Tuesday, September 30, 2008

Australian Professional Sports Linking to Online Gambling Firms

As opposed to the stance of professional sports in the US (see related post), in Australia, teams are actively working partnerships with gambling firms -- and earning extra cash. They do have limits on the scope of wagers offered, such as limits on whether the teams can profit or loss from a single match, and limits on wagers on political or other non-sporting propositions.

The cash isn't large, but $2 to $3 million (Australian dollars) per year isn't insignificant. Professional sports leagues' salary structures in other countries are generally not as large as their U.S. counterparts. For 2008, the Australian National Rugby League has a salary cap of $4.1 million (Australian dollars), which is approximately $3.25 million U.S. dollars. So, adding $2 to $3 million in easy revenue when you're only paying out $4 million in salaries (hopefully getting revenues in excess of costs), just adds to the profit picture. The Canberra Times article has information on the gambling deal just struck with the Gold Coast Titans of the NRL. For the Australian Football League, their 2008 salary cap is $8.5 million (AUD) / $6.75 million (USD). So, $2 to $3 million would be a material boost to that league as well. The Australian Football League has the highest salary cap of the professional sports leagues in that country.

Two excerpts from the article are very informative and show the different (and rational in my opinion) perspective of sports leagues in other countries and the leagues here in the U.S.

The Gold Coast Titans CEO was quoted that he anticipated criticism of the club's move into gambling but argued that bookmaking organizations were making money from betting on sport, including the NRL, so they might as well profit.

The best quote is, "while we accept that sports betting is a reality and that clubs are looking to build revenue streams, we will retain the right to examine each proposal on a case-by-case basis," NRL chief executive David Gallop said.

Huge. The chief executive (i.e. commissioner) of a professional sports league accepts sports betting as a reality and accepts the desire by clubs to tie into that to build revenue, but reserves the right to intelligently review and regulate such activity. Seems to make sense to me.

The gambling entity has agreed as part of the deal to implement safeguards to protect the integrity of the game and players and in addition the team signed a betting integrity agreement.

When will the U.S. sports leagues figure this out?

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Thursday, September 25, 2008

NFL and Gambling Linked? Say It Ain't So!

Online Casino Advisory has an article discussing the linkage between the founders of NFL and gambling. History is history so that isn't really big news. However, the NFL's stance opposing gambling does seem more than a bit hypocritical, if not outright schizophrenic. Gambling interest helps drive NFL viewer interest.

The NFL does have communications with the Nevada sportsbooks, so that unusual betting patterns can be quickly discerned and action taken. In that sense, legal sports betting helps protect the integrity of the game. The NFL needs to look at the recent NBA officiating scandal and make sure that that kind of thing doesn't happen.

I don't think players are the weak link. With the high salaries of professional atheletes in the US professional sports, the players aren't the people likely targeted by bad guys -- it's the officials. They don't have the publicity or notoriety and they don't get paid nearly as much.

College is a different matter. My opinion is that college sports wagering needs to be properly controlled. It would be naive to think it is only happening in legal Nevada sportsbooks. You still need the few legal books to help detect unusual wagering patterns. College players are vulnerable due to NCAA rules with regard to income.

I think the professional leagues' opposition to legal sports gambling is misplaced. They should embrace it. What needs to happen is that the leagues need a cut of the wagering. For typical fixed odds wagering, if a book is balanced, the sportsbook should gross approximately 4.5%. So, the leagues get 10% of that, or 0.5%. If approximately $1 billion is wagered illegally each week of the NFL regular season, and that wagering was made legal and regulated, the NFL would pull in an additional $5 million. For a 17 week regular season, that's $85 million. Figuring just an additional $15 million for the playoffs and Super Bowl, a round $100 million in additional revenue every year. Not chump change.

With that, they could easily pay officials more and ensure proper security and game integrity with beaucoup cash left over. Not that officials won't make bad calls, but the public would be more sure the bad call was just that and not something worse.

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Friday, September 5, 2008

Gambling as Entertainment?

Is Gambling entertainment, or just gambling? The Southtown Star article mentions that leisure activities are getting more costly and a gambling outing can be just as enjoyable, with the bonus of possibly winning some money in addition to having a good time.

The author does mention that gambling can get out of control, and become a huge problem in one's life. No argument there. Moderation and responsibility are important. The anti-gambling crowd uses the examples of people that fall into trouble as a means to try and outlaw or limit gambling expansion, but Prohibition ultimately shows the pool logic of trying to stop people from doing what they want to do that doesn't directly impact others. If 6% of the population has a drinking problem, and we don't outlaw alcohol, why outlaw gambling if 1% of the population has a gambling problem?

What I found interesting in the article is the implied comparison between an "entertainment" night out and a "gambling" night out. Could they really be similar in terms of cost? What follows below is a hypothetical comparison of an evening for two. One evening is a typical movie date and the other is a gambling date.

The movie date consists of a dinner for two at a casual dining restaurant, followed by a movie and a nightcap of a couple of drinks at a local pub. The gambling date consists of a dinner for two at a tribal casino buffet, followed by two hours of slot wagering on a 5-line nickel machine (each person playing one machine), ending with a nightcap of a couple of drinks at a local pub. I don't include the cost of gasoline to and from the venues, but we'll treat them as equivalent for this exercise.

Movie Date

Dinner for 2 (incl tax/tip) $60 - 1 hour
Movie Tickets for 2 $15 - 2 hours
Movie Snacks (1 popcorn, 2 sodas) $8
Nightcap (2 drinks each) $20 - 1 hour

Total cost $60+$15+$8+$20=$103
Total time: 4 hours

Gambling Date

Buffet Dinner for 2 (incl tax/tip) $45 - 1 hour
Gaming Play - 2 hours
5-Pay line nickel slot machine
5 lines played @ 6 plays/minute
Payback - 92%
Theoretical loss / minute - 12 cents
Theoretical loss / hour / machine - $7.20
Each person plays one machine
Nightcap (2 drinks each) $20 - 1 hour

Total cost - $45+($7.20*2)*2+$20=$93.80
Total time: 4 hours

So, yes, it is possible to gamble at a higher wager level and for a longer period of time, but given this scenario, a gambling evening can be as lengthy of an escape as typical leisure activities, at a comparable cost. And with the gambling activity, the possibility exists that you can actually win something, possibly making the gambling date very inexpensive indeed.

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