Could Regulators Derail Radio’s Sports Betting Cash Cow?
Radio is enjoying a rich cash infusion in the form of relentless advertising from sportsbooks competing tooth and nail for market share in the 18 states and the District of Columbia where online gambling is live and legal. But the deluge of ads, across TV, radio and other media, has raised concerns among regulators and industry watchdogs that could threaten what has quickly mushroomed into one of radio’s top ad categories.
In New Jersey, where online gambling has been legal since 2013 and sportsbook ads are inescapable, a top regulator has raised a red flag. “If the industry does not control itself, the government will step in and certainly create standards they may not want,” David Rebuck, director of the New Jersey Department of Gaming Enforcement, said during a panel discussion in September, as reported by The Wall Street Journal.
In Colorado, House Speaker Alec Garnett is getting complaints from viewers annoyed by ads from 25 different digital sports-betting operators competing to dominate the market. Garnett told the Journal he could impose ad restrictions – not unlike those that govern marijuana ads in the state. “What I’m trying to figure out is, will the market solve this problem itself, or is this here to stay?” Garnett said. “I think if it’s here to stay, then at some point, for sure, there’s going to be action.”
Online betting brands invested $13.8 million in broadcast radio in the first five months of 2021, according to Kantar, with the lion’s share coming from DraftKings, which plowed $11.7 million into the medium. If spending continues at this rate, it will far exceed the $20.9 million invested in radio in all of 2020. That’s because online gambling brands place the vast majority of their ad dollars in the back half of the year to coincide with the NFL season.
Underscoring how enormous the category has become, radio gets less than 10% of the total ad dollars invested by online betting companies. Across all media, online gambling companies spent $314.6 million on advertising in 2020. But that’s just a drop in the bucket of what’s to come in 2021, where $109.3 million was invested in the first quarter alone, per Kantar.
Those estimates may be conservative based on projections from BIA Advisory Services. In its latest forecast released in September, BIA estimates 2022 local ad spending in the online gambling category to be $1.4 billion across all radio markets. Over the air radio is expected to capture 8.9% of this total in 2022 or $125 million, up from $73 million in 2021.
To stave off regulation, the American Gaming Association has developed its own set of guidelines. “One of the things that we're doing is partnering with teams, and leagues and media companies to have a responsible gaming campaign,” David Forman, Senior Director of Research at the American Gaming Association, said during last week’s “Radio Works For Gaming” webinar from the Radio Advertising Bureau. The campaign turns on four tenets “that we really want to get across to people to make sure that when they're gaming, they're doing it responsibly, Forman continued. They include: set a budget and stick with it; keep it social – play with friends, family and colleagues; be informed – learn the details of the game you’re playing; and play with trusted, licensed, regulated operators. Entities that have partnered with the trade group on the campaign are sportsbooks BetMGM, DraftKings, Fan Duel, sports franchises such as the New York Jets and the Washington Football Team, broadcasters including Sinclair Broadcast Group and sports leagues such as the NHL, NASCAR and the PGA Tour.
Meanwhile, the NFL is kicking off a $6.2 million responsible betting campaign aimed at getting fans to set limits on their wagers, understand the risks of betting and know where to get help if things get out of hand.
As radio reaps the rewards of a robust new category, the AGI is looking to expand its partnership to the radio industry. “We'd love to partner with you guys,” Forman told RAB members last week. “We're talking about how we can continue to have the industry spend some money with you all, but hopefully, kind of grow this pie in the most healthy way for the long term outlook for our industry, and also for your industry as we spread to more states.”
Stakeholders hope to avoid what happened in the U.K., Spain and Italy, which have implemented restrictions on sports betting advertising after a public outcry. In 2018, the U.K instituted a whistle-to-whistle ban for all sports betting ads on TV and there is currently an effort to adopt a total ban on gambling advertising. Italy established a total ad ban in 2019. Spain followed in 2020 with a total ban on social media advertising and team sponsorships while confining radio and TV ads to 1-5am.