Deep pocketed sports books have been a boon to local media in the past year. BIA Advisory Services forecasts $1.6 billion will be spent by online gambling services on advertising in 2022, with local television getting the biggest piece of the pie at $570 million and $150 million going to local radio stations.
“This new vertical has been wonderful for local media during the most recent year to year-and-a half, as it made up for some of the shortfall in advertising spending by other verticals, such as automotive,” BIA Advisory Services Chief Economist Mark Fratrik said during a recent BIA “Leading Local Insights” podcast. “Since online gambling is not widely legal throughout the entire United States, local media that can target legal areas have been the major beneficiaries of that new advertising spending.”
Legal online sports betting arrived in New York State on Jan. 8, accompanied by an ad blitz from multiple sportsbooks that has been impossible to ignore. Within four weeks, New York became the nation’s largest sports betting market, unseating New Jersey. That allowed stations in radio’s largest market, New York City, to accept sportsbook advertising targeting New York residents. That is on top of the money already being spent by online gambling brands on New York City stations targeting residents in the neighboring states of New Jersey, Connecticut and Pennsylvania, where the practice was already legal.
Caesars Entertainment CEO Tom Reeg says dollar volumes wagered with Caesars, as well as market share achieved in the Empire State, is double what they anticipated. In fact, the New York market is as large as the rest of the business for Caesars Digital.
More States On Deck
Thanks to a landmark Supreme Court ruling in 2018 that made the decision to legalize sports betting a state-level issue, more than 30 states have legalized sports wagering, including 18 that allow online betting. California, Texas, Florida and Massachusetts, could join them next.
As more states legalize mobile sports betting, radio will continue to benefit as sportsbooks look to sew up market share in new states.
“Online gambling could not have come at a better time for the local media industry,” Fratrik says. “As more states allowed such activity, advertising skyrocketed, and we expect that growth to continue into the near future.”
Sports gambling brands including FanDuel, DraftKings, BetMGM and others invest the largest chunk of their media dollars in the fourth quarter to coincide with the NFL season.
To attract new customers, some of the nation’s best-known sports books formed long-term partnerships with radio’s largest companies. Audacy cut a long-term deal with BetMGM and iHeartMedia with Draft Kings. Last July Cumulus Media announced a multi-year, multi-platform partnership with WynnBet that made the sports betting app one of its largest advertising and marketing clients. But the deal ended earlier than expected after WynnBet’s agreement to go public was scuttled in November. Responding to what he called “the unsustainable nature of the current competitive environment in sports betting,” WynnBet CEO Craig Billings made “a meaningful curtailment” in marketing spend in November and December and began focusing on “proven performance marketing channels.”
The loss of WynnBet revenue, in tandem with the protracted delay in the automotive ad market recovery, had Cumulus warning investors last week that it will be harder to reach the upper range of its 2022 earnings guidance. But Cumulus noted it does business with 20 different sports betting companies and says it will remain a top 10 ad category, despite the loss of Wynn Bet dollars.
Meanwhile, Caesars Entertainment’s Reeg says the company will pull back on ad spending for its sports betting division as it pivots toward profitability after already exceeding the market share it was shooting for.
“We have accomplished what we set out to do,” Reeg told analysts during the company’s fourth quarter earnings call last week. “We set out to become a significant player, and it's happened significantly quicker than we thought.” Satisfied with the number of customers it has signed up, Caesar intends to focus on profitability. “Right now, we're marketing to the entire world – that's going to stop and we're going to start marketing to the most profitable customers,” he explained.