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Media companies turn to gambling to boost revenues

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Media conglomerates pivot to gambling in mutually beneficial deals to boost profits amid falling advertising revenues

It’s no secret that ad revenues for traditional media houses and entertainment companies have been in decline for many years - tech giants Facebook, Google and Amazon have scooped a major portion of that revenue pie each year.

So it’s unsurprising that media companies have pivoted to other revenue streams to boost their flagging bottom lines. Some, such as The New York Times, chose video, which proved less successful than they hoped.

Many media companies have identified a new strategy. They have turned to gambling and specifically sports betting on the back of the US Supreme Court striking down a ban on sports betting in 2018. Since that momentous reverse, 26 states have launched legal markets, and the industry is booming.

It seems Americans have an appetite for betting matched only by the astronomical amounts of cash available to wager.

Media houses eyeing a slice of a sizeable revenue pie

Americans bet $24 billion with legal sportsbooks in the first half of 2021, according to the American Gaming Association. This translates into approximately $2 billion in gross gaming revenue. The industry is expected to produce a staggering $30 billion in revenues from an estimated $400 billion in total wagers by 2030, according to research.

Gambling and sports wagering, in particular, have moved out of the realm of being a vice and are now an integral part of how people engage with sports.

Maxim, the men’s magazine with a long-established and sizable reader base throughout the world, expanded into sports betting and the online casino industry. By licensing its brand to Malta-based online gambling company Carousel Group in a multimillion-dollar deal to use the Maxim name, the media house also received a minority equity stake in MaximBet.

For Carousel, the deal with Maxim was all about brand recognition.

Disney became the latest of the traditional media conglomerates to climb aboard the sports wagering bandwagon. Disney’s affiliate, ESPN, stands to receive $2 billion in cash and warrants over a 10-year period from Penn Entertainment in return for ESPN marketing a new sportsbook, ESPN Bet, by incorporating the name into its shows and live events broadcasts.

Penn Entertainment is an American entertainment company and operator of integrated entertainment, sports content, and casino gambling.

“It has become a big part of storytelling,” said Mike Morrison, ESPN’s vice president of sports betting and fantasy.

Mutually beneficial

These deals between big media and gambling companies are mutually beneficial. For media companies, there is increased revenue and exposure to a rapidly growing industry with almost limitless potential. For gambling companies, there’s the opportunity to partner with established and highly regarded brands.

In the highly competitive sports betting sector and even pertaining to the online casino industry, deals such as these are necessary for companies to attract players to their online platforms as cheaply as possible. So why not go with an established name with a worldwide reach?

From that momentous Supreme Court Decision, turning the sports betting industry from illegal to legal to mainstream adoption and stigmatisation of the gambling industry has largely fallen away, wagering and the coverage of odds-making and related information has become a legitimate activity.

More and more big media companies are participating for the mutual benefit of themselves and the gambling fraternity, and in the world of gambling, that’s a smart bet.

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