Cover The Spread: Why PA Pro Teams Should Look For NJ Gaming Partners

Posted on September 21, 2018 - Last Updated on September 24, 2018

For years, the idea of sports and sports betting entering marriage seemed far-fetched.

While New Jersey battled for states’ rights to legalize and regulate wagering, America’s top sports leagues constantly pushed back. They were responsible for the initial court case by suing the Garden State in 2012 after it enacted the Sports Wagering Act that legalized sports betting.

As the case bounced around lower-level courts, as it eventually reached the US Supreme Court, even after the high court ruled in favor of New Jersey to ultimately allow states to legalize wagering, leagues continued to butt heads with the idea of a legalized industry. They filed suits. They urged for integrity fees. They supported politicians who sought to craft federal regulations.

Frankly, though, sports and sports betting should not be mutually exclusive entities. They can help each other. Some franchises are beginning to realize that. Even an entire league seems to understand a bit.

For Pennsylvania, though, the convergence of sports and sports betting may not occur within its borders.

Pro teams seeing value

Yes, the respective leagues stand stout against state-sanctioned sports betting. However, several teams have already begun pairing off with casinos and sportsbooks to capitalize on the ever-expanding industry.

NJ Devils expect $5 million in sponsorships

The New Jersey Devils of the NHL, for example, estimate cashing in on $5 million by playing in a state with regulated wagering. According to a recent story from Bloomberg, franchise president Hugh Weber “expects to make about that much this season” by partnering with local sportsbooks and casinos.

That $5 million, Weber said, derives from “a handful of different sponsorship deals with a variety of different operators.”

Golden Knights strike deal with William Hill

The Devils are not alone in recognizing the value of embracing legalized sports betting. Also in the NHL, the Vegas Golden Knights recently partnered with major British bookmaker William Hill US to become the first major sports franchise to sign a deal with a sportsbook. William Hill noted the partnership means the book and the Knights will “collaborate on engaging with fans of legal betting age through various media, advertising and promotional platforms.” That includes in-arena signage, updated league-wide odds, and away-game watch parties.

Dallas looks to Oklahoma for gaming deal

Earlier this month, the Dallas Cowboys, in teaming with Oklahoma-based WinStar World Casino, became the first NFL team to partner with a casino. (This comes on the heels of owners deciding to allow casino sponsorships.) The deal allows WinStar to display logos and markings of an NFL team. Additionally, both parties can host cross-promotional events. Sports betting remains illegal in both Texas and Oklahoma, yet owners such as the Cowboys’ Jerry Jones still seeing the upside of having casinos in their corners.

MGM and the NBA kicked this all off

Even the NBA, the entire league, partnered with MGM Resorts International to make the company the league’s “official gaming partner.” As a result, MGM will use official NBA and WNBA data and branding across its land-based and digital sports betting platforms while also being promoted across the NBA’s “digital assets” that includes NBA TV, NBA.com, the NBA App and NBA social media.

The relationship between sports and sports betting is apparent. And team owners and executives are finally beginning to embrace it.

Said Golden Knights President Kerry Bubolz:

“We are always looking for innovative ways to engage different segments our fan base and provide a unique fan experience.”

Can PA take advantage?

Sports betting in the Keystone State has obviously not gotten off the ground just yet. Hollywood Casino and Parx both have licensing applications submitted to the Pennsylvania Gaming Control Board. Though both operations aren’t expected to launch until later this fall, or even the winter.

Even with eye-opening fees of $10 million for license and 36 percent tax on revenue, PA properties still see enough value and upside to sports betting. And if the trend of pro teams pairing off with casinos and/or sportsbooks, the field of potential partners abounds.

Could the NFL’s Pittsburgh Steelers or Philadelphia Eagles begin courting partners? Maybe the NHL’s Pittsburgh Penguins or Philadelphia Flyers? Or the Pittsburgh Pirates or Philadelphia Phillies of the MLB? What about the NBA’s Philadelphia 76ers?

At the moment, the New York Jets, based in East Rutherford, New Jersey, is searching for a partner. Certainly, the NFL team would like to capitalize on the New York market, though the state likely will not have sports betting go live before the football season ends. That does not mean the state is completely out of consideration, though. Just look at the Cowboys and its Oklahoma casino partner.

Pennsylvania, however, boasts one of the biggest markets in the country. It has a sports betting industry nearing its birth. The problem for Keystone State properties, though, is what they cannot offer teams that competitors in nearby states can: more money.

PA teams should look beyond Keystone State

After online gambling legislation passed in October 2017 with a sports betting measure, it seemd inevitable PA would be one o the first new states to launch it.

Obviously, that has not come to fruition. Meanwhile, nearby, New Jersey has blossomed into a booming industry, not only on the retail side but also with eight mobile sportsbooks. Since going live in June, sports betting in New Jersey has generated more than $16 million in revenue from nearly $158 million in handle. In August alone, NJ books took in more than $95 million in handle, including more than $21 million in the first month of mobile wagering.

Even if Pennsylvania gets its sports betting industry into action within the next two months, casinos might not have the assets to appeal to pro teams. Not like New Jersey.

Proximity alone brings New Jersey casinos and sportsbooks into consideration for Northeast franchises. Funds, though, push Garden State properties up the list of ideal suitors.

New Jersey’s deeper pockets are the key difference maker

As reported in our white paper, both New Jersey and Pennsylvania have roughly five percent of profit left over after paying a variety of fees, including taxes and finances needed to keep operations running. With gouging state fees and taxes, however, Pennsylvania casinos are in deep financial holes. There’s the 36 percent tax on sports betting revenue in PA. That rate is more than 20 percentage points more than NJ. Additionally, the one-time $10 million licensing fee dwarfs the versus five-year $100,000 license in NJ.

That leniency in taxation allows for NJ properties to enjoy a larger purse for advertising and marketing. One that is roughly double the allowance for Pennsylvania operators. On paper, Jersey-based casinos and sportsbooks appear more attractive to teams seeking sponsors. Even for teams located in Pennsylvania.

The number of franchises searching for casino and sportsbook partners will certainly continue to grow. After all, all owners and executives want to maximize revenue, however they phrase it.

“We see sports betting as additive to the experience for our fans,” said Weber, the New Jersey Devils’ president. “There’s a lot on the horizon.”

Though not in Pennsylvania. At least, not in the near future.

Photo by meunierd / Shutterstock.com

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Grant Lucas

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.

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