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What if sports betting could actually *reduce* fan engagement?

Good morning, and thanks for spending part of your day with Extra Points.

A few quick housekeeping notes before we get to the story today.

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With that, let's get to a study I'd like to share with everybody:

It's hard to overstate just how much money has flowed into the greater sports ecosystem from gambling interests over the last few years. The Supreme Court struck down a federal sports betting law in 2018, and now most of the country has legalized it in some capacity. Sportsbooks essentially underwrite entire media companies, from Barstool Sports to my old employer, and it's impossible to watch any sporting event anywhere without seeing ads for books or various fantasy apps.

Even some college programs have explicitly gotten in bed with gambling interests. LSU has an official sportsbook. So does Colorado. Others will likely join them over the coming years.

I'm personally not much of a gambler, but I also recognize that there are lots and lots of sports fans who don't see things like I do. The American Gaming Association, back in 2019, estimated that roughly 100 million Americans could be considered either current or potential sports bettors. That's a ton of people, and if they like gambling, or see gambling as something that might enhance their sports fan experience, well, of course it would make sense for sports media outlets and sports organizations and other companies to try and serve that need, just like they also try to serve their need for funny GIFs or a desire for frosty beverages at games.

Gambling on sports makes somebody (usually the house) a lot of money. But does it actually have a positive impact on fan engagement?

I have no idea. I'm a boring Mormon dad who would much rather spend ten dollars on Taco Bell than a bet on whether some Conference USA team covers a spread on a Thursday night. I'm not the person you should ask about this sort of stuff.

But thankfully, some academics at Xavier University recently studied this question.

In the Journal of Business Research, Dr. Ashley Blank, Dr. Katherine Loveland and Dr. David Houghton published a paper titled "Game changing innovation or bad beat? How sports betting can reduce fan engagement", which would seem to answer my hypothetical question right there in the title.

The authors did highlight two other papers on the subject, one, using data prior to widespread legalization of sports betting, that suggested that local TV ratings increased when the "local market team covers the point spread and when point spread outcome uncertainty increases", with the effect even more pronounced in games that folks might not typically watch. The authors also highlighted a second paper that showed that sports betting operators are able to drive engagement via their social media channels.

So there's some existing literature on this...but tracking more direct relationships between fan engagement and betting doesn't appear to have attracted much literature yet.

The authors dug into survey data from hundreds of fans, and found that even while adjusting for other variables, "losing a bet decreased fan engagement but winning a bet did not increase it." They also found, unsurprisingly, that fan engagement and positive emotions increase when their favorite team wins. Losing a bet, as you might imagine, decreased positive emotional response.

The authors also examined if the results would be different for prop bets, as opposed to bets on the final outcome of the game, and found similar results.

So...what does this mean?

Via the study:

.Although industry experts expect sports betting to increase fan engagement, results from two studies do not support this expectation. Instead, we find that when fans lose a bet, positive emotions and subsequent fan engagement decrease. This effect holds for both moneyline bets tied to performance (Study 1) and prop bets not tied to performance (Study 2). In addition, we find that when fans win a bet, fan engagement does not increase. Together, these results suggest that sports betting can be detrimental to fan engagement. Therefore, sports betting may be a bad beat for leagues and teams.

Even the authors recognize that this isn't a completely comprehensive study. Bets come in many shapes and sizes, and perhaps detailed examinations of point spreads, over-unders, futures, etc. could have different impacts on fan engagement. This study also only focused on home teams, so it is possible that betting activity on rivals or completely unrelated programs could have different impacts.

A sports franchise or athletic department may decide to embrace sports betting for plenty of reasons outside of growing fan engagement. It could just be a pure revenue play, or for reasons that don't have anything to do with trying to grow future viewership or deep engagement. All promotions, from sports books to bobble heads, have costs involved.

The authors offer the following advice:

Because fans are the lifeblood of any sport organization, this negative effect of sports betting on fan engagement has major implications for leagues and teams. As a result, we strongly urge leagues and teams that welcome sports betting to proceed with caution and take steps to reduce the negative impact of sports betting on fan engagement. For example, teams could engineer design and operational elements of loyalty programs to bolster positive emotions, fan engagement, and retention.

Basically, sports gambling doesn't seem like something you should automatically bet the house (gambling term) on, because it's hardly a sure thing (gambling term?) to pay out (that's a gambling term) the way you think it will.

The full study, with detailed methodology, can be found here.

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