The NFL's New $1 Billion Sportsbook Partners

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Friends,

After avoiding any connection to legalized gambling for the past decade, the NFL has officially changed its attitude, naming Caesars Entertainment, DraftKings, and FanDuel as its first-ever sportsbook partners in a deal announced yesterday.

Here are the details:

• All three companies will share exclusive rights.

• The deal is for an initial three-year term, with the ability for the NFL to extend with two one-year options thereafter (total of 5 years).

• The deal allows them to use NFL intellectual property, engage with fans through “NFL-themed free-to-play games,” and integrate content directly into NFL.com and the NFL app.

The best part?

The package is expected to generate close to $1 billion for the NFL over the next 5 years.

For context, that’s almost what Amazon is paying annually for exclusive rights to Thursday Night Football — also known as big money :)

For those of you that don’t already know, the NFL has had a long-standing opposition to sports betting, fearing that it might eventually diminish the integrity of the game.

Here are a few examples:

• Former NFL Commissioner Paul Tagliabue spearheaded the league’s support of the Professional and Amateur Sports Protection Act of 1992 (PASPA), which made it illegal to bet on sports in the U.S — except in Nevada.

• When PASPA was in the process of being overturned by the Supreme Court, the NFL spent millions of dollars on lawyers & lobbyists fighting to uphold the law.

• When former NFL commissioner Paul Tagliabue was asked if there might ever be an NFL team in Las Vegas, he responded: “Not in my lifetime.”

• Current NFL Commissioner Roger Goodell was asked in 2017 whether the NFL had ever considered putting a franchise in Las Vegas; he responded: “Not when I’ve been commissioner.”

• In 2017, Roger Goodell told Peter King of Sports Illustrated: "We are not changing our position as it relates to legalized sports gambling. We still don't think it is a positive thing."

I could go on, but you get the point.

So now that the NFL has done a 180-degree-turn on their stance, the real question becomes — what changed?

Well, everything.

On May 14, 2018, the United States Supreme Court ruled PASPA was unconstitutional and paved the way for states to self-regulate retail and online sports betting. New Jersey, which had been the primary proponent of repealing PASPA, was the first state to take advantage of the amended laws — signing a bill that effectively legalized sports betting less than one month later.

And just like that, an entire new industry was born.

Fast forward three years, and twenty-five states and Washington D.C. have legalized sports betting, representing 27% of the US population, with many other states currently working on bills that would lead to legalization.

For example, Macquarie believes that by 2025 over 95% of the US population will have access to legal mobile sports betting in their state.

In the end, that’s why the NFL has changed its stance.

There are obvious benefits, like the ~$1 billion contract the NFL just signed, but ultimately, the acceptance and exploitation of legalized sports betting opens hundreds of new revenue opportunities for the league and its individual teams.

Only time will tell to what degree the NFL can maximize revenue from sports betting, but with about $4 billion in losses last year due to COVID-19, my guess is that they will be aggressive.

Side note: With the NFL announcing its deal yesterday, all major US professional sports leagues now have sports betting partners in place. Times have changed.

Have a great weekend, and we’ll talk Monday.

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