When Cincinnati Reds CFO Doug Healy testified earlier this week before Ohio legislators regarding sports betting, he made the point of view from state’s pro teams very clear.
Instead, he said it needs to function like a “three-legged stool,” with casinos, the state, and sports teams as legs. For that stool to have even legs, teams like the Reds need access to licenses, too. That would include a retail location on or near the team’s stadium and a mobile skin.
We are primary economic engines in our communities, and should benefit from this new revenue stream, particularly because sports betting is wholly derivative from our businesses,” Healy told lawmakers Wednesday. “Legalized sports betting in Ohio poses risks on our sports that we are willing to accept, so long as we have access to the benefit of new revenue from that market.”
Ohio has eight major league franchises, three each in Cincinnati and Cleveland, as well as two in Columbus. The Columbus area could qualify for a third if lawmakers consider Muirfield Village Golf Club a professional sports venue. The course hosts the PGA Tour’s Memorial tournament.
The state is also home to four full-fledged casinos and seven racinos, which offer video lottery terminals.
The Reds actually have a history with sports betting, and definitely not a healthy one. A betting scandal tainted the team’s first World Series title in 1919, as eight members of the Chicago White Sox were accused of taking money to throw the games. The so-called Black Sox scandal led to the banishment of eight Chicago players.
Seventy years later, the Reds were associated with gambling again, after MLB permanently banned Pete Rose, a legendary Reds player and at the time the team’s manager. It was later determined he bet on games involving the Reds. Rose initially denied the allegations, but in the years since has admitted doing so.
Healy didn’t address either incident directly, but spoke about the risks sports betting presents to sports teams.
“Our risk is scandal,” he said. “We have nothing if our fans don’t believe our athletes are trying their best each and every day, or believe that the outcomes are contrived in any way.”
He added that the state’s pro teams opposed last year’s bills in the state legislature because both did not truly recognize “the critical role that sports play” in wagering.
There’s also an economic factor in this as well. Last year, the Reds and Cleveland Indians played truncated seasons, with no fans at games because of COVID-19. That created a major economic hit. And while MLB plans a 162-game season this year, it remains uncertain if Cincinnati can host a capacity crowd.
The other pro sports teams experienced similar problems.
Healy told lawmakers that other jurisdictions have passed laws allowing pro franchises to partner with licensed operators. Last year, the Chicago Cubs inked a deal with DraftKings. In DC, William Hill operates a retail sportsbook at Capital One Arena.
It’s quite possible some of the teams have a provider in mind as a partner. The Reds, Indians, and the NHL’s Columbus Blue Jackets broadcast their games on the soon-to-be rebranded Bally’s Sports regional networks. Bally’s paid Sinclair Broadcast Group for naming rights and has plans to incorporate sports betting technology into the content.
The sports franchises aren’t the only ones who want to offer sports betting alongside the casinos. A couple of weeks ago, a lobbyist for Ohio’s grocery stores made a pitch for supermarkets to offer sports betting in a similar setup to the lottery. On Wednesday, even the Bowling Centers Association of Ohio made their case in similar fashion.
Executive Vice President David Corey said casino operators estimate mobile apps will absorb 85 percent of the Ohio market. Retail sportsbooks would likely capture between 5 and 10 percent.
“So, really, all we’re talking about are the scraps that will be left. But those scraps are so important to our local Ohio businesses,” Corey said. “We do not believe that Ohio should continue to give out-of-state operators yet another monopoly.”
At least one casino operator is skeptical about expanding sports betting control to sports teams and other businesses.
Dan Reinhard, senior vice president of governmental affairs for JACK Entertainment, said that the data from other sports betting states indicates that five operators will control about 95 percent of the market. That would leave very little market share for the remaining licensees.
If each sports team gets a license, plus each casino and racino, that would mean up to 15 operators would likely vie for that remaining 5 percent. That does not include a potential lottery sports betting option as well.
“JACK believes that 11 mobile sportsbooks, along with the 11 retail sportsbooks in casinos and racinos, will allow the state to maximize revenue while limiting the immense regulatory and administrative burden that would come along with licensing and regulating an unmanageable number of operators,” Reinhard said.
Late last year, Cleveland Cavaliers owner Dan Gilbert, who founded JACK Entertainment, sold his shares in the company to members of its executive team.