SBJ Unpacks: Going all in on AI

The introduction of ChatGPT a year ago enabled anyone with an internet connection to interact with a chatbot whose replies sounded organic, whose knowledge was vast and whose potential kick-started an arms race in AI. Users could even ask for the response to be crafted in a poem or narrative voice of a favorite author.

While limitations were apparent early -- answers are not always factual, and there’s pending litigation challenging copyright protection on source material -- ChatGPT’s arrival forced everyone in every industry, including sports, to consider how generative AI might aid their end product or internal workflows. In some sectors, it will be a necessary cost center; in others, it can drive revenue. More use cases will emerge. And everyone stands to be involved.

Drawing on insights from more than two dozen leaders in the sports and technology industries, SBJ's Joe Lemire , Ethan Joyce and Rob Schaefer identified applications of generative AI across media and content, operational efficiency, athlete performance, data analysis, marketing, customer service, ticketing and cybersecurity. Coverage includes:

• Identifying AI solutions in team operations

• Case study: Turning complicated information 'into a conversation'

• Generative AI plays on both sides of cybersecurity issue

• In ChatGPT's own words: The future of AI in sports

• Timeline of AI use in sports

The Univ. of Miami and Legends have agreed to expand their partnership to cover all of the athletic department’s revenue streams, ranging from corporate sponsorships to ticketing, fundraising and a new off-campus retail store. Legends characterized this expanded agreement as a first-of-its-kind college deal because of how it encompasses all aspects of the Hurricane’s revenue-generating capabilities as well as campuswide marketing partnerships that extend beyond athletics. The original deal between Legends and the school, signed in April 2021, was more narrowly focused on marketing partnerships. The new arrangement will put all of Miami’s revenue streams under Legends’ direction.

In addition to the new agreement, Legends and Miami announced a key personnel shift. Jason Layton , formerly the Hurricanes’ senior deputy AD, has become the Chief Revenue Officer for the new partnership within Legends College and will become a Legends executive. Layton joined the Canes’ front office in 2014 as the senior associate AD for communications and sales and has run point on sponsorships, digital media, ACC Network communications and licensing, among other duties. 

Legends College President Mike Behan , Layton and Miami AD Dan Radakovich were out front on developing this new partnership structure.

Legends launched its new college division last month.

The Blackhawks' privately funded $65M enhancement of Fifth Third Arena is the latest example of NHL clubs taking advantage of the dearth of public ice sheets in the U.S. to get more tightly connected with their surrounding communities. K.C.-based Generator Studio designed the Fifth Third Arena addition, which entails two more ice rinks (for four total) including what they’re calling a Championship Rink with 1,500 seats, as well as a bar and other hospitality and eating options that Blackhawks concessions partner Levy will run. Chicago-based FC Studio is contributing hospitality design.

The Blackhawks have "seen so much success in six years that now they want to double the facility," said Generator Studio architect Jared Hagedorn, who is working on the project. Construction will be mobilized in early 2024 with work beginning in earnest around April 2024. The facility is tentatively planned to open in Q1 of 2025, incidentally the 100th year anniversary of the Original Six NHL clubs, of which the Blackhawks are one.

The U.S. is covered in football, baseball, and soccer fields and basketball gyms; it has considerably less ice for playing hockey or skating. With that in mind, the Blackhawks are orienting Fifth Third Arena even more toward the community with the additional ice, as well as the food aspect since the facility sits in an area of Chicago with fewer food options than most of the city. The thinking is students from Malcolm X College, which sits across the street, will make use of the new eating and drinking options at Fifth Third Arena just as much as hockey visitors. Based on community input, the Blackhawks scrapped plans to include a large residential and hotel component in the development.

"They want to make this hospitality-first. They want the neighborhood to be able to come in and grab a coffee, along with the hockey parents," said Generator Studio co-founder Tom Proebstle.

The Blackhawks work gives Generator Studio another entry on its NHL training facility-community iceplex resume. The Blackhawks called the firm because of its successful projects in St. Louis (Centene Community ce Center) and Seattle (Kraken Community Iceplex). At Fifth Third Arena, which is part of the larger complex surrounding United Center that’s being created for basketball and hockey, Generator Studio has designed a new front door to the venue with a two-story, glass atrium. Visitors then head up a grand staircase to the main level for access to the championship rink and the large bar. An outdoor patio is available for corporate event rentals or to loan to the community, for neighborhood association meetings, for example.

A subplot to the NBA's In-Season Tournament semifinals, which begin Thursday night, is a $1M sweepstakes that remains alive and well in New Orleans. Back in August, the Pelicans unveiled an in-house "We Win, You Win" promotion that would give 100 fans attending at least one of their two IST home games a prize of $10,000 each -- as long as the team won the tournament. 

Now that the Pelicans have advanced to the IST Final Four in Las Vegas, the money is not only still on the line, but the team claims its attendance metrics have risen significantly because of it. According to Pelicans SVP and COO Ben Hales , the Pelicans are now in the top three leaguewide in partial ticket plans sold and group ticket sales. Although Hales said it is against team policy to release the official numbers, he said the franchise's "show rate" in its two IST home games has also drastically improved and that it sold 4 times the amount of its usual Pelicans merchandise, perhaps due to new City Edition uniforms worn at IST games.  

"This [sweepstakes] was really set up, first and foremost, to draw attention and educate fans about what the IST tournament was," Hales told SBJ. "Because, look, everyone has been a little confused about how this is supposed to work…So we thought we needed to do something that would really get people invested in the outcome and give us a great home court advantage. Fans definitely embraced that and followed it far more closely than I think they would have otherwise…It felt like a playoff atmosphere." 

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The Pelicans' first IST home game against the Mavericks, its 6th game of the season at the Smoothie King Center, drew 16,354 compared to 14,032 in its sixth home game last season. The team's second IST game against the Nuggets (and 7th home game overall) drew 15,278 compared to the 14,658 it drew in its seventh home game last season. Team officials also said the secondary ticket market sales traffic for those two IST games was an all-time high. 

If the Pelicans end up winning the IST championship in Las Vegas on Saturday, Hales said the sweepstakes' random drawing will take place almost immediately. "It will certainly not be an end of the season thing," he said. "We want to get people paid off as quickly as possible. People are excited. You see it on social media. In fact, I was laughing [Friday] night because my daughter's school had their class Sweet 16, and right before I left for our game, one of the dads came out and was like, 'I'm still alive for that million, right?' I said, 'Yep, tune in Monday, man, let's see.'" 

Maybe I’ve watched too many "Shark Tank" episodes. Because the first image that came to mind this week when the story broke that Mark Cuban was selling a majority of the Mavericks to the family that owns the Las Vegas Sands casino chain was of Cuban saying, "And for those reasons, I’m out."

Of course, Cuban is not quite out. Not yet. Maybe not ever. He loves the basketball side and likely will remain engaged there for as long as the Adelson family will have him. But he’s out as controller of the franchise’s fate as it approaches critical decisions on the business front in the coming years -- most notably, where it will go when its lease at American Airlines Center expires in 2031.

The Adelsons are banking on ownership of the team helping their chances of developing a destination casino resort in the Dallas metroplex, with a new arena for the Mavs as an anchor. Cuban has positioned that as a tourism play, rather than simply a gambling play, a distinction that he sees as significant.

With the Adelsons in as owner of the Mavericks and Tilman Fertitta (owner of the Golden Nugget chain) in his seventh season as owner of the Rockets, maybe that improves the chances of Texas legislators allowing voters to decide whether to change the state’s constitution to allow for casinos -- or at least a handful of carefully placed resort casinos.

What does this mean for the prospects of legalized sports betting in Texas?

For now, probably not much. The state legislature only meets in regular session every other year, meaning 2025 will be the next time legislation clearing the way for a referendum could be introduced.

In the last few years, as the owners of 12 major pro franchises, the PGA Tour and Texas Motor Speedway have gotten more involved and the coalition supporting sports betting has mobilized in the state, the legislators who matter most in Texas have moved from "Get off of my land" to "not quite yet."

In May, the coalition made its most substantive headway to date, getting the two-thirds majority it needed to get a bill through the Texas House. A casino proposal that also included sports betting got slightly less support. In the Senate, neither proposal has managed to even make it to a committee hearing.

In some states, competing gambling interests -- casinos, card rooms, video lottery terminals, horse tracks and online sportsbooks -- end up dividing legislators who might otherwise coalesce around a single issue. And then none of them get their wish.

Having the family that wants to develop a Dallas-area casino resort fully vested in the NBA should make that less of a concern for those hoping to get sports betting on the ballot in 2025.

Fantasy sports is an industry that’s growing like almost no other. It’s estimated to be a $28 billion market in 2023 and set to grow to more than $50 billion by 2028. Nearly 20% of Americans age 18+ participate in fantasy sports. 20%! 

As with all growing industries, innovation is vital to its continued success. But with innovation and growth comes the ever-present threat of government intervention and regulation.

Innovation is the lifeblood of the U.S. economy. A thriving economy depends on a healthy and pervasive innovation ecology across all industries. So, when government directly or indirectly gets in the way, everyone should be concerned.

Computing and sports gaming have a long history of innovation, with computers being used beginning in the early 1960s. More recently, fantasy sports have become increasingly mobile as the computing power that used to take up an entire room can now fit in the palm of our hand. The entire industry has evolved to become one oriented around ease of use, intuition, and convenience.

Sports gambling has grown enormously over the last few decades as, again, technology and innovation have made it more accessible and easier to bet on your favorite team or a risky coin toss. These games of chance depend predominantly on randomness and luck. The gamblers have little to do with the outcome. That uncertainty is the thrill and the appeal. In its simplest form, think of betting lunch with a colleague on the outcome of Monday Night Football.

Something that at first blush may seem similar but is inherently different is fantasy sports. Fantasy sports require skill, insight, assessment, research ability, knowledge, and strategy on the player’s part. The skill of the player directly affects the outcome. Spotting factors that others do not is the thrill of this game, not randomness or luck. The industry’s growth has led to an explosion of new players in this space who want to get in on the action, continue to innovate, and continue to build out new companies and new ideas. 

But as is often the case, growth and innovation draw the attention of competitors and government regulators alike. Concerned about the growth of fantasy sports eroding their position in sports betting, some larger, established players are looking to partner with the government to shut out the competition. They want to rig the game by “rent-seeking.” Make no mistake: Innovation and, most importantly, the consumer will suffer.

In economics, “rent-seeking” occurs when companies leverage government to grab a portion of existing wealth or lock in their current market position rather than expending resources, innovating, or otherwise outcompeting others to create their own success. This increases government power as government bureaucracies become the vehicle for gobbling up new or protecting existing market share. Meanwhile, innovation and consumers suffer since government intervention results in an inefficient and unfair allocation of resources, hampering the formation of capital to be invested that would generate further economic growth.

The push is on by those who would slam the door behind them and lock in their position in sports betting. They are actively lobbying across the country, leveraging relationships they have built over the years as a regulated industry. The overt goal is to reverse years of laws and regulations to morph fantasy gaming into gambling. This would force gamers and the fantasy sports industry to labor under extra regulations reserved for those who choose to pursue games of chance rather than those of skill.

States are responding by taking steps to evaluate how government agencies can partner with gaming companies to stop fan-favorite fantasy sports. But the real solution here is simple. Government must not enable those established companies who found success first to build a wall around an entire sector of the economy to preclude competition or innovation.

Games of skill have a different appeal than those games of chance — intellectual challenge versus escapism, outsmarting the field versus the anticipation of an unexpected win. They both have their place, and one is not necessarily better than the other. But conflating the two and subjecting both to identical regulatory burdens fails to protect consumers and serves no one except for government bureaucracies and an entrenched industry trying to snuff out competition.

Bartlett D. Cleland is a research fellow with the Institute for Policy Innovation.

• CONMEBOL announced the 14 U.S. venues that will host matches as part of next summer’s Copa América from June 20-July 14, reports SBJ's Alex Silverman. The group includes 11 NFL stadiums and three soccer-specific MLS stadiums.

• Prime Video drew the most-streamed game in NFL history on Thursday, as the Cowboys’ comeback win over the Seahawks posted 15.26 million viewers. That passes the 15.05 million that Vikings-Eagles drew to start the “Thursday Night Football” slate this season in September, notes SBJ's Austin Karp.

• Charlotte-based “better brunch” restaurant chain Famous Toastery is tapping into sports marketing, making deals to sponsor NASCAR Cup Series driver Michael McDowell and putting its name on a bowl game, writes SBJ's Adam Stern.

• For its second edition in 2024, The Soccer Tournament will expand its field to 48 teams and add an eight-team women’s bracket with an equal, winner-take-all million-dollar payout, notes SBJ's Silverman.