It’s Finally Legal to Bet on March Madness This Year

(Bloomberg Businessweek) -- When the odds came out for the game between Duke and the University of Virginia in January, it was a seismic event at the Action Network’s offices in New York. The staff at the digital media startup had been waiting for days to find out who was favored to win the matchup between two of college basketball’s best teams. When the news broke on a Friday evening that oddsmakers favored Duke by four points, pandemonium broke out. Reporters and editors scrambled to publish stories—and place bets of their own. “They were screaming, like, ‘Oh my God, Virginia minus four, go, go, go!’ ” says reporter and senior producer Darren Rovell.

Action Network Inc. was founded on the premise that this mania, long relegated to Las Vegas casinos and black-market-barroom sportsbooks, is about to find its way into the American mainstream. Last May the U.S. Supreme Court overturned the federal law that had confined legal sportsbooks to Nevada. Since then seven more states have begun to allow betting, and a couple dozen others are considering it. Nationwide, operators’ revenue could reach $6.5 billion by 2023, according to researcher Eilers & Krejcik Gaming. Bettors in New Jersey, where legalization arrived last June, are already wagering almost $400 million every month.

Action Network doesn’t take wagers. Instead, it’s looking to become the go-to source of information for sports bettors through a subscription-based service offering news, data, and analytical tools. “There are more and more people who might not have been inclined to bet who are now trying to figure out what it all means,” says Chad Millman, who left a job as an editorial director at ESPN to become head of media at Action Network. The goal, he says, is to make those people feel confident enough to place a bet, or at least sound smart while chatting about sports at a bar.

The Chernin Group, an investment firm led by former News Corp. President Peter Chernin, formed the company in the fall of 2017, a few months after the Supreme Court said it would hear an appeal to overturn the law that limited betting. The site published its first story a few months before the ruling was handed down. “We’re very much a moment-in-time business,” says Chief Executive Officer Patrick Keane, a longtime media executive who took the job in November.

This year’s NCAA men’s college basketball tournament, the first since the ruling, is a big moment for the company. Tens of millions of Americans who otherwise rarely bet on sports will fill out a March Madness bracket and put down $10 or $20 to enter a pool with friends or co-workers. Action Network wants to convert these casual bettors into regular customers. It’s offering a detailed preview of each game, rankings of which underdog teams are likely to make a deep run, and a service that will fill out brackets with optimized picks based on the number of entrants in a pool.

The company, which has been steadily adding reporters and editors over the past year, now has about 30 on staff, out of a total head count of about 75. Rovell, who also joined in November, is the highest-profile hire to date. Like Millman, he came from ESPN, where he was a sports business reporter. He’s also a Twitter celebrity, with more than 2 million followers he feeds with everything from breaking news to pictures of ballpark concessions to videos of himself opening old packs of baseball cards. Now he’s adding a steady dose of betting market tidbits linked to Action Network stories.

Readers who click on those links often find they can’t read the entire story without downloading Action Network’s mobile app. The so-called app wall is the first step in the company’s strategy to move customers toward paying for one of its tiers of subscription services. “For me it’s basically just driving people up to the app wall,” Rovell says. “I’m going to hit you and hit you. You’re going to be interested in this content at some point.”

Other hires include Rob Perez, the NBA super-fan better known on Twitter as “World Wide Wob,” and Michael Berg, the cowboy-hatted sports gambler known to his followers as “Blackjack Fletcher.” All share an obsessive interest in sports and an eye for the storylines that matter to bettors. On a recent Wednesday, for instance, deputy editor Scott Miller and social media director Connor Nolte were studying film from that January Duke-Virginia game. Duke won by two, but Miller and Nolte suspect that a last-second shot by Virginia—meaningless to the outcome but decisive for many bettors, since Duke was favored to win by four—didn’t beat the clock and shouldn’t have counted. They’re studying the replay footage as if it were the Zapruder film.

Action Network says it’s been averaging almost 2 million unique visitors per month over the past three months. The best-performing stories, Millman says, are straightforward news about betting lines. The company also produces a handful of podcasts, including a twice-weekly show on collegiate sports that irreverent host George DiDaniels, known to his listeners as “Stuckey,” opens with “What’s up, degenerate nation?”

The news stories and banter seek to build a sense of community that will get fans to download Action Network’s app, then climb a ladder of paid services. The base $8 monthly tier, the Edge, provides access to expert picks and information on where other bettors are putting their money. The next level, a $50 service called BetLabs, allows users to filter through data from more than a decade of games in the NBA, the NFL, MLB, and other leagues to build their own betting systems. If a fan has a theory, for instance, that college basketball teams tend to exceed expectations when they enter March Madness on a winning streak, he can test how well the hunch stands up historically and identify chances to bet on it. The top tier is Sports Insights, a $250 monthly service that allows subscribers to see details of where money is flowing through more than 60 sportsbooks around the world.

When Chernin formed Action Network in 2017, it rolled together three companies that provided these services separately. Keane is working to integrate them into a single brand and move customers along an escalator from casual to serious betting. “That’s how we build a big business,” he says, “if we’re able to have a shallow end, medium end, and deep end of the pool.” To do that, the company will have to figure out how to speak to experienced bettors without intimidating new ones and to newbies without insulting veteran gamblers. Millman, for example, says he banned use of the betting term “moneyline” in headlines because he thought it would turn off casual readers. “They have positioned themselves very intelligently,” says Chris Grove, a managing director at Eilers & Krejcik. “They have a nice blend of entertainment and cultural content alongside more utilitarian tools.”

In February, Action Network announced it had raised $17.5 million from a new group of investors including team owners from the NBA, the NHL, and MLB, as well as the former owners of the Ultimate Fighting Championship. The investment, and the vote of confidence it signals, gives Action Network a much-needed boost as it moves into competition with large sports media companies that are also investing in betting coverage. Two weeks before the company secured its new funding, AT&T Inc.’s Turner Broadcasting announced plans to put a studio inside the sportsbook at Caesars Palace Las Vegas Hotel & Casino, where it will produce betting-focused shows. And on March 11, ESPN began airing Daily Wager, an hourlong gambling show on its ESPNews network.

March Madness, Keane says, will be an important test: “We’re fighting tooth and nail against Yahoo! and ESPN and CBS and Fox.”

To contact the editor responsible for this story: James Ellis at jellis27@bloomberg.net

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