November 29, 2018
In reaching a comprehensive gaming deal with Major League Baseball earlier this week, MGM Resorts International reverted back to a playbook that has dictated the company's sports betting strategy in the brief Post-PASPA era.
The partnership, which designates MGM Resorts as the first-ever official gaming partner of the league, follows similar deals with the NBA and the NHL over the last four months. MGM Resorts, one of the world's largest gaming operators, owns the distinction of being the only company in the casino industry to form partnerships with all three leagues. Though MGM completed all three deals on a non-exclusive basis, it remains the lone sports book operator to land a sponsorship deal with a Big Four professional sports league since the Supreme Court struck down a federal ban on sports betting in May.
With the three leagues on board, MGM has yet to hook the big fish in the pond. On Wednesday, MGM Resorts International CEO Jim Murren delivered a keynote address at the ICE Sports Betting USA Conference in New York. Predictably, Murren was peppered with questions on MGM's relationship with the NFL. While Murren noted that MGM shares a philosophical alignment on sports betting with the three aforementioned leagues, the same can not be said for the NFL.
Without enumerating all of the differences between the sides, Murren addressed a key sticking point during his appearance. While the NFL has urged Congress to enact uniform standards for states that are considering the legalization of sports gambling, Murren said that MGM does not support a federal approach. Echoing that position, the American Gaming Association has consistently opposed legislative efforts for certain business interests that it believes can be accomplished through commercial relationships such as MGM's partnership with Major League Baseball.
"It is not a coincidence that we have relationships with those three leagues and not currently with the NFL," Murren said. "This is an emerging field, I think anyone that drives a stake in the ground and says 'this is my position and I'm not willing to change,' is going to end up eating those words."
The NFL, meanwhile, has taken the position that any federal legislation pertaining to sports gambling should contain a provision that requires gaming operators to use official league data in determining betting outcomes. Since betting outcomes for prop wagers now depend on granular details such as the number of yards gained by a certain player, the need for the data has become more pronounced, NFL Executive Vice President Jocelyn Moore testified at a Congressional hearing in September. Following November's midterm elections, Rep. James Sensenbrenner warned that it could take Congress months, possibly years, to enact legislation on sports betting.
Casey Schwab, Vice President of Business and Legal Affairs for the NFL Players Association, indicated Wednesday that he favors a cautious approach in evaluating potential commercial relationships with gaming operators. To that end, the league may prefer to wait until Congress acts before entertaining such deals. Sensenbrenner, chair of the House Judiciary Subcommittee on Crime, Terrorism, Homeland Security and Investigations, outlined several pathways for Congress to explore in deciding whether federal legislation for sports betting is necessary. On one hand, Congress can adopt uniform federal standards, as NFL Commissioner Roger Goodell recommends. On the other, the federal government can defer completely to the states. The biggest mistake, Sensenbrenner argues, would be to do nothing.
"We want to make sure that the framework is set up first and so does our league," Schwab said. "We don't want to go out there and do a deal without the proper underlining framework."
More immediately, Murren emphasized that there were several factors driving the deal with MLB. The agreement enables MGM to become an official partner of grassroots events such as the league's MLB Road Show in Japan. Though sports betting in Japan has been limited primarily to horse racing, recent legislation was passed over the summer that could lead to the opening of casinos nationwide, the Japan Times reported. As MGM waits to hear whether it will be awarded with a casino license in Japan, Murren is focused on promoting baseball with MLB across the country.
Furthermore, while Murren believes the deal could yield a reasonable return on investment from sports betting he appears more concerned in augmenting relationships with associations like MLB. When confronting significant regulatory and lobbying hurdles with the new sports betting environment, it will be valuable for the company to align with the leagues, said Adam Greenblatt, CEO of MGM GVC Interactive, a joint venture between MGM Resorts International and GVC Holdings.
Despite their differences, Murren also demonstrated a willingness to maintain a more fulsome relationship with the NFL. Over the next several months, he said MGM will target strategic relationships with NFL team owners comparable to one the company signed last month with the New York Jets.
Whether it is team owners or the leagues themselves, Murren seems determined to cultivate partnerships with those who share his view on sports betting as a unique value proposition.
"Our focus has been to develop philosophical alignments with the leagues as a way to build fan engagement and ensure the integrity of the product," Murren said. "Those three leagues have been willing to do that."