The Josh Harris-controlled Philadelphia 76ers and New Jersey Devils signed a multiyear marketing agreement with partypoker, becoming the first major U.S.-based professional sports teams to align themselves with online gambling.
The agreement with the unit of Gibraltar-based Bwin.Party Digital Entertainment Plc (BPTY), the teams and Prudential Center, home to the Devils, comes about a year after New Jersey legalized online gambling, which is expected to be a $7.4 billion business in the U.S. by 2017, according to the research firm H2 Gambling Capital. Nevada and Delaware are the only other states to allow online gambling.
“This is our flag in the ground that we do things differently,” Scott O’Neil, chief executive officer of the National Basketball Association’s 76ers, the National Hockey League’s Devils and the Prudential Center, said in a telephone interview. “We’re looking for groundbreaking opportunities with companies willing to take chances.”
The agreement is worth at least $10 million, according to a person with direct knowledge of the deal.
Former U.S. Olympic Committee Chief Marketing Officer Rick Burton -- a former commissioner of the Australian Basketball League, which allows gambling-related sponsorships -- called the agreement “logical.”
“You’ve got all these teams and leagues where everybody is being told you better be able to sell, but every possible category has been explored,” Burton, a professor of sports management at Syracuse University, said in a telephone interview. “Here, there’s a salesman who says, ‘I can get you big money, but you have to let me in the gambling space.’”
Richard Peddie, the former chief executive officer of Maple Leaf Sports & Entertainment, which operates the Maple Leafs and basketball’s Raptors, said he isn’t surprised these teams -- in the lower half of franchise valuations in their respective leagues -- are the first to align themselves with a gambling site.
“Both teams will take even more risks and push the envelope when it comes to marketing,” Peddie said in a telephone interview. Previously, hockey’s Toronto Maple Leafs had a marketing agreement with an online gaming company.
A group led by Harris, co-founder of Apollo Global Management LLC (APO:US), bought the 76ers in 2011. He assumed control of the Devils last year. The Sixers are worth $418 million, 20th in the 30-team NBA, according to Forbes Magazine. The Devils are worth $320 million, 20th out of 30 NHL clubs, Forbes said.
O’Neil said there are 60 million online poker players in the U.S., and that 2 million people a year attend events at the Prudential Center.
“We have this moment in time that allows a company like ours, which is unique, which frames New Jersey, a pretty incredible opportunity,” O’Neil said.
New Jersey Governor Chris Christie, who signed the online wagering law last year, also has supported introducing sports betting in the state. A U.S. appeals court in September blocked New Jersey’s attempt to expand its gambling business to sports, saying the state’s effort conflicts with federal law, which limits it to four states.
Expansion of sports betting has been opposed by the major athletic leagues, including the NBA and the NHL.
National Football League and Major League Soccer rules prohibit teams from accepting online gaming sponsors. Major League Baseball spokesman Pat Courtney said it considers such deals on a case-by-case basis, adding that he wasn’t aware of any existing agreements.
Mark Tatum, the NBA’s executive vice president of global marketing partnerships, said 28 teams have casino sponsorships and 20 have lottery deals.
“As long as the gambling site doesn’t include sports gambling or sports betting; it’s now allowed within our rules,” Tatum said.
There were 148,487 Internet gaming accounts created in New Jersey through Jan. 6, according to Lisa Spengler, a spokeswoman for the state’s Division of Gaming Enforcement.
As part of the agreement, partypoker will become the official online gaming partner of the Sixers, Devils and Prudential Center, which is in Newark, New Jersey’s biggest city. The agreement includes social media and digital asset creation, including mobile. Partypoker will also get traditional in-arena advertising and television spots.
“These are two of the most iconic names in American hockey and basketball with huge and loyal fan bases throughout New Jersey and the surrounding metropolitan areas,” Norbert Teufelberger, CEO of Bwin, said in a statement.
Additionally, fans in New Jersey will be able to compete for prizes, including tickets and suites for both teams, road trips and marquee events such as the Jay Z concert at the Prudential Center on Jan. 22.
Mitchell Etess, chief executive officer of the Mohegan Tribal Gaming Authority, which owns the WNBA’s Connecticut Sun, said in a telephone interview that the Sixers and Devils are only the beginning. Mohegan Sun has sponsor agreements with basketball’s Boston Celtics and baseball’s New York Yankees.
“Gaming is an industry that can provide significant sponsorship,” he said. “The reality is that over time we’re seeing that these types of barriers are eroding.”
Bwin has marketing agreements with a number of European-based sports franchises, including soccer’s Manchester United and Real Madrid.
“We’re in really good company,” O’Neil said.
New Jersey, Nevada and Delaware are the first states to offer online casino-style wagering. All began taking bets last year, with New Jersey officially starting Nov. 26. Nevada limits online betting to poker, while New Jersey and Delaware permit betting on a variety of games. All three limit betting to people physically within the state borders.
The New Jersey law was designed to help revive the state’s casino industry, which has lost about 40 percent of its revenue as neighboring states expanded. Online gaming providers must physically locate their computer hardware in Atlantic City casinos. Rival operators include Caesars Entertainment Corp. (CZR:US), Golden Nugget, part of Landry’s Inc., and Ultimate Gaming, a unit of Las Vegas-based Station Casinos Inc.
As the most populated of the three states offering online betting, New Jersey’s market is expected to generate $435 million in revenue this year, about 83 percent of the U.S. total according to Bloomberg Industries estimates.
Bwin.Party Digital Entertainment is the world’s largest publicly traded online gambling company. It was formed through the 2011 merger of PartyGaming Plc and Bwin Interactive Entertainment AG.
In October 2011, Bwin created a joint venture to enter the online gambling business in the U.S. with Las Vegas-based MGM Resorts International (MGM:US) and Boyd Gaming Corp. (BYD:US) The two companies own the Borgata Hotel Casino & Spa, New Jersey’s largest casino. Bwin offers online betting in New Jersey under the Borgata and partypoker brands.
Bwin sponsors World Poker tour events at casinos in Europe, with players chosen in online qualifying rounds.
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