Betting on Legalized Sports Gambling: The Millennial Challenge

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(L.E.K. Consulting is a proud partner of Front Office Sports)

Previously, L.E.K. Consulting considered the recent Supreme Court decision to abolish the long-held Professional and Amateur Sports Protection Act, in effect paving the way for legalized sports gambling throughout the U.S. While the move is likely to boost sports engagement in the main, reaching younger, less sports-oriented consumers may prove more challenging for sports industry stakeholders. That being said, opportunity still knocks.

Though they account for more than one-fourth of all domestic media consumption, millennials, unlike preceding generations, prefer to receive media content mainly through nontraditional means such as online and mobile viewing. At the same time, L.E.K. found that millennials spend just 13% of their time in front of traditional TV, an amount well below their older counterparts. That data is reflected in recent research from Nielsen, which noted that those ages 18-34 watch TV fewer than two hours per day, an all-time quarterly low.

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Therein lies the rub: Because fandom has historically gone hand-in-hand with watching sports on traditional TV, younger viewers who’ve continued to shift toward digital platforms have, perhaps not surprisingly, been less inclined to be supporters. Even millennials who identify as “engaged” are at best casual fans relative to baby boomers or Gen Xers. Given the decades-long dominance of traditional TV in the sports arena, the likelihood of further viewing declines could have a significant impact on sports engagement going forward, unless newer platforms are developed.

There is a flip side, however. Rather than taking themselves out to the old ballgame, many millennials have instead turned to virtual alternatives like esports programming, including live video-gaming competitions such as League of Legends as well as DOTA 2 and Overwatch. Other models offer signs of hope: While not nearly as popular among millennials as season-long sports, recent data suggests that daily fantasy sports (DFS) can nevertheless serve as a gateway to sports fandom in general. According to L.E.K., among millennials describing themselves as only casual fans, marginal fans or non-fans prior to DFS, more than half (55%) said they were significantly more interested in traditional sports as a result of participating in DFS.

Similarly, many in the industry see sports betting as key to increased sports engagement, particularly among younger consumers. And with good reason: As noted by L.E.K., consumers ages 18-34 who gamble on sports take in substantially more weekly sports content than millennials who don’t (11.3 versus 7.8 hours per week). This 44% uplift in content consumption among millennial sports gamblers is substantially higher than the uplift seen among Gen X (+29%) or boomers (+21%) (see Figure 3).

Rolling the dice

Still, gambling isn’t for everyone; therefore, caution is advised. Content providers that lean too heavily on gambling promotion risk alienating dedicated fans who may view such activity as diluting sports programming. Accordingly, making too broad a push could itself have negative consequences.

Nonetheless, going forward, wagering on sports represents a tangible opportunity to drive sports interest among millennials as well as upcoming generations of fans. With millennial sports gamblers spending upward of 60% more time consuming sports than their non-sports gambling cohorts, it’s easy to see why broadcasters, marketers, team owners and other industry leaders view the current trend as a mechanism for converting fair-weather fans into something more meaningful.

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The research and insight provided in this article were provided by Alex Evans, Robert Haslehurst and Geoff McQueen of L.E.K. Consulting. For more of their executive insights, please visit their website.