The NCAA’s March Madness basketball tournament is in full swing. If you are not a fan, you may have seen friends on their social media feeds talking about their brackets, their alma mater or their favorite teams. When it comes to the NCAA, the March Madness tournament is its main revenue generator for the entire year. The 2019 tournament brought in $ 1.05 billion in revenue for the NCAA, representing 90% of its normal annual revenue. The NCAA also makes money from the broadcast rights for the three-week tournament, which figure in the $ 1.05 billion figure. The NCAA signed a $ 10.8 billion in 2010, a 14-year contract with CBS and Turner Broadcasting to broadcast the tournament. In April 2016, the contract was extended to an additional $ 8.8 billion by 2032.
When the tournament was canceled in 2020 for the first time in its 81-year history, it reduced NCAA’s 2020 revenue by just $ 520 million. However, the NCAA took out a $ 270 million insurance policy in case of cancellation of the tournament. The NCAA also took some extreme cost-cutting measures, which meant that the college sports governing body posted a net loss of just $ 56 million in 2020.
Participating conferences also get a larger payout from playing in tournaments. For example, this year, the Pac-12 Conference has four teams in the Sweet 16 round (USC, UCLA, Oregon, and Oregon State) – representing 25% of the 16 teams remaining in the tournament as of this writing. The money generated during the tournament is ultimately divided between the conferences in the tournament and it is decided how good the schools are in each conference. The NCAA claims that approximately 96% of the money from the tournament goes to schools and participates in the annual event. The basketball fund for the tournament was $ 170 million – or about 20% of the money the NCAA made out of television advertising. For each game a team plays, its conference gets a payout called “Unit”. Each unit was worth $ 280,000 in 2019. If a team makes it to the final game, it can make five units or the equivalent of $ 1.4 million.
March Madness is huge business for everyone to join, but online gambling is now legal in 25 states, especially for gaming sites. Consider the person, a pool of 75 people with a $ 25 buy-in. The winner of that March Madness Pool will take home $ 2,000 and it will be without the need to fill a bracket. Now, those March Madness fans can turn to mobile betting companies like DraftKings to place bets on the tournament. People filling the bracket for about $ 2 million, according to a DraftKings spokesperson. However, what March Madness brings out as a whole is much, much, much more.
Betting through these relatively new legal online options is over 200% since 2019. It is estimated that 18 million people will place bets online and eight million people will place bets in sportsbooks. This is due to the fact that 13 new legal online sports betting markets have opened up since the 2019 NCAA tournament. Basically, this means that 45% of American adults live in one of the 25 states and / or Washington DC, where sports betting has been legalized. The number of Americans betting on the NCAA basketball tournament is approximately 47 million, roughly the same as in 2019. However, the dollar amount of bets is on track to break the $ 8.5 billion record set in 2019.
The founder and CEO of DraftKings, Jason Robbins, has joined the billionaires club due to the number of online betting gamblers. The share price of DraftKings has increased by 260% since April 2020. DraftKings reported a 146% increase in income from the previous year – to $ 322 million, up from $ 131 million last year. The site also has 1.5 million monthly active users – up from 500,000 from the previous quarter. March Madness is expected to increase the number of users and revenue of DraftKings and other online betting sites. Remember, there was no NCAA basketball tournament in 2020 due to the global epidemic.
DraftKings has introduced traditional brackets for their March Madness bookies. For a $ 100 entry fee with 20,000 betters, the eventual winner will receive a cool $ 1 million. The site is also hosting Survivor Pools in all states – even where online sports betting is not yet legal – is free to play and pays $ 1 million to the first-place winner.