Sports data’s peak oil’ moment

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The legal wrangling over the amount Fox believes it should stump up for its share in Fox Bet versus what Flutter thinks the business is worth is the sports-betting equivalent of the old music business maxim that where there’s a hit, there’s a writ, writes Scott Longley of Clear Concise Media.

To one way of thinking Flutter should be, ahem, flattered. It is just another sign of how the US media, leisure and indeed, gaming business elite have woken up to the potential in regulated online sports-betting and gaming.

With analysts at Goldman Sachs making predictions that both markets could be worth a combined $53bn by 2033, it is now more widely recognized that operators in the US could be sitting on a goldmine.

Everything about the US market right now speaks of a bubble and lawsuits such as this are but one indicator. The momentum behind sports betting in the US, in particular, appears to be gathering pace and with it expectations of future profits are on an upward curve.

A further signal of a steepening hype cycle comes from the recent announcement from the NFL that it was switching data providers to Genius Sports, which not coincidentally has become the latest gaming and betting-adjacent company to ride the SPAC wave to a full US listing via a deal with dMY Technology.

By all accounts, the agreement between the NFL and Genius Sports breaks all records for the amount paid for sports data rights and will see Genius pay $120m a year for the right to exclusively distribute data from the games (as well as some limited international streaming rights). Half of that sum will apparently come in the form of newly-minted Genius Sports stock. 

The cost of the new deal dwarfs the $20m a year that was reportedly paid by the previous data provider Sportradar. And in case it wasn’t clear, we also know who is expected to pay the price for this munificence on the part of the supplier. 

Everything appears set for the NFL to attempt to gouge as much as they can from the still somewhat nascent US sports-betting sector. The rash of data and licensing deals seen in the past couple of years has tied operators into official deals even in states where there is no specific regulatory mandate. Operators in the US are having to pay the piper even as the piper is intent on jacking up the price. 

By the NFL’s reckoning, as with the recent sale of broadcasting rights for an eye-watering $110bn, they have the sports-betting operators over a barrel. Indeed, soon after the Genius Sports announcement, the NFL announced a “tri-exclusive” deal with FanDuel, DraftKings and Caesars who now become official league sponsors, 

These deals are indicative of the belief that even without a legislated mandate in most states, the official stamp of approval is still something to strive for in a sector which is desirous of wider acceptance among regulating and soon-to-be-regulating states. It is the halo effect and it brings with it legitimacy, not least with the sports-betting consumer.

That’s the situation at the top end of the market at least.

But the squeeze lower down the US rankings and elsewhere around the world is less obvious and might, indeed, be non-existent. Particularly globally, the NFL will be only a small part of their business – and having an official stamp will mean nothing to the punters. Moreover, the supply of data gleaned by other means – from broadcasts for instance – will barely be affected by whatever official arrangements are in place while the stop-start nature of the game itself mitigates against any latency issues.

Peak oil

Talking about the new data deal, Chris Halpin, the NFL’s chief strategy and growth officer, said it is an acknowledgement of the ‘franchise value’ of its data rights and ‘where we can help take the market’.

It is an interesting comment. In the wider world, much has been made of data being the ‘new oil’ and that could certainly be said of sports-betting. Without it, the sportsbooks simply cannot function. This is something that, in the US context, the major leagues appear to have woken up to and certainly the news of the NFL’s latest deal will have those in charge of the rights for the English Premier League (EPL) and the various tennis authorities looking on enviously.

But the example of the EPL and its own exclusive deal with Genius is instructive. The deal, still subject to an ongoing legal case in the UK, also plots an exclusive route for data. But it has met with resistance from the operators and has highlighted how official data is far from being the only source in the space. 

Indeed, all the major data suppliers rely on a mix of official and unofficial data. That includes Genius Sports. 

While the big operators’ names in the US now find themselves painted into a corner with official data, the rest of the world has for now much more room for manoeuvre. To use the oil analogy again, much time has been spent analyzing the possibility of ‘peak oil’ – that moment where the price of oil tips more consumer nations to seek out other renewable sources.

In sports betting, the open-source route on data looks more attractive the pricier the official version becomes. Many within the global gaming sector have been looking with envy at the enthusiasm being shown in the US, whether that is among investors, the media or the consumers. But what they won’t want to see is ‘peak oil’ ideas of the pricing of data being imported back to Europe and beyond.

Which brings us to the $120m-a-year deal. Genius Sports will be hoping that can be recouped from a global roster of sports-betting operators. But it will be a hard sell and the likelihood is that even the biggest firms will be nervously looking at the cost of official rights versus the benefits of NFL betting becoming a loss leader.

Back in the day, when online poker was booming, many in the sector were keen on the phrase that when looking around a poker table, if you couldn’t see who the obvious sucker was, then it was you. The sports-betting operators might be forgiven for getting exactly that feeling right now about what they are about to be asked to pay for NFL data.