a week prior to the January 15 start of the National Football Leauge playoffs and around a month before Super Bowl LVI on February 13, the biggest betting day of the year.

In a press release, Rush Interactive CEO Richard Schwartz said New York’s decision came just in time. 

“With the college football championship game on January 10th and NFL playoffs approaching, and the NBA and NHL seasons in full swing, in addition to countless other sports and betting options available for play, fans have endless entertainment at their fingertips at BetRivers,” Schwartz said in a press release.

Eyeing a $10 Billion Opportunity

New York State expects mobile sports gambling to represent a $10 billion revenue windfall annually. On Nov. 8, the state agreed to allow mobile sports wagering — about 18 other states, including neighboring New Jersey, have allowed it for months —- with the government taking 51% of gross revenue generated by the providers. 

With New York in the mix, however, other states that have been on the fence regarding mobile sports betting — including Connecticut, Delaware, Ohio, Louisiana, and Maryland, which have approved mobile gambling but haven’t gone live — will give them a needed push. 

“When it starts in New York, it becomes a national story,” said sports consultant Lee Berke, CEO of LHB Sports Media & Entertainment. “You’ve got four of the biggest sportsbooks starting on this, they’re creating New York-specific commercials, it’s going to become a subject of New York-based media outlets,” which should give any fence-sitters a needed push.

Another incentive for states: the enormous amount of money to be made. Some reports estimate that New York could reap about $1 billion in yearly profits from mobile sports betting. The state also is charging each mobile sports wagering operator a one-time $200 million licensing fee, and other providers are expected to join the fray. Initially nine providers were conditionally licensed by the state — Bally Corp.’s BallyNets; BetMGM, WynnBET; PointsBet New York; and Empire Resorts, doing business as Resorts World — were the others. The state Gaming Commission is still considering those five other applicants.   

“The remaining five conditionally licensed Mobile Sports Wagering Operators continue to work towards satisfying statutory and regulatory requirements necessary to launch and will be approved on a rolling basis when requirements are met,” the Gaming Commission said in a statement.

New Jersey has said gross revenue from online sports wagering was about $1 billion in September, most of that from mobile transactions. New York allowing mobile betting might cut into that handle — New York City gamblers were known to travel into the state just to make mobile bets. According to some reports, New York gamblers made about 25% to 30% of the sports bets in New Jersey. 

For television networks, the initial windfall is likely to be in the form of additional advertising — already Caesar’s Sportsbook, FanDuel, DraftKings and Rush Street, have been ramping up ads leading to Jan. 8. While sportsbooks have been advertising on sports channels ever since the U.S. Supreme Court allowed legal sports wagering in 2018, Berke said the introduction of the largest media market in the country to mobile wagering is a game-changer. 

“As it becomes more national in scope, the economics change in terms of being able to offer up a range of national content in a range of national media outlets,” Berke said. “Even six months ago, buying on the NFL, people were starting to do it, but it’s inefficient because half of the country can’t bet. When New York kicks in, suddenly, things change.” 

Berke said that viewers should expect similar programming on other sports channels, as “the line blurs between what is sports programming and what is sports betting programming.”

At YES Network, the home of New York Yankees baseball, Brooklyn Nets basketball, New York City Football Club soccer and New York Liberty basketball, the initial impact will mainly be on ad sales. But the RSN, the most-watched in the country, already has strong relationships with sportsbooks like FanDuel and DraftKings, so New York's entry into mobile sports betting “just makes YES all the more valuable to these entities,” said spokesman Eric Handler. 

FanDuel and DraftKings probably have the biggest relationships with television networks, having inked a deal with Turner Sports in October 2020 to integrate betting information into content from TNT, TBS and Bleacher Report. That pact also included the ability for Turner to collect referral fees if bettors placed wagers through their sites. 

MSG Moves Aggressively

Across the board, sports networks have long been anticipating this day, and many have spent the past few months forging partnerships with casinos and sports wagering outlets and creating programming geared toward gaming aficionados.  

One of the more aggressive networks on the programming and deal fronts has been New York area regional sports network MSG Networks, which has expanded its sports betting-focused programming. In October MSG Networks launched Odds with Ends hosted by former New York Giants players Mathias Kiwanuka and David Tyree on Sunday mornings during the NFL season; and The Bettor Half Hour hosted by Alex Monaco to complement its existing betting shows including The Betting Exchange with sports gaming experts Katie Mox, Jeff Johnson and former New York Jets safety Erik Coleman.

Also last year, MSG Networks struck marketing partnerships with FanDuel, Bet 365, BetMGM and Caesars Sportsbook.   

Caesars Sportsbook also plans to launch a new series on MSG Networks and its social media channels featuring actor and comedian JB Smoove — who also stars in the sportsbook’s national commercials. The show, One Course with JB Smoove, will integrate Caesars Sportsbook betting odds and content. In addition, the gaming giant and MSG Networks will launch a 20-part programming marathon to bring back the 2013 series Four Courses with JB Smoove, where the actor and comedian conversed with athletes and celebrities over dinner and which will now be updated with Caesars-themed content.

Caesar’s Sportsbook also will sponsor a special month-long programming block tied to former New York Ranger goalie Henrik Lundqvist. ■

With the finish line in sight, British long distance runner and Olympic gold medalist Mo Farah made one final sprint at the IAAF Diamond League finals in Zurich, Switzerland, last month. It was the last race of his long and distinguished track and field career and, coming up from behind, he won the last title in his storied career to wild applause.

NBC Sports Group televised Farah’s triumph to track and field fans live via its Track and Field Pass service, a $69.99-per-year, direct-to-consumer service that’s part of an emerging category of digital streaming sports subscription offerings that could threaten to sprint past traditional linear cable sports services to super-serve sports fans across the country.

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Traditionally, live sports programming lived in cable bundles that featured national sports networks like ESPN and FS1, as well as regional sports networks and a handful of general entertainment services.

But now, subscription digital sports services can showcase a huge roster — whether it’s NBC Sports Group offering packages with sports ranging from track and field to cycling to rugby; or Turner Sports kicking up a proposed OTT service geared to UEFA Champions League European football; or ESPN planning a direct-to-consumer service featuring 10,000 live Major League Baseball, National Hockey League and Major League Soccer games.

Getting Cord-Cutters in the Game
The new services seek to provide additional revenue to help sports programmers offset the high cost of rights while giving younger cord-cutting fans an opportunity to access content that’s not typically offered on linear sports channels.

“Before, if you were a cord-cutter or cord-never, you effectively said sports aren’t important to you because the only way to access U.S. pro sports content was through the pay TV network ecosystem,” fuboTV chief financial officer Joel Armijo said. “Now, in the [internet protocol] world, we’re moving toward completely personalizing that experience for a sports fans looking for that lean-forward kind of immersive experience.”

The sports industry has already taken several swings at the multiplatform, direct-to-consumer digital subscription model — all of the major pro sports leagues offer out-of-market packages of live games — while national and regional networks have offered marquee sports via TV everywhere platforms to authenticated viewers subscribing to the traditional cable bundle. As a result, audiences are increasingly viewing live sports content on phones, laptops and computers.

At the same time, younger viewers in particular are increasingly cutting the cable cord or choosing not to subscribe to cable at all, decreasing the pool of potential viewers who watch linear sports content. Pay TV providers lost about 976,000 net video subscribers in the second quarter of 2017, continuing a disturbing trend for cable networks, according to Kagan.

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The realities of the changing marketplace have pushed several linear sports channels, which are heavily reliant on distributor license fees and advertising dollars to offset high sports-content fees, to look for opportunities to generate revenue on alternative platforms. Last month alone, three major sports-media players committed to stepping onto the direct-to-consumer field within the next year:

● ESPN, which has recently suffered subscriber losses — its subscriber total was down 3.5% in its recent third-quarter earnings report — will launch a new service in 2018 that will mostly offer content not currently available on the linear channel. Offerings would include MLB and NHL content from BAMTech, which provides the technological backbone for the two leagues’ out-of-market streaming packages, and which is now majority-owned by ESPN parent The Walt Disney Co. While details of the service are vague, Disney chairman and CEO Bob Iger said during the earnings report that the launch of the direct-to-consumer service marks “an entirely new growth strategy for the company.”
● CBS Sports will launch a new OTT service later this year. It also launched a Showtime PPV app on Apple TV devices for the Aug. 26 Floyd Mayweather-Conor McGregor pay-per-view boxing match.
● Turner Sports — which distributes National Basketball Association games on TNT and Major League Baseball games on TBS — will launch a new streaming service based on its recent acquisition of UEFA Champions League and UEFA Europa League rights in 2018.

Sports media consultant Lee Berke said the recent OTT sports service announcements mark a shift in the traditional cable bundle’s virtual stranglehold on the category as viewers migrate to more multiplatform viewing.

“I don’t think the bundle or traditional cable is going away, but it’s shrinking, and the days of 80% to 90% penetration of cable services in homes are gone,” said Berke. “The key is that [sports networks] need to be in [the digital] space in an aggressive way and take a new look at their programming rights to see how best to divvy them up in an innovative range of approaches that meet the needs of new generations of viewers that may think their televisions are their phone, laptop or tablet.”

NBC’s Niche Play
Still, cable sports networks have to walk a fine line in trying to generate new digital revenue streams with direct-to-consumer services while not syphoning away cable subscribers from its linear cable channel offerings. NBC Sports Group has tried to have the best of both worlds by launching several direct-to-consumer services under its NBC Sports Gold service featuring niche content and international sports.

The company’s Cycling Pass, Pro Motocross Pass, Track and Field Pass, Rugby Pass and Premier League Pass all offer content that isn’t available on broadcaster NBC or cable sports network NBCSN, said Rick Cordella, executive vice president and general manager for Digital Media for NBC Sports Group.

While NBC Sports Group remains a big supporter of the existing cable ecosystem, the advent of new digital technology, combined with viewers’ willingness to watch content on multiple platforms (NBC’s Sunday Night Football drew an average of 600,000 unique digital viewers to NBCSports.com last year), represents a chance to deliver content to underserved groups of fans, Cordella said.

“What I think has happened is, the technology is now available to deliver these products, and the acceptance of that technology allows you create offerings like NBC Gold that weren’t possible years ago,” Cordella said. ”People are willing and open to watch content this way.”

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A huge question looming over this shift is whether enough underserved sports fans would be willing to pay anywhere from $10 to $70 to watch live sports fare on their phones and laptops. Cordella wouldn’t provide specific subscriber numbers for any of the five OTT sports services, but he said the numbers have “exceeded expectations.”

OTT provider fuboTV is one player that’s skeptical that sports alone will draw enough subscribers to change the game in a video-streaming marketplace dominated by entertainment services such as Netflix, Hulu and Amazon Prime Video. A mix of quality sports content and entertainment-based fare will attract a broader audience and score more revenue dollars, CFO Armijo argued.

FuboTV’s 70-plus channel Fubo Premier bundle sells for $34.95 and includes 35 channels that feature sports content, including soccer-heavy beIN Sports, fuboTV Network, Eleven Sports and most recently, Pac-12 Network, to go along with FS1, Golf Channel, Olympic Channel, NBCSN, CBS Sports Network and NBA TV. Also part of the bundle are a number of news and entertainment-based channels including Lifetime, Fox News Channel, USA Network, Univision, El Rey Network, HGTV, Hallmark Channel and History.

“We will continue to work to really super-serve sports fans and that’s very core to what we do,” Ben Grad, fuboTV’s North American head of content strategy and acquisition, said. “At the same time, there’s no one-size-fits-all model out here. We’re confident with our approach of being able to very well serve a number of customers in the marketplace with both sports and entertainment programming.”

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Still, NBC’s Cordella said a sports-only OTT service is an easy sell to fans hungry to watch their favorite sport. “One of the good things about sports is the fact that this is a known entity — you’re tapping into a built-in fan base that already exists,” he said. “When you take a particular soccer game and say, ‘It’s this team versus that team,’ you know exactly what you are getting, as opposed to entertainment services where you have to explain what the content is and why it’s different and better than what your cable subscription already has.”

It could be a while before standalone OTT services replace pay TV providers, Berke said, but companies that don’t explore the direct-to-consumer marketplace do so at their own risk.

“I don’t know if it’s the end game, but it is a necessary step,” Berke said. “It doesn’t mean that that’s the only way consumers will be watching sports in the future, but it means that you need to have a substantial presence there if you’re going to keep yourself relevant for new viewing options. You have to be able to reinvent yourself for each new generation.”

Discovery Communications could be eyeing the creation of European regional sports networks built on the Pan-European sports networks it already controls through its recently acquired Eurosport channels.

Silver Spring, Md.-based Discovery bought a controlling (51%) interest in Eurosport in May. The service has several pay TV brands — Eurosport, Eurosport HD, Eurosport 2, Eurosport 2 HD, Eurosport Asia-Pacific and Eurosportnews — that generally have focused on lower-cost rights like German Bundesliga soccer outside of Germany, skiing and cycling. The channels recently scored ratings gains with French Open tennis matches, averaging about 1.36 million viewers, and broke the 50-million viewer mark in France with cycling’s Tour de France.

“We think we can build Eurosport by being strategic and working with our partners,” Discovery CEO David Zaslav said at the Communacopia conference last week. Eurosport “has one feed that is sold on a Pan-European basis; we can put it into all 70 countries without adding one sales person. We also have a strong local presence. In some cases we think we can build a very strong local sports channel.”

Zaslav coyly replied “maybe” when asked whether those channels would be based on a U.S. regional sports network model.

The time might be ripe for European regional sports, Lee Berke, CEO of sports consultancy LHB Sports, Entertainment & Media, said.

While most prestige rights are locked into long-term contracts with big European distributors — such as BSkyB’s and BT’s $4.9-billion, three-year lock on England’s Barclays Premier League soccer — Berke sees room for channels built around a particular sport or team. “That’s where I think you can get some traction,” he said.

The biggest questions are which rights, which sports and how much money would Discovery be willing to spend. But the programmer has been willing to open its checkbook. This year, it teamed with Liberty Global to buy production company All3Media for about $1 billion and is expected to team up with Liberty Media to bid on a 49% stake in Formula One Racing, worth about $4 billion.

Berke also said Eurosport could build channels around supplemental and shoulder programming from teams, as well as regional skiing, Scandinavian hockey and European basketball.

Other U.S. networks’ efforts to secure major rights in Europe have not had much long-term success. ESPN, for example, had Barclays Premier League rights for a time, but then sold its U.K. and Ireland channels to BT last year. ESPN still has a strong digital European presence through its espn.co.uk website and others, but has shifted international focus mainly towards Latin America.

That could mean the market has room for a well-run competitor, and Eurosport has the experience to possibly pull it off, Berke said. “They have navigated their way through distribution country by country,” he said. “ My guess is they’re saying some of the same things we’re saying here in the U.S. — more interest in developing a range of programming on a range of screens and a range of distribution outlets.”