The landscape of sports betting is shifting as prediction markets gain traction, impacting the value of existing sportsbook agreements. To safeguard their marketing rights, sportsbooks are actively collaborating with their partners.
Recently, Major League Baseball (MLB) became the latest major sports organization to formalize a partnership with prediction markets, entering into an integrity-focused agreement with the Commodity Futures Trading Commission (CFTC) and securing a sponsorship deal with Polymarket, valued between $150 million and $300 million over three years. The National Hockey League (NHL) has also partnered with Polymarket and Kalshi, while Polymarket has agreements with Major League Soccer (MLS) and the Ultimate Fighting Championship (UFC).
These new partnerships are diminishing the value of existing sportsbook deals. For instance, FanDuel holds a “co-exclusive” agreement as the Official Sports Betting Partner of MLB, while Polymarket serves as the league’s Official Prediction Market.
It seems inevitable that the National Football League (NFL) and the National Basketball Association (NBA) will soon find their own prediction market partners. Notably, the NFL's sports betting category has reopened for the first time since 2021, as FanDuel and DraftKings hesitated to meet the increased costs associated with obtaining official league data from Genius, which is necessary for a partnership.
The leagues’ readiness to collaborate with emerging companies also paves the way for teams to negotiate their own deals.
Sportsbooks like FanDuel and DraftKings are cautious about further fragmentation within the betting category, recognizing the financial implications of protecting their marketing rights. Eric Foote, CEO of VIG Partners, noted that legal sports betting operators are returning to their teams and league agreements to broaden their category definitions, often at an additional cost.
As the sports betting sponsorship landscape evolves, teams are struggling to secure partnerships. Foote describes the current market as a buyer's market, indicating that teams are now often left with only one or no partners, forcing them to aggressively pursue any available opportunities.
Despite the challenges, the prediction market sector is on the rise. Initially, teams may have limited options for partners, but this is expected to change. Foote believes that leagues will first finalize their deals before allowing teams to participate, and he is optimistic that more opportunities will soon become available.
While leagues emphasize integrity in their prediction market initiatives, Foote suggests that financial motivations are a significant driving force behind these agreements. Ultimately, the focus remains on the monetary value of the deals.