- The Supreme Court’s ruling that a nationwide ban on sports betting is unconstitutional could mean added advertising dollars to Google and Facebook.
- If companies like DraftKings and FanDuel could have a larger market, they’ll want try to acquire more users and spend more ad dollars on Google and Facebook.
- The deregulation could also make it easier for Facebook to get back into the sports-betting business.
- Watch Google and Facebook trade in real time here.
Google and Facebook could reap the benefits from the Supreme Court’s ruling that a nationwide ban on sports betting is unconstitutional. The Supreme Court’s ruling on Monday gives states the authority to decide whether to allow sports betting.
The total market for sports betting in the United States was reported early in 2018 to be $150 billion, according to the American Gaming Association.
This could add materially more revenue for Facebook and Google. “Online sports betting could be a nice digital advertising tailwind,” Sandler wrote.
That’s because with more potential sports-betting users on platforms like DraftKings and FanDuel, those companies will spend more on marketing and advertising.”We wouldn’t be surprised if the online and offline casino and betting brands “scorch the earth” with marketing spend right out of the gate,” Sandler said.
Enter Google and Facebook.
“If we assume $10B annualized ad spend in 2019, and a 50%-Google/YouTube, 40%-Facebook, and 10%-all other mix, sports betting ads could add 4% to revenue for GOOGL and 7% to FB revenue growth,” he said. DraftKings and FanDuel could combine for the largest portion of of sales and marketing spend in 2019, given the deregulation.
That move to a total ad spend of $10 billion would be way higher than what DraftKings and FanDuel combined to spend in 2015 and 2016. In those years, the two ultra-competitors combined to spend $500 million on advertising, Sandler pointed out.
Even better for Facebook, the social-media giant could tap into the sports betting business. Facebook had launched an unsuccessful sports-betting platform in 2012 in the UK, “but structurally, everything is in place for users and developers to leverage Facebook as a gaming and sharing channel when online betting goes live,” Sandler said.
Facebook “has payment and gaming infrastructure in place, so could actually enter the business longer term through developer partnerships,” he added.