Canada’s professional sports sector could soon tap into sports gambling’s full monetary force, and that has the potential to dramatically change the landscape of several sports-related industries over the next few years.
Experts agree that Ottawa’s Aug. 12 decision to begin allowing the provinces to regulate single-game sports betting as they see fit starting on Aug. 27 is a key catalyst. The legislation allows sports teams and leagues to tap into what the Canadian federal government estimates is an annual $10-billion industry in illegal, underground gambling transactions in Canada and another $4 billion in “grey market” betting placed by Canadians overseas.
But the COVID-19 pandemic’s heavy blow to professional sports finances since March 2020 may have also played a crucial role in making team owners more open to the idea of sports betting.
The pandemic forced leagues to go as long as a full season without ticket and concessions revenue, which seriously damaged business for the National Hockey League (NHL), the Canadian Football League (CFL) and other gate-revenue-driven professional sports groups.
“I think a lot of this — if not all of it — has to do with revenue,” said Aaron Korolnek, host and producer of TSN Edge — a fantasy sports/sports-gambling radio show on TSN1050 in Toronto. “When you go back to 2012-2013 when single-game betting legislation was tabled, the NHL and its commissioner, Gary Bettman, were staunchly opposed because of match-fixing. Well, what’s changed in the last nine years for match fixing? Nothing.
“The only thing that has really changed is the financial landscape of their league. And looking at the future of their bottom lines, they realized this is something that their audience wants and something that can grow revenue and help us demonstrate our league is viable in the present and future.”
In this sense, professional sports organizations’ dramatically readjusted attitude toward gambling goes far beyond Canadian borders.
Veteran Vancouver sports journalist Matt Sekeres noted that it wasn’t that long ago that American professional sports held the same battle lines against gambling — a stance taken by stakeholders that included North America’s biggest, most profitable sports entity: the National Football League (NFL).
“I covered a couple of Super Bowls in 2003, 2004 and 2005 where the NFL didn’t even accept Las Vegas Convention and Visitors Authority money because they thought it was too great a link to single-game sports betting,” said Sekeres, now the co-host of the Sekeres & Price online show and podcast. “They told Las Vegas, ‘You can’t even as a city appear on our Super Bowl telecast.’ And yet, here we are, 15 years later, with every major sports league on board.”
The United States has been open to sports betting since 2018, when the State of New Jersey won its Supreme Court challenge to give state governments control over legalizing sports gambling.
To date, 21 states (and Washington, D.C.) have legalized sports gambling; another 11 have passed legislation to legalize it and are awaiting approval from either regulators or other stakeholders.
Paul Burns, president and CEO of the Canadian Gaming Association (CGA), said the changes in U.S. law made Canada among the last North American holdouts without legalized single-game legislation. Burns — who lobbied Ottawa for that change for a decade — said acceptance of sports gambling among the general public and others has been high for more than a decade, meaning that once the sports world dropped its opposition, the status of sports gambling in Canada had only one logical direction to go.
“We saw the last remaining stakeholders who weren’t on side in Canada were professional sports leagues,” Burns said. “Once the law changed in America, the U.S.-based teams started to better understand what sports betting is and how they can take advantage of it. These teams started to support it, and that’s when we started to see the last stakeholders start to come onside... The awareness in Canada was going up and up, and I think we saw the inevitability.”
He also noted that the benefits of sports betting revenue have been long sought after, not only by casinos and other betting services providers, but also by business groups, unions (for unionized casino workers) and — perhaps most surprisingly — by amateur sports.
The CGA’s focus has been on persuading legislators rather than the public, Burns said, and the most important benefit of legalizing single-game sports betting may be for the government to retain its ability to regulate an industry that was happening, regardless of whether it was legal.
“We know there is about $14 billion being wagered every year in either offshore and illegal gambling operations,” Burns said. “So we know today that Canadians are spending that amount... So the legal industry will try to repatriate some of that money. Will that market get bigger than that? It very well could, because as more exposure of the products happens, we can start seeing more consumer choice.”
In that sense, Korolnek compared the situation to being eerily parallel to that of the cannabis industry at its inception, with a similar level of public acceptance leading to a large underground market that can now be monetized by legal-market players.
In addition, both he and Sekeres said they have observed advertising dollars from gambling companies and providers starting to flow into Canadian sports media — another potential game-changer for an industry that, along with the rest of the mainstream media, is struggling with major economic uncertainty.
Korolnek cautioned that the regulatory pieces being introduced by each province will be crucial, because “there will be stories of people losing their life savings,” as there were with casino gambling.
He also noted that professional sports’ initial concerns around players betting on their own games remain valid, because there is no way of knowing how big a topic single-game betting is within a team’s roster without being in the locker room itself.
But Korolnek said that the legalization and de-tabooing of sports gambling is natural. He noted that every sports fan today knows how big a role betting plays in fandom, whether it’s the already legal multi-game parlay lotteries in Canada or other casual bets between friends. The advent of online gaming and fantasy sports – where money prizes may be involved — further extends the culture of sports gambling to an almost ubiquitous status within the sports industry itself.
“I do know a lot of fans who don’t bet, but for me and my generation — and I’m 33 — the main reasons my friends and I became NFL fans were gambling and fantasy sports,” Korolnek said. “My friends are not fans of the CFL at all. They live in Toronto, and that’s a common thing for people living here my age. But you place a wager, and that really draws the attention of the average consumer — my friends included.”
He said that the history of modern sports betting is deeply ingrained in Western culture given its origins in English horse-race gambling a few centuries back (although historians believe some sort of sports betting may date back 2,000 years to ancient Greece). As such, it can be argued that betting has been integral to sports since the beginning, Sekeres said, and the latest development is a sign of things to come.
“This has been cultural in England for generations. My great-great-grandfather used to go down to the betting house at the end of his block to bet on the ponies, and we are talking about the turn of the last century in London. It’s something we’ve adopted, and at the end of day, it’s just adrenalin – it’s more interesting when you have money on the line.”
The key now, Sekeres added, is for leagues like the CFL or the NHL’s Canadian teams to ensure that the betting revenue does not “flow around them as people place bets,” but rather translates to real monetary benefits for the teams’ bottom-lines.
He said it is especially vital for a league like the CFL, which lost an entire season last year to COVID-19 and now needs to find any revenue stream it can. Given that several games’ viewership in the first two weeks of the 2021 season reached 600,000 viewers this summer, the trick will be to monetize that fan attention through betting.