Impact of Market Underestimation of Future Salary Cap

[jope]

So no one currently gets revenue from Nevada but the NBA and other sports leagues suddenly think they deserve a percentage of future gambling wagers or profits because it’s going to almost go national?

Lmao.

I figured most sports arenas have potential to turn into pseudo gambling houses. They could bank a lot with live, in-house bets that are handled internally. Skip the bookie ******** and have live quarter by quarter bets managed in the arena, with the team running the operation. Maybe even have an app to integrate with so people can bet from their phones while in their seat watching the games or something

 

[silesian]

The NBA's official salary cap projections are 101/108/113/119 for the next 4 years. The player's association threw out the $120 M (vs 108) number out there for their agents to use. But of course, there is a bias for players to make this number higher.

So the bias on the $120 M may be to the downside, not up.

All that could change with sports betting, but there is a lot of uncertainty.

The big long-term uncertainty is around the new TV contracts. Many believe that the current contract is unsustainable and unprofitable for the networks. But long-term with sports betting, who knows?

The last few years, I recall the short-term estimate was dropped in the $5M range, so the trend is not favorable.

So if I were a GM/ owner, I would not place bets that depend on an upward arc

 

[silesian]

So no one currently gets revenue from Nevada but the NBA and other sports leagues suddenly think they deserve a percentage of future gambling wagers or profits because it’s going to almost go national?

Lmao.

There are 2 parts to the equation: (1) direct revenue from betting (1% has been kicked around) as an integrity tax. (2) increased interest in the game (and therefore more spending) due to more fans having a stake in outcomes.

#1 is BOGUS and will never happen.
#2 is REAL and is what Cuban is talking about. Betting will be more accessible and innovative. If you are beating a team by 15 and the line is 14, you stick around the arena and spend money in the 4th quarter. More people watch on TV, more people come to the arena and ticket prices go up. How much? I doubt it is 2X as Cuban claims, but I'd be surprised if it was not a significant increase.

 

[Miggs]

I figured most sports arenas have potential to turn into pseudo gambling houses. They could bank a lot with live, in-house bets that are handled internally. Skip the bookie ******** and have live quarter by quarter bets managed in the arena, with the team running the operation. Maybe even have an app to integrate with so people can bet from their phones while in their seat watching the games or something

Yep. Something will happen. I think it'll take 5-10 years. Maybe more. But it will happen.

 

[Ellipse]

Wait, I'm missing something. Why, exactly, should any casino pay the NBA for the right to bet on NBA games? The court ruled that congress cannot give a right to Nevada casinos, deny it to New Jersey casinos, and forbid states from changing their existing gambling laws. Where in this decision does it say that the NBA must get a cut of every bet placed upon an NBA game? Gambling rights are not owned by sport franchises.

Edit: In order to protect the integrity of the game, the NBA use to deny NBA betting in any state that had an NBA team. This caused some issues when the Jazz use to play some of their "home" games in Las Vegas.

But that was a condition for granting a franchise to a city and was done in a era when the only legalized gambling was in Nevada. The NBA does not have the authority to "tax" gambling, which is regulated by the states.

 

[checkbookdoc]

Thanks for the comments. It has been interesting to hear perspectives on what will happen to the salary cap. I personally think there is a good chance the cap will increase significantly in the next few years, but maybe I am wrong.

I am also interested in the second part of the question (which I actually think is more interesting). If you knew for a certainty there was going to be an large increase to the salary cap, how would your preferences for this summer change?

 

[Ellipse]

I figured most sports arenas have potential to turn into pseudo gambling houses. They could bank a lot with live, in-house bets that are handled internally. Skip the bookie ******** and have live quarter by quarter bets managed in the arena, with the team running the operation. Maybe even have an app to integrate with so people can bet from their phones while in their seat watching the games or something

If the NBA did this, then the integrity of the game goes all to hell.

New halftime activity:

"Hey <leading scorer>, why you spending so much time in the john?"
"Burritos." <leading scorer> looking at phone app: Hmm, over/under on my 3rd quarter scoring is ... I think I'll take the under for $20k. Uses burn phone to place the bet.

Ref A, "I'm thinking of telling Tony that the home team plus 10 is a bad bet for $1000 each, what do you guys think?"
Ref B, "Yeah, I'll go along with that."
Ref C, "Sure, but make it for $2000 because it looks like the $500 bet I placed before the game is a goner."

 

[jope]

If the NBA did this, then the integrity of the game goes all to hell.

New halftime activity:

"Hey <leading scorer>, why you spending so much time in the john?"
"Burritos." <leading scorer> looking at phone app: Hmm, over/under on my 3rd quarter scoring is ... I think I'll take the under for $20k. Uses burn phone to place the bet.

Ref A, "I'm thinking of telling Tony that the home team plus 10 is a bad bet for $1000 each, what do you guys think?"
Ref B, "Yeah, I'll go along with that."
Ref C, "Sure, but make it for $2000 because it looks like the $500 bet I placed before the game is a goner."

I mean, the scenarios you referenced are possible with or without inhouse gambling.