At present, it seems like a certainty that corporate Australia will use some form of the “for society’s good” argument. The latest instance of this is the claim, echoed by federal minister Bill Shorten, that a complete ban on gambling advertising would spell disaster for free-to-air TV. To clarify, the Labor party still supports new restrictions on gambling advertisements, such as hourly caps and bans during children’s programming and around sports broadcasts. However, they have dismissed the idea of a total ban, which has sparked a backlash even among some of its own backbenchers.
During an appearance on ABC’s Q&A on Monday night, Shorten remarked that Australia’s free-to-air TV broadcasters were in “diabolical trouble”, with many relying on gambling ad revenue “just to stay afloat”. “I’m not convinced that complete prohibition works,” he said. But would our commercial TV networks really collapse tomorrow without gambling ad revenue? Or is another factor at play?
To understand this better, we need a broader picture of where advertising spend in Australia originates. Global analytics firm Nielsen frequently compiles top 20 lists of both the categories and individual companies that spend the most on ads here. In 2023, the top category, retail, accounted for $2.56 billion in advertising spend. Gambling and gaming, by contrast, represented just $239 million, less than a tenth of that amount. Harvey Norman led the list of individual companies in 2023, with the first gambling brand, Sportsbet, appearing at 16th place. It’s reasonable to assume that the majority of gambling companies’ ad spend goes to TV. Research by the Australian Communications and Media Authority (ACMA) found that 68% of gambling companies’ ad spend went to free-to-air TV markets. The remaining proportions were 9% to radio, 15% to social media, and 8% to other online platforms.
Estimating the gambling industry’s total annual advertising spend can be complex, as various figures are often cited. One source estimated it at $300.5 million for 2022. More recently, ACMA provided detailed figures between May 2022 and April 2023, putting the total just over $238 million, with $162 million of that going to free-to-air TV networks. However, the way advertising is classified can differ between agencies, and the number of brands in operation is constantly changing. In a highly competitive market, any new entrant must spend significantly on advertising to gain enough market share to be viable.
This is why I believe the actual figure for the 2023 financial year might be slightly higher than ACMA’s widely cited number, accounting for the substantial ad spend of new entrants that might have fallen outside the time window assessed. Based on the average company ad spend as a percentage of revenue and the size of the gambling industry, I estimate it could be closer to $275 million.
Putting these numbers in context, Channel Seven, for instance, generated $1.5 billion in revenue in 2023. Even if it had received the entire gambling industry’s ad spend at my higher estimate of $275 million, this would still account for less than 20% of its annual turnover. If all that money went to TV ads, Channel Seven’s 38.5% share of television advertising revenue would place its revenue from the estimated sports betting ads at about $106 million, around 7% of its total annual revenue. Losing most of that revenue would be a blow but wouldn’t threaten the business’ survival. A total ban would likely be phased in over several years, rather than implemented suddenly. Australia’s free-to-air networks would adapt, develop new strategies, and find alternative markets to replace that revenue. Their management teams are too capable to simply accept a revenue loss without implementing countermeasures.
It’s important to remember LinkedIn is now more than 20 years old. Facebook is 20. YouTube is 19. X (formerly known as Twitter) is 18. TikTok is seven. If free-to-air TV’s business model is so slow to evolve that it can’t adapt to the digital age, it probably doesn’t deserve to compete at the top level. Digital has been around for a while now. The media industry has experienced the brunt of this change but also had the most time to adapt to the disruptors, which are now more established entities rather than new “cool start-ups” from Silicon Valley. The argument that we need to preserve sports gambling ads to protect major media brands has little to no foundation. It’s a tired argument we’ve encountered time and again, reminiscent of the defenses once used by big tobacco.