The NCAA Men’s Basketball Tournament is perennially the most wagered upon multi-pat sporting event in the U.S. This year’s tournament is expected to break handle records – and possibly $4 billion.
Matthew Bakowicz, Director of the Sports Management program at American University’s Kogod School of Business, explained to Ryan Butler of Covers on how media is changing sports betting, the ways prediction markets are impacting sportsbook revenues and why he is projecting a record high betting handle for this year’s March Madness tournament.
RB: You’ve spent a decade in the industry before coming to AU, including time with DraftKings and Simplebet. What is your methodology behind the $4 billion projection?
MB: “I am higher than the American Gaming Association, which is coming in at $3.3 billion. I'm looking at, on a best number ever, high side, a total of $4.5 billion. In reality, $4 billion is a better number, and there's a couple of reasons for that. One is the expansion of sports betting into multiple different states this year. We saw that increase going through, specifically with the big names of DraftKings and FanDuel.”
“The second component is the social component that we're now seeing entering in the sports betting market. I don't believe that the AGA is accounting for the fact that we have a very big media push right now for March Madness that is getting the information to individuals at a rate that is much faster than we saw five years ago.”
RB: Obviously, the hundreds of millions invested by sportsbooks underscore the importance they view in marketing, but do you see sports betting use increasing as media consumption increases?
MB: “So because of this media flow and this attention being spent, bettors can now pretty much watch any game, anytime, on any device, for minimal cost, and because of that, people want to get in on the action. They're watching this advertisement push, they're watching this marketing push, and they're more likely to take the plunge into the betting atmosphere.”
“And if you look at from the Super Bowl ratings comparison to March Madness ratings, and I compare the two because the Super Bowl is one of the biggest recruitment days for sportsbooks, we saw about 211 million individuals watching the Super Bowl this year, which was an increase from last year, and about 56% of the individuals watching the Super Bowl claimed they would be placing bets, which was an increase from last year as well.”
“If those individuals had a good experience betting on the Super Bowl, they were then given push notifications, marketing platforms, investment strategies, multiple different opportunities to continue that wagering model into March Madness. If the industry can capture those individuals, that's going to be another group that will then help increase the handle.”
“You also have an increase of streaming being easier and easier. I will be teaching class on Thursday at 4:05 in the afternoon. I will have a classroom of 35 students. I guarantee you at least 12 to 15 of them will be watching a March Madness game on their laptops. So because of the ease of stream access, and on those streams you see advertisements for gaming, and because it's easy to view, people are more tempted to place wagers.”
RB: The ease of access is something you mentioned too, which is streaming and social media has gotten easier and more ubiquitous. Is this expanding to new demographics that might not have traditionally been as keen to betting, especially with the growth of prediction markets?
MB: “The other interest from the social aspect is the integration of female individuals betting. Traditionally, the gambling market has been males between the ages of 21 to 35. With the integration of prediction markets, you're seeing females being drawn to things that they have interest in. It is statistical truth that more females watch the Oscars and watch the Grammys. So there's now prediction markets that are available to wager on that.”
“People that are involved in prediction markets will stumble into the sports betting market because they understand how it works, because they understand the language, because they're now familiar with it. They might say, ‘I am a fan of Duke basketball as well. I know how to put bets on. It's pretty easy for me to do this on basketball.’ So you're going to see a female population betting that will be much higher than what we saw last year, because there are new marketing campaigns that are drawn to females now."
RB: As someone who worked with sportsbooks, are you seeing also the technology improvements around live betting increasing handle?
MB: “Younger people, if you think about it, are so drawn to technology on their cell phones, to being on their phone 24/7, to texting constantly. If you go to a bar, and it's a college bar and you look, you'll see almost everybody at that bar on their cell phones texting. Nobody's having a conversation with each other. That's normal.”
“Because that's so common, people want to be involved in something else, like betting. It's very easy for them to constantly make adjustments to their bets and constantly bet a game that's going on live. It's normal for four friends sitting around comparing lines in real time. The second thing is, in the world of instant gratification, people don't want to wait 3.5 hours for a payout. They want a quick bet, quick result, and immediate payout.”
“Also, if you look at the economy, individuals want their money to last. They're happy with small bets across a game. They want that $100 to last over a 3-hour period. They don't want the old model. Younger gamblers want constant engagement, instant gratification, and it's being marketed to that. Also, you have easy cash out features. Older bettors often don't even know how to use that. So because of technology advancement and generational behavior, it's a perfect storm for live betting."
RB: How significant of an impact will prediction markets have on taking handle from sportsbooks, and what do you expect for March Madness?
MB: “The first and most important thing is 90% of the business of prediction markets is event contracts around sports. Close to $900 million (of event contracts) were placed on sports for Polymarket and Kalshi over the NFL season over this last past year. So how big of a deal is it? It's hard to quantify exactly how much is taken, but if 90% of their business is sports contracts, there is money being taken. These companies are evaluated at around $20 billion. If federal regulation changes and they lose that market, that valuation drops significantly. So while I can't give a precise number, it's absolutely taking business."
