'Sports Betting Is Inevitable': Inside the Sloan Sports Analytics Conference

Over the last three months, NBA commissioner Adam Silver has become the leading public advocate for legalizing sports gambling in America. So it was curious to hear him tell ESPN The Magazine last month that he worries about "being portrayed as pro sports betting."

"I view myself more as pro transparency," Silver said, "and someone who's a realist in this business." Realism, in this case, refers to the recognition that gambling on televised sports in America is a huge and booming industry, estimated to be in the hundreds of billions of dollars in value. An exact figure is hard to establish because so little of this activity is reported, which is among the reasons Silver has advocated, as he put it in a now-famous op-ed in the New York Times, "[bringing it] out of the underground and into the sunlight where it can be appropriately monitored and regulated."

The first step in that process, it would seem, is simply discussing it out loud, sapping gambling of its taboo like an old family secret. Rarely has American sports betting seemed less shadowy than it did at this past weekend's Sloan Sports Analytics Conference, where Silver was just one among the numerous industry leaders to speak their minds on the topic. On the sun-lit third floor of the Boston Convention and Exhibition Center, sports executives and media members gathered for two days to discuss the state of sports: its statistics, its economics, and its bright future.

There was widespread agreement among the conference's attendees that legal gambling is inevitable. "It's definitely coming," said Michael Rubin, a co-owner of the Philadelphia 76ers and executive chairman of the sports merchandise retailer Fanatics. "Sports betting is inevitable," agreed Vivek Ranadive, majority owner of the Sacramento Kings. Even the conference itself seemed to agree. "What," asked the descriptive copy of a breakout panel on legalizing gambling, "are the implications of this inevitable trend?"

There is plenty of evidence that this change is coming. In an articulate piece for the Washington Post, Will Hobson observed that, despite America's sometimes-fervent moral objections to games of chance, the lottery has arrived in more than 40 states, and no longer appears to be in danger of going anywhere. The 1992 Professional and Amateur Sports Protection Act ("PASPA" to its familiars) outlawed sports gambling in all but four states, grandfathering in those that already permitted it, most notably Nevada; but Senator John McCain has recently called for a renewed discussion on the floor of Congress. And a handful of states, led by New Jersey, have sought to repeal PASPA in the hopes of bringing in new revenue.

Does this really mean legal sports gambling is inevitable? That's a matter of opinion. At the moment, a consortium of sports leagues including the NFL, NBA, MLB, NHL, and NCAA are seeking an injunction against New Jersey's attempts to legalize the practice within its borders. New Jersey governor Chris Christie has suggested this makes Silver a hypocrite, though NBA officials resolve the apparent paradox by saying that gambling shouldn't be legalized without federal oversight, something the state of New Jersey can't provide. The more important lesson, though, is that if the NBA were sufficiently motivated to disallow gambling, they could continue trying to litigate it out of existence. What they appear to want is something else, though: a legal form of gambling that they can control.

"We have sports betting in the U.S.," said NBA assistant legal counsel Dan Spillane, speaking on the betting panel. "It's a big underground industry right now. The issue is, what should we do about it? Should we bring it into the open?"

The implied answer to this question is yes, but why? Is the integrity of the league really threatened by illegal gambling? The Tim Donaghy scandal in 2007 caused then-commissioner David Stern to reevaluate the league's rules on gambling. Presumably, the subsequent reforms helped to eradicate game-fixing, if it ever affected refs other than Donaghy; there have been no related public incidents in the years since. So why the newfound interest in the importance of betting activity?

A likely answer is the rise of fantasy sports. In the years since the Donaghy scandal, the Fantasy Sports Trade Association estimates that its user base—fantasy players across all sports—have more than doubled, going from 19.4 million in 2007 to 41.5 million in 2014.

The breakneck pace of growth in fantasy sports has opened the eyes of executives in all American sports. If sports was ever the domain of jocks and their coaches, a visit to Sloan leaves little doubt that businessmen are in charge now. You don't hear much here about the Rushmore of NFL quarterbacks or Don Larsen's perfect game; several invited speakers referred to the games themselves as "product." And this year, the acquisitive eyes of the industry leaders were trained on what they see as the growth areas: international markets (a perennial favorite of league commissioners, despite the seeming indifference of fans) and gambling revenue. The boom in fantasy has given some indications of the opportunities that legal gambling may bring.

Top executives including Phil de Picciotto, founder and president of the sports marketing agency Octagon, Celtics owner Wyc Grousbeck, Ranadive, and MLB commissioner Rob Manfred all expressed appreciation for the noted increase in "fan engagement" caused by gambling. Philadelphia 76ers co-owner Michael Rubin, in blunt fashion, brought this point to its logical conclusion. When gambling is legalized, "there will be tens of billions of dollars of value created very quickly."

Even if the leagues don't wind up with a cut of legal gambling revenue (which they may), they'll acquire new customers, and new data on their existing customers. Fans who now check in periodically may obsessively update their rosters, tuning into mundane out of market games in the hopes of winning their fantasy leagues.

All American sports leagues stand to benefit from legal gambling, but it may not be a coincidence that the NBA is leading the charge—it may have the most to gain. According to Bloomberg, fantasy football is far ahead of other sports in terms of users; baseball is a distant second. The fantasy football market is estimated to be worth as much as $11 billion. Fantasy basketball, it is safe to infer, is considerably smaller.

The NBA has lagged in this industry for a few reasons. For one, basketball isn't easy to quantify. Baseball has long been a game of numbers —61, .406, 755, 3,000, and 500 all jump off the page without even a hint of attribution. Basketball is a much more fluid game, its statistical records far less hallowed. (Quick: what's the record for points in an NBA career? Or season?) Football has never had baseball's statistical allure either, but its wildly successful TV schedule has more than compensated for that. Fantasy football is in effect a weekly tournament whose results are posted on Tuesday morning. But here too basketball has been unlucky—its games are scattered throughout the week, and points are tallied over the course of the season, which means fantasy players have to wait months for the satisfaction of going head to head with their opponents, and determining a winner.

These principles of fan engagement may sound abstract or speculative, but the arrival of daily fantasy sites, most especially DraftKings and FanDuel, have shown the economic promise of bets that pay off every day. Their daily format eliminates the delayed gratification of season-long fantasy, and the numbers speak for themselves. Both companies are charting explosive growth, and according to Femi Wasserman, VP of Communications at DraftKings, NBA basketball is one of the site's fastest growing sports, having increased by a factor of nine since last year. FanDuel.com trumpets a payout of more than $10 million per week in cash prizes.

Jeff Ma, a noted Blackjack card-counter and contributor to ESPN's new betting site, ESPN Chalk, summarized the matter: "Obviously, there's a lot of money that's driving this decision [to back legalized gambling.] Fantasy was kind of a gateway to this, and certainly daily fantasy has been a gateway." When the sports leagues carved out an exception for fantasy in anti-gambling legislation, he added, they gave themselves an opportunity to see what gambling may offer, and how much it scandalizes the public. "Daily fantasy is essentially gambling," Ma said.

What all this means is that, regardless of whether legal and monitored gambling has any effect of game-fixing, and even regardless of what percentage the NBA may receive of the money placed on its games, legal gambling will significantly deepen the pockets of the league's teams and employees.

Now, it's just a matter of making it happen. Several experts on the betting panel at Sloan avowed that New Jersey was unlikely to prevail in its current crusade, which should put the matter off for a few years. Asked to set a timetable, ESPN Chalk reporter David Purdum put the over-under at five years for federally controlled gambling. "And I'll take the under," he said.

"You set the line and then took the under?" asked Ma. "I want to be in your sports fantasy league."