Major League Baseball Teams And A New Revenue Stream: Online Gaming Business...

Major League Baseball Teams And A New Revenue Stream: Online Gaming Business Partners

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In the wake of massive financial losses incurred during a pandemic-shortened 2020 baseball season, where no fans watched games in person until the playoffs, Major League Baseball teams looking for any new revenue streams may soon follow the Washington Nationals’ and Chicago Cubs’ lead. 

“It’s a great idea,” one league source said of the Nationals’ announcement Monday that the club had entered into a “multi-year, exclusive partnership” with digital gaming company, BetMGM. The business arrangement includes the opening of a sportsbook adjacent to Nationals Park, the team’s home stadium in the capital. 

The Cubs last September made a similar business move, announcing a partnership between the storied franchise and Daily Fantasy Sports (DFS) online betting company, DraftKings. 

A Supreme Court ruling nearly three years ago — when the country’s highest court removed the federal ban on legal sports betting in states — paved the way for MLB and the 30 teams to potentially capitalize on billions in new revenue. But there are still some legal hurdles to clear for teams considering such business propositions, and whether players should be compensated with some of the revenue made through these partnerships. And there are ethical and moral concerns raised when considering baseball’s murky history with regard to the issue of gambling. 

“MLB is promoting these relationships,” said economist Andrew Zimbalist, a Smith College professor and Forbes contributor. “If more people are betting, more people are watching, and that raises TV revenue. It would also enable teams to raise ticket prices — depending, of course, upon when fans are allowed back into stadiums. There is greater fan avidity. One of the things sports leagues are contending with is the proliferation of the internet and all different types of entertainment sources. There is more competition than ever before. 

“If you’re going to further build a fan base, sports betting is going to do that.”

In order for the Yankees and the Mets to capitalize on such a potentially lucrative partnerships, however, state laws need to be ratified. New York Gov. Andrew Cuomo earlier this month announced a proposal to authorize mobile sports betting in the state, and now that proposal must go through the state legislature.  

“Under Governor Cuomo’s proposal, the New York State Gaming Commission will issue a request for proposals to select and license a sports operator or platform to offer mobile sports wagering in New York,” read part of a press release from Cuomo’s office. “This operator or platform must have a partnership with one of the existing licensed commercial casinos.”

Cuomo also mandated that any mobile apps used for sports betting must include protections “against abuses and addiction,” although the press release didn’t outline any such safeguards.

“New York has the potential to be the largest sports wagering market in the United States, and by legalizing online sports betting we aim to keep millions of dollars in revenue here at home, which will only strengthen our ability to rebuild from the Covid-19 crisis,” reads the Cuomo press release.

Baseball’s all-time hit king, Pete Rose, received a lifetime ban from the sport for betting on baseball games, including those that featured the Cincinnati Reds, the team he played for and managed in the 1980s. And eight members of the 1919 Chicago White Sox, including “Shoeless” Joe Jackson, were banned for life for throwing the World Series that year. 

One sports attorney said that while these business partnerships between teams and online gaming companies are “an alternative revenue source, especially if there is no attendance this year,” there should be regulations in place to prevent threats to the integrity of the game.  

“If I’m a gambler, and I know you get Batter X out with a curveball any time he gets two strikes, you can be sure I will bet on a pitcher trying to curveball Batter X to infinity every time he is 0-2 in the count,” said the sports attorney. “On the flip side, teams have to generate revenue any way they can after last year.”

After the 2018 Supreme Court ruling, former baseball commissioner Fay Vincent went a step further in an interview with the New York Daily News, asking if a “gambling commissioner” would be appointed to help prevent a black cloud from enveloping the sport.

“How are we going to deal with a totally blank sheet?” Vincent asked in the 2018 Daily News interview. 

But Zimbalist said he thinks professional baseball players — whether making the minimum or as high as $30 million a year — would not be as likely to “fall prey” to gambling sins in this brave new world of the sport having business ties to legal sports betting.

“It’s hard for me to imagine,” said Zimbalist. “These players are multimillionaires, so I don’t think there would be deleterious effects for the players. Maybe there might be referees or umpires on the take. My biggest concern would be for college athletes and college sports. Those athletes fit the circumstances of the Chicago Black Sox players.”

Zimbalist also said that MLB players should “absolutely” seek to receive additional compensation from these types of deals. 

“The players are providing the source for the betting,” said Zimbalist. “It might be easier in salary cap leagues (like the NBA), where salaries are directly tied to revenues, although the unions have to make sure that betting revenues are included in defined revenue.

“In MLB, it should work out that as team revenues grown, the players become more valuable to the teams (the owners) and should be able to command higher salaries,” added Zimbalist.



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