Data Wars!
Following the NBA’s call for complete control over its data if PASPA is repealed, Hannah Gannagé-Stewart looks at how the great data debate is shaping up to influence US sports betting.
Even if the US Supreme Court repeals PASPA this summer, there will be a number of fronts on which to fight before a sustainable US-regulated industry can emerge from a 25-year prohibition on sports betting across most of the country.
One such battleground is sports data. No sportsbook can run without it and, with a renaissance of fully legal US sports betting looking increasingly likely, the leagues have wasted no time in staking their claim to the connected world’s most precious commodity.
In lobbying documents circulated last month, the NBA and MLB called for operators to be restricted to the use of data “obtained from the relevant sports governing body or an entity expressly authorised by the sports governing body to provide such information”, in the event of a change in federal laws around sports betting.
In other words, they want gambling operators to have to acquire the rights to use their data in much the same way that broadcasters do to broadcast their games and tournaments.
This is on top of proposals for an ‘integrity fee’ to be levied at 1% of handle, wiping up to 30% off operators’ bottom lines. The argument is that official data feeds, if enshrined in law, will help to protect the integrity of sports being wagered on.
However, if the final deal on data rights is prohibitively expensive or restricts competition, it runs the risk of playing into the hands of existing providers to the offshore books. The cynical among us may also note that, in pushing for a data monopoly, the leagues’ also secure a slice of what promises to be a multibillion-dollar pie if a full repeal comes to pass.
Shifting sensibilities
The NFL’s 2015 deal with Sportradar may have been an early sign that the leagues’ position on gambling was starting to soften. As part of the partnership, the NFL reportedly took an equity stake in the Swiss company, which is a major supplier to gambling operators globally.
That said, Sportradar’s due diligence regarding its dealings with offshore books ramped up considerably that same year. Having been publicly linked to Betcris, an offshore book which has been the subject of multiple federal indictments for taking US bets, Sportradar instigated measures to ensure it could sever links with clients found to be doing the same in future.
The data company told iGBNA that it had terminated agreements and turned off at least five separate operators that were found to be breaching its terms and targeting US punters in recent years. “In general, we want to be the official data provider and distribute that as a partner,” says Sportradar US deputy president Laila Mintas.
She is reserving judgment on the exclusivity conditions being proposed by the leagues. “For us, it shouldn’t be a problem per se but if it limits the market and creates challenges, then it becomes counter-productive from our point of view.”
The difficulty is that any legal US sportsbetting market will be born in the shadow of an offshore market valued by H2 Gambling Capital at more than $150bn in handle in 2016.
It’s estimated that just 10% of US sports wagering takes place in Nevada, where full sports betting is legal at the point of access by US bettors, the rest being processed by books based offshore in Caribbean and Central American jurisdictions.
Not only does the US need to legislate for a visible, responsible and regulated industry, it also needs to be competitive enough to draw some of the billions of dollars currently flowing offshore into taxable domestic coffers.
The view from Europe
Football DataCo was established in 2001 as a JV between the English Premier League and the English Football Leagues, with an agency relationship with the Scottish leagues.
It holds the rights to all official data from the sport and tenders licenses for the use of its IP in media and wagering. The contract currently belongs to Perform Group’ Running Ball, which counts Genius Sports among its customers.
“If you believe sport shouldn’t get a penny from betting, you’re going to think differently, but in this connected world I think that’s an outdated attitude,” says Football DataCo general manager Adrian Ford. “The question is: ‘What’s the correct return sport should take to ensure everyone maximises the benefit?’”
Genius Sports Group has been lobbying for the use of official data feeds in the US since 2014, when NBA commissioner Adam Silver first advocated for a change in the law.
“Official data delivers the fastest, most accurate and reliable data into the betting market, which helps sportsbooks offer the best products to their customers and ultimately protects the integrity of sporting events on which they rely,” says Chris Dougan, the managing director of Genius Sports’ US arm.
“So if official data is mandated, or at least becomes a commercial requirement to operate a sportsbook in the States, then the illegal offshore black market will not have access to the fastest, most accurate data and will struggle to compete with the regulated market offering, at least where in-game products are concerned.”
Even playing field
Football DataCo’s Ford has taken a keen interest in the evolving market in the US, speaking regularly to key stakeholders, including the American Gaming Association, about the pros of official data feeds.
“If you have official data, it’s a gold standard, it’s a benchmark. It’s good for integrity and it also means that as a sport you can put some controls in as to who can use that data and who can’t,” he explains. “That’s important because you want to differentiate between the regulated market, who are the good guys, and the unregulated market, who are the bad guys”.
But how can the good guys compete if they’re playing under a different set of rules? Ford believes that the amount of money changing hands on both sides makes potential differences in data costs negligible.
“If there’s an integrity fee, you could see a world where the license to use official data “If official data is mandated, the illegal offshore black market will struggle to compete with the regulated market” was included as part of that,” he says. “Then it’s down to the leagues and market forces to make sure that their official data providers are being reasonable about the distribution costs of the data feed.”
Ford believes that the US market will be ripe for constructing commercial deals. “In my world, where there is no regulated framework between sport and betting, I only have one lever. In a world where it is multidimensional, you can see how a commercial framework arises that actually takes that problem away as long as there is an overall relationship between sport and betting in the first place.”
Nevada-based Don Best Sports, whose client list includes many of the Nevada books as well as international online operators, is also behind the use of official data in theory.
Managing director Benjie Cherniak says all providers want to work with official feeds, as long as the business model is inclusive.
“Competition breeds innovation – competition forces everyone to up their game,” he says. “So industries in which you see a monopoly aren’t as functional, in my mind, as industries in which you see competition.”
However, he adds, the issues around data are peripheral at this stage of the debate. “You have to determine who the operators will be in the first instance. It will likely be the bricks-and-mortar places, where we have casino licenses, and the first thing they’ve got to do is sort out the platform issue.
“The reality is that this data piece will work itself out over the long run, it’s not priority number one from day one. Priority number one from day one is having an operation, which means you need a platform. Within that there’s going to have to be data but that becomes a secondary thing.”
The battle, it seems, is not yet between competing data providers, or even operators and the leagues. It’s going to be a tug of war between the lucrative offshore market and the post-PASPA industry US legislators draw up.