The NBA on Tuesday announced a landmark deal in its first partnership with a gaming corporation, as MGM Resorts became the official gaming partner of the NBA and the WNBA.
ESPN's Darren Rovell reported that the deal is for three years and $25 million.
BREAKING: NBA & WNBA signs MGM as official gaming partner. Sources tab deal at 3 years at more than $25 million. Gives MGM rights to names, logos & data feed.
— Darren Rovell (@darrenrovell) July 31, 2018
"As part of the partnership, MGM Resorts will use official NBA and WNBA data and branding, on a non-exclusive basis, across MGM Resorts’ land-based and digital sports betting offerings throughout the United States," the league announced in a press release.
“As the landscape for sports betting in the U.S. continues to evolve at a rapid pace, MGM Resorts is a proven gaming leader for us to work with on this groundbreaking partnership,” said Commissioner Adam Silver. “Our collaboration will result in the best possible gaming and entertainment experience for consumers through the use of accurate, real-time NBA and WNBA data and our collective efforts to maintain and enhance the integrity of our games.”
Here's what you need to know:
Not Exclusive: Silver, when asked if the deal was exclusive, said the only thing that was exclusive is the designation of MGM Grand as the official gaming partner, but that the licensing of the official data is still very much open.
We'll discuss that importance in a minute, but what this means is that while MGM gets certain licensing and branding advantages, the NBA maintains the ability to build sponsorship packages at both a league and team level with other operators.
This opens up a pretty wide array of income streams for the league, while also setting an important precedent that it should be compensated for its data and IP.
No Big Cap Bump: Don't expect any 2016-like cap bump from this deal alone. Assuming this money goes into Basketball-Related Income to be dispersed into the salary cap, it's only going to generate a total of roughly $408,000 per team across the three years. That's less than 1% of the cap for 2019-20.
However, it does open the door for more of these partnerships on top of any fees the league is able to suss out at the state level or other sources of revenue. It's the opening salvo in the land rush of sports betting revenue for the leagues, the first of its kind.
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Policy Shift: Silver said that while the league continues to have conversations at the state level regarding integrity fees and its pursuit of them in state legislation, the league is also realistic. Pushback has been strict from not only gaming operators but state legislators (and, of course, the lobbyists they interact with) regarding the discussion of a 1% fee from all gaming transactions involving the NBA. The league has downshifted in several states to 0.25% but has still found little traction.
This move sets a precedent for the use of league's trademarks and data, to essentially push other operators into making similar deals. The NBA still walks away with an initial offering of $25 million, but it also sets a price on doing business with the league. How that affects other operators, and what the league's response is if those operators refuse to play ball (so to speak), remains to be seen.
Data Is The Big Deal: The money's nothing huge for the NBA. That's basically a year of a near-superstar. What is important is the deal includes provisions of two-way sharing of data. So MGM will provide the NBA with anonymized gaming data so the league can monitor for suspicious activity that could impact the integrity of the game, and in return the NBA will send official data to MGM so there are no discrepancies for bettors. It effectively increases the validity and reliability of the data bettors are gaming upon when it comes to the NBA. That component has been a crucial, key element the league has pursued not only in talks with gaming operators, but in conversations with state legislators.
Mobile Betting Is Coming Outside of Nevada: Jim Murren, the CEO of MGM Resorts International, snuck in this tidbit toward the end of the press conference: The Borgata, an MGM property in New Jersey, will have its mobile sports betting product up and running by the "end of this week."
That will mark the first mobile betting product made available outside of the state of Nevada since the Supreme Court's ruling in May.
