In hindsight, it might have been the bet of the century: predicting this week’s stunning Supreme Court ruling that each state, rather than the federal government, can choose whether or not to legalize sports gambling. In one swoop, the decision birthed what is estimated to become a $150 billion industry annually.
Now the questions are: who will be the industry’s leaders, and how best can they guard both its progress and the social concerns that already are being raised?
“It is critical to figure out how this will be regulated,” says Jed Hughes, vice chairman and global sector leader of Korn Ferry’s Sports practice. Aside from the states exempt from the previous 1992 prohibition—Nevada, Delaware, Montana, and Oregon—about 20 states have proposed legislation to expand sports gambling. “It will be interesting to see which states adopt and embrace sports betting as part of their economies,” Hughes says.
Adopting is one thing. Implementing, however, as healthcare and political leaders found out during the rollout of the Affordable Care Act, is something else. Though that example is incongruous with legal sports betting, Marc Gasperino, senior client partner and managing director of Korn Ferry’s Digital practice in the Americas, says the analogy is apt. “One of the biggest errors they made was not going out to get digital talent,” says Gasperino. “Similarly, are states going to go with their own talent and develop their own technology infrastructure? Or are they going to partner, and if they partner, with whom and how? What involvement will the leagues have?”
There’s an even more important question to address: how to divide up that $150 billion pie. Mark Cuban, tech entrepreneur and owner of the NBA’s Dallas Mavericks, quipped that “every owner just saw the value of their team double” on CNBC in the aftermath of the ruling, for instance. Aligning the disparate stakeholders, which range from media and technology companies to leagues, individual team owners, fans, and regulatory agencies, among many others, under a uniformly acceptable business model is an Olympic-sized task. “Legalized gaming will inherently increase the interest of casual fans, in our eyes driving enhanced audience growth across media and in stadiums,” says Hughes. “In terms of technology, we expect to see more fantasy platforms, gaming apps, and investment in new startups to spur disruption and innovation in the space.”
Along with legal gambling comes ethical and social issues. Though there is vested interest all around in maintaining the integrity of games and competition, sports historically hasn’t been immune to tilting the playing field to one side’s advantage. And while supporters argue that legal gambling will create legitimate revenue streams for money from the current $150 billion black market, critics claim it will simply develop new reservoirs for corruption, particularly at the amateur and collegiate level. Moreover, gambling addiction and the role it plays in incidences of domestic abuse, drug use, burglary, and other crimes is a serious concern that needs to be addressed completely and continually by all stakeholders. Gasperino advises that leaders enhance community outreach and fan support programs to have conversations about addiction and other social issues, and to earmark revenue to help develop wellness programs for those afflicted.
These are all pressing issues that leaders need to sort out. Indeed, while New Jersey, which led the court challenge, said certain areas like Monmouth County can start taking legal bets as early as Memorial Day, the state isn’t simply flipping a switch. It has actually been preparing for this week since 2012.