NHL’s road to gambling revenue lengthy despite Supreme Court ruling

NHL Commissioner Gary Bettman. (Darryl Dyck/CP)

More than 15 years ago, I was part of a meeting in the NBA head office in New York City, attended by then commissioner David Stern, and his assistant Adam Silver. In that meeting, Stern stated that pro sports leagues and their clubs were “running out of runway.”

In other words, the conventional ways to generate revenue – tickets, television, advertising, merchandise – were close to full capacity. The challenge was to find new ways to generate cash, without passing all or any of the cost onto the paying customer or business partners.

Certainly, the leagues have pushed into the digital world in a great way, and are now growing that part of the business, after considerable experimentation and investment. So it goes to reason that Monday’s United States Supreme Court ruling on sports gambling would be a great way of extending that “runway” as well.

Not so fast.

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There are plenty of hurdles to pass, before revenue flows to the leagues and teams. And even then, there is no guarantee any money will flow that way, or at least substantially. The ruling allowed for all 50 states to control sports gambling in their own jurisdictions. Therefore, there could be 50 different sets of rules as it pertains to sports gambling. That’s assuming all the states will eventually legalize the activity. New York State, for example, still makes sports gambling illegal. There is also no guarantee that any sports gambling system requires the leagues to participate. The leagues, in an attempt to harness the states, will ask U.S. Congress to create a national framework in which the states’ sports gambling can work, in order to avoid multiple systems throughout the U.S. In simple terms, one system of how the gambling can work, as oppose to fifty.

North American sports leagues control their intellectual property through copyrighted names, logos, video footage and proprietary data. There is little to no indication that the new sports gambling systems will require any of those elements. As we’ve seen in previous attempts (in Canada and in Nevada), using city names without any league affiliation is allowable, therefore no licensing is required.

Bottom line is, the states don’t really need pro sports to participate in the program, in order for sports gambling to occur. It might enhance it. But it is not a necessity. Frankly, I’m not sure why the states would want to share the revenue. Also, don’t be surprised if the success of this activity relies on the prop bets; the ones that take little or no expertise, and can be initiated even after the game begins, particularly in an online environment.

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From a hockey perspective, we saw yesterday the league, and the players putting a stake in the ground on gambling.

For example, from the NHL:

“The Supreme Court’s decision today paves the way to an entirely different landscape – one in which we have not previously operated. We will review our current practices and policies and decide whether adjustments are needed, and if so, what those adjustments will look like. It’s important to emphasize that the Supreme Court’s decision has no immediate impact on existing League rules relating to sports wagering, and particularly, wagering involving NHL games. So, while changes may be considered in the future, today’s decision does not directly impact the operation of the League or any of our Clubs in the short term.”

And from the NHLPA:

“The Supreme Court’s decision today may well pave the way for increased, widespread, legalized gambling on sports throughout the United States. While this has the potential to have a positive impact upon sports, fans, and players, it is very important that players’ rights are protected in any new legislative schemes, including rights of privacy and publicity. We look forward, along with the other Players’ Associations, to being a vital part of that discussion.”

Those words sound more like pre-CBA negotiations than they do about sports gambling. However, protecting the privacy of the athletes is important. Particularly when it comes to revealing injuries, which may or may not be required, if the leagues partner in the sports gambling business. One would have to assume that all monies (again, if any) raised from sports gambling would be considered part of hockey related revenue, which owners and players share 50/50.

So it leads you to ask question, if the leagues don’t in fact get a cut of the revenue, how will the leagues and the clubs prosper?

• Through potential higher TV ratings when you are interested in watching your wager develop?

• In advertising, as gambling agencies want to buy air time to promote their business?

• In sponsorship, as the states or privatized companies (assuming the states license theses companies) pay for association with pro teams? Perhaps, but don’t bet on it.

Sorry, I couldn’t resist.

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