Betting is economic saving grace as sports return to normal

How has the stoppage on sporting events affected the economy? 

It’s true to say that the current pandemic has impacted worldwide sports events. One of the biggest events on the planet, the Tokyo Olympic games, has been cancelled, not to mention the UEFA Euro Championship as well, which has been pushed back until next year. Similarly, many other sporting events around the world have also been affected. Just take a look at the complete list. Of course, this has had a massive economic impact around the globe, and here is why:

The economic impact of stopping sporting events

Looking at the UK alone, £39 billion is generated each year thanks to physical activity and sports, in particular grassroots sports and match fees, not to mention all the job roles that go with it. Considering that most sporting events have been cancelled across Europe can you begin to see the negative impact.

The US has been hit particularly badly. Nearly all major leagues have either been paused or cancelled. Even the NBA had to suspend proceedings due to Rudy Gobert, the Utah Jazz star, testing positive for the virus.

The economic impact is vast, affecting not just players and teams, but workers as well. The NBA makes around eight billion dollars per year from various channels, and this year is expected to lose between 350 million and 450 million dollars, even before other factors are considered. Losses from gate receipts will also majorly contribute to losses, making up two-thirds of revenue, not to mention the tens of millions of dollars lost in wages for actual arena workers.

Sponsorship, rights deals, and TV advertising are other revenue streams that will be lost this year. For example, the contract with Turner and ESPN sports is worth over 100 million dollars alone. And if a force majeure occurs, this means such providers can pull out if their contracts allows them to. Equally, media partners will lose out too, particularly as their pre-paid rights can no longer be used for cancelled games.

For the players, things are equally as bad. For each cancelled game, they risk losing 1.08% of their salary. Nevertheless, a clause for this has not yet been enforced. As of yet, only one-fifth of the schedule has been lost, resulting in the loss of a billion dollars. If further changes are made, like the alteration of games to fit a later timeline or the shortening of playoffs, the loss will be even more significant. Players salary can also be affected by a salary cap which can be imposed to recover lost income. Additionally, luxury tax thresholds can also be applied the following season to recover lost money.

The NHL has also been affected financially by the current pandemic, albeit not as severely as the NBA.

Sports betting: an economic saving grace as sports return to normal

North America, in particular, is expected to generate strong growth thanks to the increasingly expanding sports betting market. March was a poor month as a result of March Madness Basketball being cancelled. Then between April and July, these months were quiet for sports betting anyway, so the impact was minimized. With the NFL starting in September, the pandemic will still have an effect. Nevertheless, strong growth is still expected. Small sports and events have played a large part in marketplace growth. So much so that this year, over 80% of activity has been from small sports.

In the EU, most countries allow some form of betting on sports, and this includes ones which are under separate jurisdictions. Specifically, Malta, the Isle of Man, Gibraltar and Alderney. These distinct areas are responsible for approving licenses and continual regulation.

Although many people have been unable to support their favorite team in recent times by visiting a stadium or game, there have been other ways to provide support. Sports betting has significantly grown in popularity. So much so, that DraftKings, the platform to play daily fantasy sport, has seen its shares double. This is perhaps because many of us are no longer prepared to visit crowded casinos due to current risk and instead practice some socially distanced gambling. Fans are still able to feel the connection with their favorite teams. Noticing this changing trend, many American states where sports betting was previously illegal have now legalized it, mainly because of the large amount of money it can potentially generate.