Pennsylvania is launching iLottery,online casino,sports betting

Philadelphia TV Advertising Could Be More Useful To NJ Sportsbooks Than PA Casinos

retro TV in front of turquoise background

Legalized sports betting is already proving to be an asset for television advertising revenue.

Three states outside of Nevada have rolled out regulated wagering: Delaware, New Jersey, and Mississippi. As a result, CBS CEO Les Moonves, speaking during an earnings call last week, cited betting-related ad revenue rolling into a CBS affiliate in Philadelphia, which, he added, creates excitement for a similar spike in the broadcasting company’s home of New York City.

Moonves added that sports betting advertising is “a category that has unbelievable upside.”

In Pennsylvania, however, that upside may only be pie in the sky rather than realized.

Sportsbook advertising mirrors DFS advertising in ’15

It’s interesting to see Philly reaping the rewards of sports betting dollars without a sportsbook operational in the Keystone State.

Sports betting is legal in Pennsylvania, thanks to a gambling expansion law passed last fall. Yet not one casino within the state has applied for a $10 million sports betting license.

To offer sports betting, casinos need to pay a $10 million one-time licensing fee and impose a 36 percent revenue tax on regulated wagering.

That said, Valley Forge Casino should offer wagering courtesy of a partnership between soon-to-be-owner Boyd Gaming and FanDuel GroupParx Casino also plans to offer sports betting via its deal with GAN. Both lined themselves up to make a run at the sports betting industry, even if applications have yet to be submitted for licensing.

It is no surprise that casinos are shelling out advertising dollars on sports betting. A similar trend occurred just three years ago when DraftKings and FanDuel were going head-to-head for daily fantasy sports supremacy.

During that time, the two DFS giants burned through $400 million in advertising. Each served as an ad-spending leader. Together, they helped build a billion-dollar industry.

Now, the two companies are both stepping foot into the sports betting world — and certainly, both are willing to go through a similar marketing process. Still, it will not be easy. Especially in Pennsylvania.

PA casinos might not have firepower to compete with NJ

Currently, it is New Jersey sportsbooks buying up the Philadelphia ads. Once football season starts, those spots will likely get even pricier.

The advertising slice of the pie is already running thin in the Keystone State though. Especially when compared to its New Jersey competitors.

When casinos and lobbyists argued against sports betting and online gambling tax rates in Pennsylvania last year, they often cited marketing costs.

While the costs for sports betting isn’t directly comparable to online gambling, the latter can shed some light on the former. Take a look at a breakdown of where $1 of online gambling revenue goes in New Jersey compared to Pennsylvania, as reported in our white paper:

The charts above reflect how $1 in online gambling revenue is dissected in both New Jersey and Pennsylvania. As you can see, each state has roughly five percent of profit left over after all is said and done. But the taxes (17.5 percent in NJ, 42 percent in PA) are concerning for Pennsylvania. With such gouging taxation, there is little left over for other areas, namely advertising. NJ boasts double the percentage available for ads.

For sports betting, New Jersey taxes its sportsbook operators at just over 14 percent. As mentioned above, PA holds a 36 percent cut of betting revenue. A five-year sports betting license in NJ runs $100,000, while a one-time payment of $10 million is the cost for similar licensing in PA. Before even rolling out sports betting operations, casinos are already in a deep hole, leaving little to spend on advertising.

The potential of sports ads can’t be overstated

Few success stories do not involve aggressive advertising. The same holds true for PA sports betting.

To realize the potential for the industry in the Keystone State, casinos and sportsbooks need to promote themselves, their brands, and their operations. They cannot simply rely on worth of mouth. But with steep licensing fees and tax rates, success is difficult. Particularly with aggressive campaigns from their Garden State neighbors.

Television executives and even some marketing experts recognize the potential for betting-related advertising. There’s an untapped market to reach, and a barely-opened flow of ad revenue, and viewership, to cash in on.

A 2016 study by the American Gaming Association and Nielsen Sports analyzed the relationship between NFL regular-season games and sports betting. The study found that adults who wagered on the NFL watched 19 more games in 2015 than those who abstained from betting. That doubled the ratings across major broadcasts and cable networks. If sports betting was legalized, the study concluded, regular-season viewers would jump from 40 million to 57 million and they would watch more programming for longer periods of time.

Certainly, those properties benefit from having physical sportsbooks that bettors or potential bettors can see. Yet, according to a report by the Gambling Compliance, there is potentially $400 million to be made in the PA sports betting market. All tools in the belt need to be used. Especially advertising.

About

Grant Lucas is a longtime sportswriter who has covered the high school, collegiate, and professional levels. A graduate of Linfield College in McMinnville, Grant has covered games and written features and columns surrounding prep sports, Linfield, and Oregon State athletics and the Portland Trail Blazers throughout his career.