Ben Margot/AP
- The coronavirus pandemic hit many sports betting and media companies hard last week, as major sporting events including the NBA season and March Madness were suspended or canceled.
- Industry executives, advisors, and investors told Business Insider how they're coping with the recent, and potential long-term, shifts.
- Some are looking to cut costs, holding product launches and shelving marketing campaigns.
- Others are getting creative to keep fans engaged, looking to topics like politics or leaning on personalities.
- "Eventually sports will come back," one insider said. "But what's the hole going to be that we're digging out of whenever all that happens?"
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US sports-betting companies are looking for ways to cut costs, and stay relevant with sports fans, amid a dearth of live-sporting events caused by coronavirus concerns.
In the past week, many of the year's biggest - and most gambled on - sporting events, including the regular NBA season, the March Madness college basketball championships, and Premier League soccer matchups have been canceled or postponed.
Prior to the cancellations, insiders in the sports-betting industry that Business Insider spoke with seemed largely optimistic that online sports-gambling would persist, even if games were played to empty stadiums and casinos cleared out.
The thinking has changed since last Wednesday when the NBA suspended its regular season, tossing the lucrative playoffs and finals into question. The NCAA subsequently canceled March Madness, a major event that sports-betting companies had planned product launches, marketing campaigns, and promotions around.
Now, gaming operators and media businesses that had been capitalizing on the betting industry are trying to figure out how to keep their operations on track until live sports return to the air.
Some companies are looking for ways to cut costs, or turning to smaller events like horse racing or topics like politics to keep fans interested. Long term, they're wondering how the current disruption to daily routines will shape legal sports betting in the US, which only took off after a federal ban was overturned in 2018. Consulting firm Activate previously projected the industry could bring in $19 billion in revenue by 2023.
"Everybody is still in triage mode right now and trying to regroup," said Chris Bevilacqua, cofounder of Bevilacqua Helfant Ventures, a media advisory and investment firm that sells products and services to the sports and entertainment industries. "Eventually sports will come back ... but what's the hole going to be that we're digging out of whenever all that happens?"
Some sports-betting and media companies are looking to cut costs
Some sports-betting and media companies are looking to cut costs and conserve cash in the coming weeks and months, amid uncertainty around when live sports, and the US economy, will rebound, multiple insiders said.
Product launches are starting to be paused. Marketing plans are being shelved.
Bevilacqua, whose firm had planned to release a software tool on opening day of the MLB season in March, said the product launch is now on hold. The company is using the time to fine-tune the software, and continuing to provide its other products and services to the industry.
"It was not good timing for us," Bevilacqua said. "We're in the same boat as everyone else ... Product road maps and iterations are understandably going to change."
Media companies that may have hoped to strike deals with gaming companies after seeing Penn National Gaming's $163 million deal to acquire a stake in Barstool Sports are likely dashing those dreams for now. Deal chatter has all but dried up.
"Up until a week ago I think everybody was pretty bullish about deals that could be done," said one industry advisor, who has advised multiple media companies that are moving into sports betting. "A lot of that is going to be put on hold."
Instead, between discussions on how to protect their families during the coronavirus outbreak, executives are trying to figure out how to keep their employees safe and on the payroll.
"Everybody is hunkering down and preparing contingency plans to keep their businesses operating," the sports-media advisor said. "They're thinking through how to, frankly, preserve their employee bases and trying to avoid having to lay people off."
The Action Network, a sports-media company that sells subscriptions and takes commissions for referring customers to sportsbooks, doesn't expect to do much marketing for its platform in the coming months, said Chad Millman, its chief content officer. With few live sports airing, there aren't big enough audiences that the outlet could convert into subscribers to make the spend worth it.
"If you're going to be running a business in any industry right now, you're going through your budget and asking what can we do without," Millman said.
Digital-media companies are getting creative to keep sports fans around
Digital-media companies like The Action Network and Barstool Sports are getting creative to keep sports fans around without live games to cover.
Millman at The Action Network said his content team held a pre-planned meeting last Thursday to create a game plan if sporting events were canceled. "That meeting became more real and less theoretical," Millman said.
The Action Network, which offers news and stats for sports bettors, is now covering free agents like Tom Brady in the NFL, and how those deals could impact future odds and fantasy-sports markets. It's focusing on other upcoming events that are still on the schedule, like horse racing and the April return of UFC. And it's ramping up its ongoing political coverage around the Democratic primaries and debates, which could help generate affiliate revenue as betting companies experiment in the space.
Daily-fantasy-sports company DraftKings, which also runs sportsbooks in the US, ran a free-to-play pool around Sunday's Democratic debate, which The Action Network helped draw visitors to, for instance.
"For us," Millman said, "the challenge is going to be how do we continue to fuel an audience without a sports calendar."
The Action Network is also having a little fun around March Madness. It created a "March Sadness" bracket and has been simulating games. Players are assigned teams at random and the winner, to be announced on Monday, will get a $1,000 prize. Thousands of people signed up to play, Millman said.
Barstool Sports, which has always been more focused on entertainment than hard news and information, is giving its personalities more runway in the absence of live sports. Founder and personality Dave Portnoy has started day trading and chronicling his exploits. Sam Riggs Bozoian, another personality, is practicing his golf putt at home. Kate Mannion is counting how many trains pass her apartment window.
"We've always followed what those personalities are interested in," said Erika Nardini, the CEO of Barstool Sports. "What's been so fun about the last 72 hours is people are doing all sorts of different things ... We're not a company that needs a studio to create."
Nardini said more people have been visiting Barstool's blog, in part because the company is publishing more often.
The coronavirus pandemic's disruption of live sports could shape legal sports betting in the US
While some more established sports-betting and media businesses may be able to bide time, early-stage companies that aren't generating revenue yet are in a tougher spot.
"Early-stage companies have the toughest road," the advisor said. "Venture-capital money can become more sparse. And later-stage companies that have established businesses maybe are perceived as safer bets."
One venture capitalist who invests in sports and technology startups is advising the entrepreneurs he works with to stay focused, and use the time to build relationships with sports leagues, partners, consumers, and even potential recruits that may not have given them the time of day beforehand.
"It's a really tough time," said Wayne Kimmel of SeventySix Capital, which has holdings in startups like VSIN, ShotTracker, and US Integrity. "I want us to keep moving forward. This is a great time to establish and strengthen relationships."
Kimmel said he's still investing, and has made new and follow-on investments to portfolio companies in recent days.
While sports betting and media companies are focusing on the immediate future, they're also wondering how a shift in consumer habits could shape the US' legal sports-betting industry that only started to take off in 2018.
Will the way people watch and bet on sports change? Will new regulations limit who can attend games? Will states that have not yet legalized sports betting change the way it's regulated? Will it drive more online and mobile sports gambling when sports return?
"I wonder if people will come up with more creative ways of betting," said Mohit Kansal, a partner at the Toronto-based private-equity firm Clairvest Group, which has holdings in a number of gaming companies, including casinos and racetracks. "The biggest question is, how does this affect consumption in the long term?"