Silver Announces NBA Sports Betting Deal

ifmanis5

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The NBA will partner with MGM Grand on a sports betting agreement and enterprise.
Shams Charania‏Verified account @ShamsCharania 1m1 minute ago
The NBA has partnered with MGM Resorts for multiyear agreement on sports gaming/betting.

Adam Silver is announcing the deal right now.


http://www.espn.com/chalk/story/_/id/24245142/nba-first-league-betting-sponsor-deal-mgm
The NBA has become the first major U.S. sports league to sign an official betting sponsor.

On Tuesday, commissioner Adam Silver announced that the league struck a deal with MGM that will give the gaming company rights to use league highlights, names, logos and its direct data feed, as well as exclusively market itself as the official gaming partner of the NBA and WNBA.

Industry sources pegged the deal to be for three years and at least $25 million.
 

InstaFace

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Hard to believe MGM is going to make >$8M / yr that they wouldn't have made anyway on the sports betting. Are any gamblers here going to go to MGM over Caesars if the latter is offering better odds on your wager?

I'm just not understanding the value prop on either side of this. I don't think it's an unseemly relationship for a league to have anymore, I just don't understand why this was such a priority for Silver (I guess $8M/yr of found money isn't so bad, but it's still peanuts compared to most of their deals), much less why it was such a priority for MGM.
 

djbayko

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Yeah, if that's all of the revenue the NBA is generating out of this, you actually kind of wonder why Silver was pushing so hard for it. Maybe this is the best deal he can scrape together until the casinos have a few years to better gauge the business case for this.

It's not like other sports books aren't going to carry NBA games. They have been all along and don't need logos and highlights to make money.

Edit: Instaface beat me by a hair :)
 

Oil Can Dan

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I think from MGM's perspective they're betting that it's money well spent to have their name associated with NBA betting. Sort of like how Scott's is the official Lawn Care provider of MLB. Anyone using Scott's because of that?
 

InstaFace

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I think from MGM's perspective they're betting that it's money well spent to have their name associated with NBA betting. Sort of like how Scott's is the official Lawn Care provider of MLB. Anyone using Scott's because of that?
Lawn-care buyers may be far less discerning, and testimonials such as official sponsorship may carry more weight.

I know a lot of sports bettors and don't know a one who wouldn't at least shop for rates among a few preferred books. Maybe this will help MGM be top-of-mind when people are establishing relationships with sports books, particularly if they start buying airtime in select markets for ad spots during NBA games. But otherwise I'm hoping someone like @Dehere could explain the appeal.
 

NoXInNixon

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Hard to believe MGM is going to make >$8M / yr that they wouldn't have made anyway on the sports betting. Are any gamblers here going to go to MGM over Caesars if the latter is offering better odds on your wager?

I'm just not understanding the value prop on either side of this. I don't think it's an unseemly relationship for a league to have anymore, I just don't understand why this was such a priority for Silver (I guess $8M/yr of found money isn't so bad, but it's still peanuts compared to most of their deals), much less why it was such a priority for MGM.
Less discerning bettors are going to be impressed by the flashy highlights and the use of actual team names. Also, I'm sure there will be branding at NBA arenas that will drive market share. And there will surely be branding at MGM properties in places where sports betting is legal. Once Massachusetts gets with it, I'm sure MGM Springfield will gain a decent amount of business.
 

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Papelbon's Poutine

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I’m no economist or marketing expert, but I’m assuming that’s in part to stave of their sliding position with Bud and maintain their foothold with Bud Light. Bud Light has twice the market share of the second highest sold beer in the US, Coors Light, but Bud itself got passed by Miller Light last year. I think that’s at least in part trying to product their flagship in a bidding war.
 

Reverend

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I’m no economist or marketing expert, but I’m assuming that’s in part to stave of their sliding position with Bud and maintain their foothold with Bud Light. Bud Light has twice the market share of the second highest sold beer in the US, Coors Light, but Bud itself got passed by Miller Light last year. I think that’s at least in part trying to product their flagship in a bidding war.
Correct.

The more useless fungible your product, the MORE it's success is based on marketing.

It makes sense if you think about it, and it's fundamentally the answer to a whole bunch of ostensible rhetorical questions people have about commercials that go, "Why do they bother... I mean, who doesn't know who they are..." or some such. I mean, that's exactly why, right?
 

kenneycb

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Anheuser-Busch paid $1.5 BILLION for Bud Light to be the "Official beer of the NFL" for 6 years.

http://www.espn.com/nfl/story/_/id/14050224/anheuser-busch-nfl-extend-partnership-2022-15-billion

Are that many people going to switch to Bud Light who otherwise wouldn't because they can put the NFL logo on their cans?

This is advertising for MGM and it is an insanely good deal for them compared to other deals of this type.
You can go in a liquor store in pretty much any town, in any state, on pretty much any day and buy beer. You can go to Las Vegas and New Jersey to gamble on sports. The markets are not close to being comparable. The calculus may change but I imagine it will take more than 3 years for the changes to become more widespread and take hold.
 

bankshot1

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The benefits to MGM seems hard to quantify, as the league logo etal probably won't drive additional NBA wagering.

Maybe its a loss leader/marketing cost to drive other casino business.

Whats interesting is that a benchmark has been established for the NFL to price off of, if it wants to. If the NBA is worth $8M a year, whats the NFL worth?