A customer makes a sports bet at the Ocean Casino Resort in Atlantic City, N.J. on September 6, 2022. In the fifth year of legal sports betting in most US states, action is accelerating because of microbetting, the ability to place a bet on a result as accurately targeted as the result of the next pitch in baseball or the next game in football. (AP Photo/Wayne Parry)
Historically, Q4 advertising was the most expensive of the year, driven by high demand during the holiday season. Traditional product categories increasing their marketing budget include retailers, toys/games, apparel, alcoholic beverages, and movie studios. And every two years, political ads collapse billions in advertising dollars. New to the list are sports betting.
Every fourth quarter, the NFL and college football are in full swing, there is post-season baseball, and the NBA, college basketball and the NHL begin new seasons. This year will also see the quadrennial FIFA Men’s World Cup football tournament from Qatar. The global event has been postponed from June-July to November-December due to the heat.
From the fourth quarter, Nicole Ovadia, VP Forecasting & Analysis, says BIA Advisory Services: “It is a very busy time for sports betting and so we expect a spike in ad spend from the major players in this space as they compete for customers, especially in the markets where sports betting is new. ” John Casillo, an analyst at TVREV, adds, “Sports betting is seasonal, with a specific fall and winter emphasis for the NFL.”
Sports betting revenues: Sports betting revenues have increased. For the first half of 2022, revenue was just over $3 billion, compared to $4.3 billion for all of last year. Morgan Stanley predicts sales will reach $7 billion by 2025. Also, Americans will bet $57.2 billion on sporting events in 2021, a year-over-year increase of 165%.
To grow revenue (and advertising dollars) is the continued legalization of sportsbooks by states. Last month, Massachusetts became the 36th state to legalize sports betting (Washington D.C. also legalized it). Massachusetts joins Maine, Ohio, Nebraska, Kansas and Florida as states that have legalized gambling but have not yet enacted regulations.
California Ballot Referendum: California, the most populous state, has legalized sports betting on its ballots this Election Day. Kantar/CMAG reports that ad spend already exceeds $300 million. Compared to previous voting measures, Steve Passwaiter, a senior advisor to Kantar/CMAG notes, “It’s clearly set a new record, spending to date has surpassed totals for the 2020 measure [Proposition 22] for gig workers.” In addition, California’s proposals so far have easily surpassed the ad dollars spent in statewide political elections this year (the Pennsylvania Senate race was the second most expensive). Alaska also has a sports betting referendum in November.
California’s legalized sports betting has two proposals on the ballot. Proposition 26 only allows casinos and four racetracks owned by Native American tribes to allow personal gambling. Native American tribes, who currently have the only legal rights to gamble in California, support this proposal financially. Proposition 27 would legalize mobile sports betting statewide and has funding from sportsbook companies, including DraftKings and FanDuel, as well as Major League Baseball. A third group is against legalizing sports betting.
Local sports betting ad spend: For local advertising, BIA predicts that sports betting ad spend will reach $1.8 billion by 2022, a significant 80% increase from 2021. By 2024, BIA expects local ad spend for the sports betting category will be $2.9 billion. Nicole Ovadia of BIA says: “As New York and other larger markets have made online sports betting legal this year, that has led to a significant increase in ad spend. BIA also predicts that it will grow significantly vertically between now and 2024, when it will reach nearly $3 billion. This jump is contingent on California voting to legalize online gambling by 2023 and go live in 2024.”
Local radio also benefits from Sportsbooks’ seasonal ad spend strategy. According to Inside Radio, for the week of September 5 (which coincided with the start of the 2022 NFL season), three sportsbook companies were in the top 100 advertisers after a few months of silence in marketing activity. DraftKings, ranked ninth among all advertisers with 28,945 AM/FM spots, led the most radio ads run by a sportsbook advertiser in a week. FanDuel ran 11,268 ads in 52nd place and Caesars Sportsbook aired 6,766 messages at No. 86. BIA recently raised its forecast for sportsbook radio ad spend from $150 million to $164 million for the year.
NFL: The NFL will boost the popularity of sports betting in the fourth quarter. According to the American Gaming Association, 46.6 million Americans plan to bet on the NFL by the 2022 season. Front Office Sports calculates that this accounts for 18% of all American adults and a 3% increase from last season. Like last season, the NFL will limit the number of sportsbook ads for each game to six on television and Amazon Prime. One ad can be broadcast before kick-off and another during halftime. There are currently five advertisers approved by the NFL; FanDuel, DraftKings, Caesars, BetMGM and FOX Bet. Earlier this week, Amazon Prime announced that DraftKings will be a sponsor for their inaugural season of Thursday Night Football. In addition, as in the past, sportsbooks in NFL stadiums will remain closed during games.
Sports betting ad spend on National TV: As expected, NFL games dominate national TV spend with sports betting advertisers. Analyzing iSpot data, John Casillo points out that by 2021, 41.7% of TV ad impressions — and 81% of estimated national TV ad spend — for sports betting brands were allocated to the NFL.
For the first week of the 2022 NFL season, estimated sports betting ads accounted for 4.80% of NFL TV ad impressions and $24 million in ad spend. These numbers are comparable to Week 1 of 2021 (4.83% ad impressions and $23.8 million in ad spend). For Week 1 of 2022, FanDuel led with $13.8 million in ad spend, followed by DraftKings ($5.4 million), BetMGM ($2.6 million) and Caesars ($2.2 million).
In addition, iSpot reports that estimated sports betting ad spend on national TV is on the rise, from $64.6 million in 2020 to $199.7 million in 2021. Year-to-date, with the NFL season just ending begins, ad spend has already reached $161.7 million. Casillo points out that national sports betting ads could continue to grow in the coming years as more states legalize mobile sportsbooks and sports betting in general.
Magna Global noted in their latest ad spend forecast; sports betting is becoming an important category; so far, local and digital media have accounted for the bulk of the spending, but national TV will increase its share as it is legalized in more and more states (New York this year, California and Texas possibly in 2023).
Sports betting ads also extend beyond the traditional media. For the 2022-23 season, the NHL will be the first to have a “3” x “5” ad patch on the front of players’ uniforms. Three of the 32 franchises have a patch associated with casinos and betting. The Arizona Coyotes will have an ad from Gila River Resorts and Casinos; the Vegas Golden Knights with Circa Sports and the Washington Capitals with Caesars Sportsbook.
