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Best of Chris Sieroty

Gaming Guru

Chris Sieroty
 

Sportsbooks could take major hit with potential NFL stoppage

31 January 2011

LAS VEGAS, Nevada -- With National Football League owners threatening to lock out players next season if a new collective bargaining agreement isn't reached by a March deadline, sports books in Las Vegas are bracing for a financial hit.

Those who run an industry that generates $2.5 billion annually in Nevada are still debating the size of that potential loss.

A season-long NFL work stoppage could cost Las Vegas sports books an estimated $850 million, according to a calculation by John Avello, sports book and race director with Wynn Las Vegas.

"I'm concerned about the impact a work stoppage in the NFL would have on our business," Avello said. "I'm hoping they'll work it out and cooler heads will prevail."

Over the last few years, Super Bowl Sunday has generated a handle between $80 million and $95 million for sports books in Las Vegas. This year's game between the Pittsburgh Steelers and Green Bay Packers is expected to generate a handle near the record of $94.5 million, set in 2006 when the Steelers defeated the Seattle Seahawks 21-10.

"If there is a work stoppage, we'll do something to try to make up some of the revenue," Avello said. "However, that's some adjustment we'll have to make. We've done it before when the NFL players went on strike or with the NHL lockout."

Jay Kornegay, vice president of race and sports book operations at the Las Vegas Hilton, was more optimistic about the possibility of the sides reaching a labor agreement.

"It's out of our control," he said. "But I think they're going to reach an agreement. They'll be too much pressure from the Food and Beverage Association all the way to the White House."

Kornegay said there was an old saying that applied to the NFL's labor situation: "Never have an airplane strike at Christmas." He said he expected the Obama administration to possibly get involved in the negotiations because so many people rely on the NFL to make a living.

The NFL Players Association has gone on strike twice in the last 30 years, with the last walkout in 1987.

In 1982, a strike lasted 57 days and resulted in a nine-game schedule instead of the usual 16. The strike in 1987 lasted a month. However, only one week of the season was canceled before NFL owners staged games with replacement players.

The NFL and its players association have until March 3 to renew their collective bargaining agreement.

There are a number of issues that owners and players need to agree on to avoid a lockout, including revenue equity between players and owners; an 18-game regular season; and a rookie salary cap.

Sports books would feel the brunt of a lockout.

"It would be absolutely devastating to us. It would be devastating to the entire industry," said John English, senior vice president of American Wagering Inc. "We are hopeful that they can reach an agreement."

American Wagering operates 76 Leroy's Horse and Sports Place locations in Nevada. The company posted a loss of $226,316, or 3 cents a share, for the third quarter of 2010, compared with a loss of $449,418, or 6 cents a share, for the same period a year earlier.

"We get 40 percent to 50 percent of our earnings from football," English said. "Overall, it could be really rough for our business."

Jimmy Vaccaro, director of sports operations and public relations with Brandywine Bookmaking LLC, said with the amount of money bet on professional football expected to be up over last year, the impact of an NFL work stoppage would be felt across the sports wagering industry.

"We don't want a work stoppage," Vaccaro said. "Its impact would far outweigh any stoppage in basketball or baseball."

Brandywine Bookmaking owns 16 Lucky's Race and Sports Book locations in Nevada. Revenue figures were not available for the privately held company.

If a lockout occurred, Vaccaro said, he could see a shift toward college football wagering as the NCAA and television networks, such as ESPN, move games to Sunday and Monday to fill holes in their broadcast schedules.

"There is more interest in betting on college football, but it won't replace the interest in professional football," he said. "The handle is larger these days because more games are shown on television. Back in the 1970s and 1980s, you saw two college games on Saturday and you got an early and late NFL game on Sunday. When more games are available, they tend to bet more. ESPN has been responsible for this."