WWE (NYSE: WWE) is in talks with regulators in Colorado and Michigan to legalize gambling on certain high-profile events, according to a report by CNBC which cited people familiar with the matter.
The promotion, which primarily operates scripted professional wrestling matches, has also reportedly tapped accounting firm Ernst & Young for the safe keeping of match results to ensure that they do not leak to the public.
EY provides a similar service to major awards programs like the Academy Awards and the Emmys, and gambling on the results of the annual Academy Awards has been legalized in some states and is available through major sports betting providers like DraftKings and FanDuel. This has become WWE CEO Vince McMahon’s basis for the move to open the promotion to online betting.
It may not be as simple as it sounds though, because while the results of the awards programs are known prior to the event, organizers arrive at these results through a voting process where individual voters do not know the final results. In contrast, WWE results are fictionalized, crafted by scriptwriters, and approved by executives, presumably primarily McMahon, who is also executive chairman of the company’s board of directors.
WWE operates more like a TV show than a sports league or an awards show, where storylines are discussed and mapped out ahead of time, involving a number of people. How this betting system would work is still up for discussion, but WWE says that one possibility would be to not inform the wrestlers performing the matches of the outcome until hours before the event.
WWE did not comment on how withholding the results would affect the wrestlers and preparations for the matches. It would likely take a lot more planning and orchestration to make the show gambling-ready, and it would likely have a considerable impact on the show and its wrestlers.
On one hand, leaks are a huge risk. On the other hand, bets could also influence how succeeding matches are directed and booked.
If regulators allow gambling on WWE, it would still be up to the betting companies to let people place bets on the matches. It could also open up a way for other fictionalized shows to enter the space.
CNBC’s Alex Sherman later reported that Colorado is passing up the idea of allowing betting on WWE matches.
In February, McMahon returned to the company’s helm after stepping down last year amid a hush money scandal, reportedly to prepare to sell off the company. Around the same time, it was rumored that he had sold the company to Saudi Arabia.
McMahon reportedly wants $9 billion for WWE, over 30% higher than its current market capitalization of $6 billion. Adding betting to the promotion’s features could be an effort to raise its value.
According to CNBC’s sources, the company is set to begin talks with potential buyers in the coming weeks although it is not guaranteed that a sale would push through.
WWE last traded at $81.66 on the NYSE.
Information for this briefing was found via CNBC, and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.