In the inaugural episode, hosts and students Sam and Jack speak with Professor Cohen about sports gambling and its impact on ticket sales, sponsorships and the fan experience.
In the inaugural episode of Sport Business Roundtable, hosts Sam Banks ’22 and Jack Halley ’23 sit down with Larry Cohen, associate clinical professor of sport business at Drexel LeBow, to discuss sports gambling and its impact on ticket sales, sponsorships and the fan experience.
Sam: Hello everybody and welcome to the first episode of the Drexel Sports Business Roundtable podcast. I am Sam Banks here with Jack Halley Jack, how are you doing today?
Jack: I'm doing great. I'm beyond excited to be recording this first episode
Sam: Today, we have our first guests professor, Larry Cohen, a man who needs no introduction for the Drexel sports business community.
Professor Cohen. How are you doing today?
Larry: I'm doing great. Sam. Really appreciate you guys having me out here.
Sam: Awesome. We're glad you're here. So professor Cohen, this semester, you are teaching a class in sports gambling. I believe that's SMT-333, and we are here today to discuss some different topics about sports gambling and its importance in today's sport industry. Let's tell the viewers a little bit about yourself. What's your background in gambling?
Larry: Well, I really didn't have any background in sports gambling because it was illegal across most of the country until recently. What I did do was I recognized that once the Supreme court made its decision effectively legalizing sports gambling, in the country, or I should say not making it illegal. I recognized that there was a need to teach a course in this, because it was going to be an area of, of high growth and rapid growth, in the country.
Sam: And this kind of brings us to our first question. What are some of these legal hurdles that had been facing sports gambling before? Why is it not legal for the entire country? What are some things that are sort of happening now on the gambling landscape and what is there to come in the future?
Larry: Well, that's a lot to tackle with one, so I'll just actually…
Sam: Take it piece by piece.
Larry: Okay. Fair enough. I will take the first part, which is what were some of the hurdles that, and the biggest hurdle was a piece of legislation called PASPA. And PASPA made it effectively illegal to sports gamble anywhere in the United States, except for, I believe it was three states that were grandfathered in Delaware, Oregon and Nevada. And of course we all know where Nevada stood, Delaware and Oregon didn't develop sports books the way Nevada did. So for all intents and purposes, it was really Nevada was the only state where you could legally gamble or sports gamble in the United States under PASPA.
New Jersey challenged PASPA, New Jersey created a state law that said, we're going to allow sports gambling in our state. Um, and they passed the law and that. Law that New Jersey past was challenged. Believe it or not -- hard to believe now-- but believe it or not by all of the leagues professional leagues in the United States, as well as the NCAA and those challenges ultimately made it to the Supreme court of the United States on multiple occasions, by the way.
So I'm giving you the reader's digest version, um, on multiple occasions and the Supreme Court ultimately held that PASPA was unconstitutional, which cleared the way for states to each individually, if they so decided to legalize gambling in their states. And so I think that brings us to your next question, which was, well, why isn't it legal everywhere?
It's not legal everywhere because every state has its own, legislative process as well as its willingness to offer, sports gambling. Uh, by way of example, uh, there were multiple states after New Jersey, that you know jumped on the bandwagon. Uh, you know, Pennsylvania was pretty quick to adopt sports gambling, Illinois, uh, as well and so forth.
Other states, not as fast, California still doesn't have sports gambling. And so it's, it really depends on each state's, legislative process and what the people of that state want and each state, and we'll probably get into this later-- maybe we will, maybe we won't --is, uh, each state has its own regulations, which makes it from a compliance standpoint, really difficult for gambling companies, because what they do in New Jersey may not be able to operate in Pennsylvania or New York or wherever.
Sam: Sort of talking about those different regulations. Cause I think it's a good point. What are some different ways that states operate their books? Because I know that, I believe New York has like a government run gambling and some other states have their own, books and whatnot. So what are some of the core differences between some of these, uh, state regulations?
Larry: Well, each state is going to decide how many organizations it's going to license. Right? Give a license to, to be able to provide sports gambling in that state. Some states require that a bricks and mortar casino actually be in place. And so you'll see a FanDuel or, or a DraftKings partner with a casino and that's because FanDuel and DraftKings don't have a bricks and mortar, uh, casino. In some states, it can be attached to a casino or a racetrack a horse racetrack. And in some states, as you mentioned, some states are the ones who operate, the actual sports, sports gambling. So every state is different, and it's a bit of a minefield. Imagine if you're trying to roll out a national sports gambling platform and every state has different regulations that you have to comply with.
Jack: So it begs the question. How do you stay up to date with all these rules and regulations across the 50 states being that you teach this sports gambling class, how do you go about doing that?
Larry: Great question, Jack, there are multiple sources. There are multiple sources. I wish I could say there was only one source. There's a prominent attorney out of the DC area, I believe a gentleman by the name of Jeff Ifrah, who I follow, who really puts out good content on, on breaking news. But on a daily basis, I actually use a service called Law 360 ,and I subscribe to that, and it provides me every day both cases that are happening in sports gambling, as well as where certain things are legislatively in different states, relative to sports gambling.
Sam: Professor Cohen. Um, I know you said you don't have much background in gambling, but obviously being in classes with you and listening to your first week of class spiel about your career. I know that you do have a law background yourself, and you also have a background in ticket sales and sponsorships. So I was wondering what sort of implications, all of these new sports gambling laws and all of these new things that are coming up. What implications do those have on both fans attending games and sponsorship activations?
Larry: All right. So I'm going to break that one down too, if you don't mind Sam. The first one is what impact will it have on fans and ticket sales? And I think that's really to be determined. My instincts are, it's not good. And by that, I mean, prior to sports, gambling being legalized and, and its rapid growth, I believe fans cheered for a team because they were passionate about the team, right?
And so they build a bond with the team by their was their local city team, whatever it was. I think when people's interest in the outcome changes. And they're interest in the outcome is no longer if my team that I root for consistently wins or loses. It's if my team that I bet on wins or loses, or my team that I bet on covers the spread.
I think that significantly changes the dynamic for a fan. And I think that weekends sports teams' brands. So, we'll see, I know that a lot of folks that are at the league level, one of the reasons they jumped in with both feet to sports gambling was the belief it will increase fan engagement, which I don't dispute that. I think fans will be paying attention more closely. I just don't know if it's the right kind of engagement.
Sam: And before we get into the activations part of it, do you think there is a scenario where we can see arenas and stadiums just basically turning into casinos?
Larry: Well, I don't know about all out casinos, but I certainly foresee, uh, sports betting going in- game betting, going live at arenas and stadiums. You see it already in, in Washington, DC, at monumental sports and entertainment where they're putting a sports book right in there. And, you know, it's popular already in Europe. So, it's not like we're covering new ground here in the United States.
Uh, I think he gets more interesting in that regard once we resolve the latency issues with, with data, um, you can probably do a lot of stuff with kiosks in arena that aren't, "Hey, is, is this player going to make these two free throws?" Right. Which you will be able to do once the latency issue is resolved. So, yeah, I absolutely see that happening. I don't know if 5G is going to be what gets us there, or if it's something faster than that, but I definitely foresee that happening. And I think your second question, Sam was on sponsorship?
So, to me, this is the flip side of fans. I think it's great for sponsorships. It opens up a whole new category. Uh, not to age myself too much, but when I started in the business, we weren't allowed to do sponsorships with anything even remotely close to gambling... alright, gambling period. We couldn't do a sponsorship deal if a hotel had a casino with it, and we were only advertising for the hotel.
Now, fast forward sports gambling is legal, uh, in, in a lot of parts of the country and everybody is doing sponsorship deals with them. Right? There's a, there's a bit of a land grab going on in the space, uh, to see who can, get the most users, and that kind of competition is great for sponsorships. Like I said, opened up a whole new category and a very competitive category, uh, that is spending a lot of money right now. So I think it's great from that perspective.
Jack: So touching on the fan aspect of sports gambling, do you believe that legalization of sports gambling brings in a new kind of sports fan one that doesn't necessarily care about a team, but one that solely cares about the numbers and the spread, and do you think that's beneficial for sports in general?
Larry: I have a two-part answer to that. First, I think the, the sports gambling continues the trajectory that was happening already, where fans were not necessarily fans of a team, like they were 20, 30 years ago, those probably started with fantasy sports and video games where people came fans of players, individual players, and not so much teams.
So I think that sports gambling continues that trajectory a little bit. And, so my answer is, do I think it's good? I'll stick with my answer, I don't think it's good ultimately for, sports teams brands. Do I think it's going to open the door for new fans? Absolutely. Right? People who just like to gamble are going to start tuning in.
So the people who would go to casinos to play roulette or blackjack will tune into sports events now because they can gamble on them. Not necessarily because they're a fan of that particular event.
Jack: Sure. During the brief run of the XFL in 2020 and a couple other startup leagues, there's been an increased, importance of betting being that they'll have the odds on the screen, they'll have the spreads say the New Jersey Generals minus nine and a half. Do you think that this is the future? And do you think that big four sports will have this, in the upcoming years?
Larry: Yes is my answer. So I don't foresee that going away. I think the business model of the American Alliance of football. I think it was, was the, was one of the start-up leagues. Their business model was wholly based on integrating sports gambling, and, they built out a platform for it and everything.
It didn't work, but it was a pretty good indication of, of where we're going. And you look at many of the sports broadcasts now? At least when you're leading into the game, programming is all about sports gambling. What's the spread, right? And, and what are some of the prop bets?
And it doesn't really matter what, the sport is, all of the pre-game stuff leads into that. And you're also starting to see, some of the media companies experiment with having a broadcast dedicated solely to sports gambling. Right? So they're talking about the total points for the quarter as the quarters going on and all of that kind of stuff.
So my answer is, yes, that's where it's going. They're catering to that audience. The audience, you know, the media company wants to keep them engaged too right? Because they want them to see their advertising and get the ratings points and things like that. So, um, I absolutely foresee that increasing, not going away.
Sam: So Professor Cohen, obviously, as I mentioned in the beginning, you're currently teaching a sports gambling class. So for any of the Drexel students that might be listening to this podcast, give us a little mini syllabus. What goes on in the class? Tell us about all these cool guest speakers who've been having, all that fun stuff.
Larry: Sure. Well, a couple of things first, the, class takes you through. Uh, historical timeframe first. So we talk about gambling in general and the genesis of gambling. And so we go back thousands of thousands of years, um, very quickly though. Right? We don't do it. We don't spend the whole term there. And then we talk about the history of sports gambling in the United States, because the history of sports gambling in the United States is different than other places.
We have a lot of interesting, we'll call them colorful characters, mostly due to organized crime being involved, and then once we get that as our basis, we talk about, well, how does, how does a sports gambling company make money? Right? If you're, if you're a FanDuel, how are you making money? And understanding the different types of bets out there and how the house makes money.
And then we really do a deep dive into the regulatory environment, both federal, and then into some individual states, not all the states, but some of the individual states. And we conclude the class really discussing some of the ethical dilemmas and, and some of the issues you face with point shaving, scandals and, and things like that.
So, you know, that's, that's the course, in a nutshell, the, the second part of that, the guest speakers we bring in, I'm a big believer in bringing in experts. I appreciate you calling me an expert earlier, Sam, but, you know, I'm well-learned as opposed to somebody in the industry practicing. So I try to bring people in, who are working in the industry right now.
We've been very fortunate to have guest speakers, from FanDuel, from Fox Bets, uh, from 76 capital, which is a local venture capital firm that invests in sports gambling companies. Um, just to bring it all more, more delight for the students.
Sam: Yup. And obviously, having you teach a gambling class, we need to know whether you're making a profit off of your gambling exploits, or are you losing money right now?We have to see, you know, can't take a class with someone that's losing money gambling. Right?
Larry: Fair enough. Um, in the interest of full disclosure, I don't gamble. Uh, and it's not for any moral reasons. I can't stand to lose, and, I'm pretty convinced that that gambling, if you do it long enough, the odds are against you. So I choose not to.
Sam: Fair enough. Well, thank you. Once again, to professor Cohen for joining us. We had a great conversation here, and I am looking forward to seeing you again in the classroom. It's been more than two years since I've had an in person class with you, professor Cohen. So..
Larry: I've noticed your absence, Sam. So, uh, really appreciate you guys having me on the podcast. I think this is great. Um, and you know, look forward to seeing both you and the rest of the students around Drexel. Go dragons!