Former NBA Commissioner David Stern’s Unexpected Impact On Sports Betting Industry Still Resonates

Written By Mike Mazzeo on October 13, 2021 - Last Updated on November 30, 2022
FILE - This Aug. 7, 2014, file photo shows David Stern, a member of the 2014 class of inductees into the Basketball Hall of Fame, listening to a question from the media during a news conference at the Naismith Memorial Basketball Hall of Fame, in Springfield, Mass. Sports in 2020 was an unending state of mourning. (AP Photo/Jessica Hill, File)

David Stern, like many others his age, was not exactly tech savvy. This quality, however, did not prevent the former NBA commissioner from cashing in on the technology industry.

“I had to show him how to send a text message in 2014,” Stern’s son, Eric, told PlayNY with a laugh. “And here he is making a killing on tech companies.”

After retiring following an unparalleled 30-year run as commish, the elder Stern found his second wind as an investor, pouring millions of dollars into a variety of companies run by young entrepreneurs. Eric said his father’s portfolio included 48 different investments by the time he passed away in January 2020 at age 77.

Some of those companies were very much in the preliminary stages of becoming players in the regulated US sports betting industry.

Once a vehement opponent of gambling on sports, the late Stern served as an early investor for companies like Fubo, Jackpocket, StatMuse, AlphaDraft, RotoQL, and Keemotion/ShotTracker.

“David is going to be remembered as the commish’s commish and one of the most visionary leaders that we’ve ever had in sports,” said John Kosner, who co-created Micromanagement Ventures with him. “And I think the fact that within his career he could sort of make that transition from one side of the issue to the other–for reasons that make sense–just demonstrates how smart he was.”

Stern changes his tune on sports betting

David Stern was born in 1942, a couple decades after baseball’s Black Sox scandal. He received his law degree from Columbia University in 1966, five years after the NCAA University Division men’s basketball gambling scandal.

“He had a strong belief that the integrity of the game comes first,” said Eric, who has since taken over his father’s investments.

As commissioner, David Stern supported the Professional and Amateur Sports Protection Act (PASPA) of 1992, which essentially prohibited sports betting in the US outside of Nevada. Fifteen years later, he and the NBA were forced to deal with the Tim Donaghy scandal. And starting in 2012, Stern waged a legal war with Gov. Chris Christie as New Jersey attempted to legalize sports betting within its borders.

“The Tim Donaghy scandal made an enormous impression on him, and I think it really shook him,” Eric said. “And I don’t think he ever had much love for Chris Christie either.”

But after running the NBA from 1984-2014, Stern’s tune changed. When New York Times published a weighty op-ed by his successor Adam Silver in support of sports betting, Stern followed suit.

“One of the things he saw coming was that as soon as governments start looking to raise revenue from something, it’s going to happen,” Eric said. “I’m not sure what has happened was his preferred vision. But that’s sort of how government and politics work. Once something happens, it’s hard to turn the cruise ship.”

Indeed, Stern was already starting to reverse course prior to the fall of PASPA in 2018.

“Let’s not talk about the ‘evils’ of gambling when it comes to sports,” he said at a gaming conference in Las Vegas in 2016. “The industry has come to accept that a properly run gambling association will be protective of sports.”

Sports betting is now regulated in 27 states plus the District of Columbia, with several others working toward legalization and launch.

Stern’s second wind: investments

Kosner and Stern began their working relationship when Kosner was head of broadcasting for the NBA during the Dream Team era. He then ran the digital division at ESPN until 2017 before the two reunited with the formation of Micromanagement Ventures. The investment portfolio focused on companies involved in sports media, player health, and betting.

“Every day was great,” Kosner said. “It was like a wax museum of famous people coming in and out of his office. David was always super connected, influential, and generous with his time.

“To have this reunion 25 years after we worked together was one of the joys of my career. He worked as hard and cared as much doing this as when I worked with him at the NBA.”

Eric enjoyed watching his father in action too.

“He wasn’t a tech-oriented person for most of his life as commissioner. He came from another time. So I think a lot of it was really adult education for him, like someone who retires and then takes classes. Except in this case, he began investing,” Eric said.

“And I think he enjoyed working with all these young founders. He was literally investing in leaders who were in their 20s and 30s, so I think he enjoyed the mentorship probably most of all.”

Jackpocket gets a boost from Stern

Lottery app Jackpocket CEO Peter Sullivan didn’t typically dress up for work. But a 2018 pitch meeting in front of David Stern required a more formal look.

“I’m trying to think of who set it up, but we had a phone call and I came in and pitched him in-person wearing a suit,” Sullivan said. (Stern’s good friend, Adam Rothstein, is on the company’s board of directors.)

“I’m not sure I wore a tie. But when you’re going to meet David Stern, you know you have to kiss the ring a little bit too. Not just go in there like a tech guy with a t-shirt. And pay your respects.

“We just kind of hit it off.”

Sullivan, now 36, grew up in the Greenpoint section of Brooklyn. His father and grandfather were both career steel/trackworkers, and his father loved to play the lottery. The family backstory resonated with Stern.

“David just loved the blue-collar story,” Sullivan said. “And I think he always liked the fact that Americans spend more money on lottery tickets than all sporting event tickets, all concert tickets, all movie tickets, all video games and all books combined. So as a source of entertainment value it’s just tremendously overlooked. I think he could just see the grit and hustle in me, that authenticity of our family.”

Sullivan had an understanding of the business after running a failed tech startup, and he knew digital lottery tickets were a big opportunity. He was honest with Stern. The market would be slow and tough. But it could eventually develop into a big business.

Stern wound up investing as part of the company’s Series B funding round in 2018 and 2019.

David Stern as a mentor

Sullivan vividly remembers getting reamed out by Stern on the phone after sending a mistake-riddled email to investors.

“There were some punctuation issues,” he recalled. “And when he’s talking to you it’s like when your dad or grandfather says, ‘I’m not mad, I’m just disappointed.’”

On occasion, Stern would invite the young entrepreneurs of his investment companies to lunch at his office. Sullivan described himself as the “ball buster” of the group and said he loved to joke with Stern.

But at the same time, the commish had a serious side.

“You had to watch it,” Sullivan said, “because he had an ego to protect as well.”

Stern sent all of them to All-Star Games to meet team owners, and Jackpocket was able to form partnerships with the Jets, Islanders, and Devils. The next frontier for the company will be a sports lottery product–small commitments for potentially big payoffs that would appeal to casual players.

Ultimately, Sullivan had nothing but praise for Stern: “He was always supportive and had an interesting take on life. He loved talking to young entrepreneurs. I think it was a second wind for him, and it’s terrible that (he passed) because he was really starting to enjoy it.”

Stern’s sports betting legacy

Nearly two years after Stern’s death, the US sports betting industry is expanding at hyperspeed.

“David always was a visionary,” Kosner said. “He passed away really at the start of the movement.”

When Stern first invested in Fubo it was a streaming service, not a sports betting company. Keemotion (video) and ShotTracker (data) were enabling instant data by using cameras and sensors in arenas. AlphaDraft was a fantasy sports site that was ultimately acquired by FanDuel. RotoQL was eventually bought by Entercom. StatMuse just recently moved into the gambling space. And the lottery, it appeared, would run sports betting in several states.

Things have changed, but Stern’s impact on the industry is certainly measurable.

“He was aware of the estimated $400 billion per year of illegal sports betting going on,” Eric said. “He knew a lot of it was just people playing office pools or betting on the Super Bowl with their friends or betting with a bookie on a college campus. That was just reality. But he wasn’t naive on what was probably ultimately coming, and so there’s nothing wrong with it once it’s legal. It’s just another business, another aspect of sports.

“And he saw the potential for fan engagement. That was really it in the end. He saw the massive potential for fan engagement that fantasy sports and sports betting brings.”

Lead photo: Jessica Hill | AP

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Mike Mazzeo

Mike Mazzeo is a contributing writer for PlayNY, reporting on legal sports betting in New York while covering the potential legalization of NY online casinos and poker. He previously wrote for ESPN, the New York Daily News and The Ringer, among others.

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