Decreased prevalence of sports betting advertisements endangers regulated market: AGA's concern expressed
In the United States, gambling operators have been scaling back their advertising efforts, as per data from the American Gaming Association (AGA).
Initially, the sports betting sector witnessed a significant surge in ad spending in 2020 as more states started legalizing the industry. In just one year, Advertising expenditure tripled from $100 million to $300 million, and the number of ads skyrocketed from 250,000 to 750,000. The trend continued in 2021, with ad spending nearing $1 billion, and televised ad units surpassing the 2-million mark.
However, this upward trajectory proved to be short-lived. By 2022, the number of ads began to wane despite consistent spending, primarily due to the mounting cost of advertising. In 2023 and 2024, the decline intensified, with the AGA reporting a decrease of 9% in overall advertising volume and a 27% drop from 2021. TV advertising suffered a more pronounced hit, with volumes plummeting by 17% in 2024 and 44% since 2021.
Reasons for the decline
Several factors contribute to this descent. Firstly, as sports betting is now legal in 38 states, the initial race to attract new customers has cooled. The AGA explains that as the industry extends its reach into new states, operators often run advertising campaigns to boost awareness and capture market share. Over time, these markets become more mature, and the level of advertising naturally diminishes.
Secondly, increased taxes may have compelled companies to rein in some spending. According to Peter Jackson, CEO of Flutter Entertainment, FanDuel planned to reduce promotional and marketing expenses to counter the high tax rates introduced in several states such as New Hampshire, New York, and Rhode Island. Jackson stated that it was essential to moderate the generosity of promotions and tailor local marketing to suit customers effectively.
A third reason is that the industry is currently under closer scrutiny due to ongoing regulatory measures and negative press, leading some countries to ban sports betting ads altogether. In 2023, for instance, the NFL decided to cap sports betting advertising to three ads during the Super Bowl, accounting for less than 5% of all in-game ads.
As a result, sports betting ads make up a significantly smaller percentage compared to other industries. For every sports betting advertisement on TV in 2024, there were over four telecom and wireless commercials and nearly 40 pharmaceutical commercials, according to the AGA. The AGA's report indicates that the sports betting sector's share of television advertising volume remained at a meager 0.4% in 2024, with alcohol accounting for a slightly higher 0.5% and pharmaceuticals a whopping 13.6%.
AGA's concerns over the shift to unregulated markets
Concerned about this decline in regulated sports betting advertising, the AGA believes it may lead more gamblers to resort to unregulated platforms. A recent study found that 70% of sports bettors primarily using offshore sites were unaware they were betting with unregulated operators. Without proper promotion of legal betting platforms, this figure is likely to remain high, according to the AGA. Advertisements by legal sportsbooks play a crucial role in educating consumers about safe and legitimate betting options, they argue.
- Despite the decline in sports betting advertising, expenses related to the industry are still significant, with the AGA reporting a spending of over $1 billion in 2021.
- As more states migrate towards legalizing sports-betting, finance experts warn of increased expenses due to ongoing regulatory measures and the need for awareness campaigns.
- In 2023, the NFL capped sports betting advertising to a few ads during the Super Bowl, contributing to a smaller share of television advertising for the sector.
- The American Gaming Association (AGA) has expressed concerns about the shift of gamblers towards unregulated markets due to the decline in regulated sports betting advertising, with a recent study indicating that 70% of sports bettors on offshore sites were unaware of the unregulated nature of these platforms.
