Deals leagues are cutting with prediction markets are eroding the value of the ones held by sportsbooks, which are working to insulate their marketing rights.
As prediction markets’ list of sponsorship deals lengthens, sports betting brands are proactively engaging with their partners to broaden their rights and keep the emerging platforms at bay.
MLB last month became the latest and largest sports property to link up formally with prediction markets, signing an integrity-focused agreement with the CFTC and a sponsorship with Polymarket, reportedly valued in the $150-300 million range over three years. The NHL partners with both Polymarket and Kalshi, and Polymarket also has deals with MLS and UFC.
These deals are chipping away at the value of the ones held by sportsbooks. FanDuel is the Official Sports Betting Partner of MLB in a “co-exclusive” arrangement (properties had already been slicing-and-dicing the category); Polymarket is the league’s Official Prediction Market.
Seems just a matter of time before the NFL and NBA find their own prediction market partners. The sports betting category at the NFL, in fact, is open for the first time since 2021, as FanDuel and DraftKings balked at the increased asking price to continue receiving official league data from Genius, a prerequisite for a deal with the league, Sports Business Journal reported this week.
And the leagues’ willingness to work with the nascent companies opens the door for teams to cut their own deals.
FanDuel, DraftKings or any other sportsbook brand with official ties are wary of further fragmentation of the category. It’s going to cost the companies to protect their marketing rights, of course.
“The legal sports betting operators are going back to their teams specifically and/or league deals – I know this firsthand – and trying to expand their category definition,” Eric Foote, founder & CEO at VIG Partners, a consultancy at the center of such negotiations, told Gambling Insider.
“That likely comes with an additional payment. Whether that’s a large payment or a small payment depends on the size of the league or the partner, but these groups are working very hard right now to defend their turf.”
Coming Soon: Prediction Market Team Deals
With sportsbook operators having established customer bases in legal states and a plateauting of the expansion of regulated gambling, the sports betting sponsorship environment has changed. Teams are having a harder time filling the category.
It’s a buyer’s market, according to Foote, who from 2020-23 led PointsBet’s sports marketing initiatives, which included multiple team and league deals.
Before a team had one, two, three partners [and] the category was maxed out at multi-million dollars,” Foote said, “Now they’re down to one partner or zero partners. So they’re scratching and clawing to take anything they can.”
The prediction market category, though, is emerging. At first, teams likely won’t have their choice of partners, but it won’t be long until they do.
“It looks like the leagues will secure those [deals] and not until the league secures those will teams be able to participate,” Foote explained.
“From what I’m hearing, teams are limited to only working with the partner that the league is working with, but I’m fairly confident that the entire category will open up for those teams sooner than later.”
‘What’s the Size of the Check?’
Leagues ostensibly putting “integrity” at the center of their prediction markets announcements is genuine, Foote believes, but at the end of the day, deals are driven by dollars.
“Let’s be honest, it’s ‘what’s the size of the check?,” Foote said, “and these are meaningful deals.”
In other words, if they want to protect their sponsorship category from prediction markets, sportsbooks better be ready to spend.
Here’s Foote:
It’s an investment to block the category. Now is the team cooperating? It depends on the investment at that point. …
“But I think a lot of the teams are being loyal to their sports betting partner, which they’ve had for many years, and allowing them to kind of expand their category. As long as the team’s getting some influx of cash for the category, they’re happy.”
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