With one judgement the US Supreme Court has transformed the global sports sponsorship market. Misha Sher, Worldwide Vice President, Sport & Entertainment at MediaCom, explains.

It’s not often that a whole new category of advertiser is created but that’s what happened in the US earlier this month. By starting the process of opening up the betting sector across the US, the US Supreme Court has created a whole new brand of advertiser.

Estimates from the America Gaming Association suggest that around $150bn is bet illegally every year in the US, that’s in addition to what gets spent in the few places that do allow betting such as Nevada, Delaware, Oregon and Montana. 

The process of opening up the betting market will occur state by state but ultimately this will be a major spending category across the country and the battle to dominate the betting business in the world’s biggest economy will be extremely fierce. It also has global ramifications.

Building awareness in a market that has been devoid of betting brands for nearly a century will not be cheap. Sports events and sports sponsorship will be a natural place for many of these brands to make their presence felt. After all, sport is by far the biggest driver of betting activity. 

That will likely make the sports rights market in the US even more competitive than it already is. There is absolutely no doubt in my mind that we will witness some of the most lucrative sponsorship deals ever involving betting brands and sports teams and leagues in the US. Expect the influx of cash to be in the hundreds of millions without question.

If you want a perspective on how powerful betting brands can be, there is no better example than the UK market, where rules were relaxed in 2005.

In the Premier League, half of the teams are now sponsored by betting companies, while the sector also dominates every other league and sport in the UK. This includes all three tiers of the English Football League, the top four leagues in Scotland as well as the League Cup. Turn to cricket, golf, motorsport, rugby and the picture is the same. Sport is at the heart of the betting industry and, given it’s an unscripted drama, there is always something to bet on.

What will be interesting to follow is how the recent news will impact the existing global landscape as it relates to sports sponsorship in general and betting, in particular.

First, will major players like PaddyPower/Betfair and William Hill shift their investment to the US at the expense of other markets? It’s a possibility given the size of the opportunity that US market and its very developed sports landscape. Any brand that wants to dominate the US will have to invest far more than they’ve ever invested before. 

Second, what does this mean for many other right holders, not based in the US, who have traditionally counted on the betting sector? Will betting brands continue to keep a diversified portfolio? I would think that sports such as horse racing, who have been traditionally strong, will continue to be a critical part of the investment from the sector. 

The most likely option is that the betting industry will simply grow, either by raising more capital or via further mergers where a few dominant players take most of the market share. When you add the most sophisticated sports market, which also happens to be the country with the highest disposable income, you can’t help but grow the size of the opportunity.

Share prices of gambling stocks in both the US and UK have seen major surges, with share prices of London-listed companies rising by a combined total of £1.5bn. It wouldn’t surprise me if that’s the kind of cash that gets invested in the US betting market in the next few years.