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June 2, 2023

Editor Note: Adam Grossman takes the controls on Friday mornings. You will find his latest Revenue Above Replacement column below. I'll be back on Monday. Have a great weekend.

Fans Can Benefit From Legalized Sports Betting, Even If They Never Wager

The recent five-year anniversary of PASPA's repeal spurred reflection on how sports betting has impacted fan engagement.

Sports betting’s impact is often portrayed as a one-way street, where betting operators, leagues, and teams are seen as the primary or sole beneficiaries.

The narrative suggests that legalized wagering gives fans a reason to be literally invested in the outcomes of sporting events, which in turn make them more likely to watch games on television, purchase a ticket to attend in person or interact with a partnership activation.

But that thinking is not entirely correct. Sports fans can benefit from the emergence of legalized betting markets too, even if they never make a wager.

The sports betting gold rush gives fans access to more and different information on outcomes surrounding their favorite leagues, teams, events, and athletes. For example, movements in a sports betting lines over time can showcase potential changes in a team or player's ability to win.

“Football fans can use the betting lines as a measuring stick as to the perceived value of players on their favorite team based on how much the line moves if that player is injured,” iGaming advisor, investor and entrepreneur Benjie Cherniak said. “A similar dynamic occurs in baseball by assessing line moves based on who the starting pitcher is on a given night or who is starting goalie in the case of hockey.”

Before PAPSA’s repeal, fans were often forced to rely on media commentary as their primary source of this type of information. We've previously highlighted the problems associated with “

expert analysis

”–there's no accountability!

Studies 

have shown predictions can improve when consequences are considered as part of the decision making process. That is the case across a multitude of fields, including natural language processing models at the core of many social media listening platforms used by sports organizations.

PAPSA’s repeal has given casual sports fans access to more information from experts facing real consequences with their predictions, including how sharp bettors believe variables will impact a game (or a specific in-game situation).

“Market forces are often the best prediction tool for evaluating outcomes,” Frank Frigo (VP U.S. commercial, Metric Gaming) said. “Generally, if a market is mispriced, it is going to be exploited by informed, and well-funded bettors until it converges on a more accurate price.” 

Obtaining better information on potential outcomes is not the only way casual fans benefit from sports betting. Using this information to signal their sports expertise to their social network can be equally as important.

Signal theory is a behavioral science concept often applied to social networks. It suggests that individuals want to be able to clearly communicate information, such as their personal values, to their family, friends, and colleagues. 

A frequent example used to highlight the concept is the success Toyota found in the early hybrid car market. While its Prius had competitors with similar features and environmental benefits, the Japanese manufacturer was able to stake and maintain a market leading position because of the car’s exterior design. The Prius’ unique shape enable drivers of the car to clearly signal to their social networks their personal values on clean energy in ways more traditionally designed cars could not. 

Sports betting information can become the “Prius” of casual sports fans’ conversations, helping fans to signal their sports expertise to their social networks.

Sports industry leaders should consider encouraging fans to have these types of conversations given the impact that strong social networks and fan communities can have on sports organizations.

In a research

article

 entitled “Affective Outcomes of Membership in a Sport Fan Community” for

Frontiers in Psychology

, professors Brandon Mastromartino and James J. Zhang explain how cultivating strong fan communities can result in “repetitive consumption behaviors such as attending live events, purchasing team merchandise, and watching games on TV.”

About the Author: Adam Grossman is the Vice President of Business Insights & Analytics at Excel Sports Management. He works with companies, sports properties, media rights holders, athletes, agencies, and events to determine the value of their most important assets. Grossman is also a professor at Northwestern University Master’s In Sports Administration program and the co-author of The Sports Strategist: Developing Leaders for a High-Performance Industry. You can find him at [email protected].