Q&A: March Madness and the impact of modern sports betting

UNIVERSITY PARK, Pa. — The NCAA basketball tournament, commonly referred to as March Madness, tipped off last week. As the remaining teams march toward the Sweet 16 — scheduled to begin on March 26 and 27 — Brett Christenson, clinical assistant professor of marketing at Penn State’s Smeal College of Business, explained in the following Q&A the economic impact of March Madness and how modern sports betting affects the college hoops experience.

Q: How big is the March Madness enterprise?

Christenson: March Madness is a huge enterprise because it attracts a large viewership, particularly here in the United States. Most of the money flowing into sports right now comes from viewership, media sales and media growth. But the NCAA is also selling tickets. There's also merchandise. There are sponsorships and partnerships involved with the tournament.

Plus, it's a month-long tournament, so it becomes almost a cultural cornerstone. With that attention comes a marketplace for sponsors and partners to transfer fans’ feelings to their own brands to sell their products, and opportunities for players to create their own brands.

There are a lot of different stakeholder groups connected to it, which means it's a large enterprise now in the billions of dollars.

Q: How large is the sports betting market?

Christenson: From the 1990s to the early 2000s, for football alone, Las Vegas brought in anywhere between $10 to $30 billion. Over the next 5 to 10 years, as gambling continues to come into sports, the numbers we have today suggest that sports gambling will generate between $50 billion to $70 billion, maybe even $80 billion, per year. So, what Las Vegas might have seen for one sport over a decade, we're probably going to see a similar amount or a significantly larger amount over a single year moving forward.

Q: What does the sports gambling landscape look like right now?

Christenson: There have been a lot of recent news stories about sports gambling, and particularly a heightened worry about the athletes themselves being impacted by what's happening in the gambling economy. New sites, new mobile apps and new mobile gambling technologies have brought up new concerns for leagues, teams and even players. The primary goal of the NCAA is to develop the student-athlete, not necessarily make the most revenue or the most profit. But for many viewers there is a very big economic reason to embrace gambling.

What we're seeing now is entire television shows devoted to what the betting lines are, to what the recent news stories are, to what the spreads are going to be. This information is readily available on your phone. The problem is that the market is very fragmented. So, what is legal here in Pennsylvania might not be legal in Nevada.

Sports gambling used to be simpler, with bets focused on which person or team will win or lose, and the amount they would win by. But now there are prop bets where fans can bet on every aspect of a game, like who will score the first points or how many points a specific player will score. This type of betting could undermine the ethic of the sport.

Q: Is prop betting changing how fans engage with sports?

Christenson: What we're seeing now is people watching longer and engaging with more content, being more active, which drives viewership. But they're cheering more for a specific player to score a certain amount or for a team to not score at a certain point instead of cheering on a team they may have grown up supporting.

Prop betting is not only changing the ethic of the sport and what's motivating performance on the court and off the court, but also the connection between the fan and the sport. Maybe some fans are cheering a little bit more for somebody to miss a free throw, or watching a game that they wouldn't have cared about two years ago.

Q: How is this new form of gambling impacting players and sports in general? 

Christenson: Recent news coverage has focused on the athletes themselves participating in sports betting and when that is allowed and not allowed. In some cases, college players are allowed to place bets on games outside their division. In other cases, prop bets are prohibited, or betting in general is not allowed for an entire sport. But the underlying ethos there, in allowing the actual student-athletes to bet, is something that decades ago in professional sports would have gotten someone banned from being in the Hall of Fame.

What we're seeing today is it’s more socially acceptable to do. It's also much more readily available. Decades ago, a person would have to go to Las Vegas to place a bet. Today, you can do it from your smartphone.