Alliance of American Football will have enhanced in-game betting

The future of gambling has found its home in an unlikely place: a professional football league that's five months away from playing its first game.

The Alliance of American Football's in-house tech team has built a gambling product that not only will allow the gambler to watch a game on an app while betting on it on the same screen, it will also allow the league's exclusive gaming partner to better price the in-game odds by building a data set that correlates the likelihood of a certain bet winning.

When Charlie Ebersol co-founded the AAF, he had in mind the idea of building a separate tech business alongside the league. While Ebersol effusively talked about gambling, he did not reveal that his team was building a robust product that would immediately bolster interest in the league. That revelation, which comes this week, makes it more clear why certain investors wanted in, including the Chernin Group, which owns the sports betting site and app The Action Network; tech investor Keith Rabois; and Brian Singerman from the Founders Fund.

Another investor on the gambling side is MGM, which will be the exclusive in-game gambling partner of the league for the next three seasons. MGM will host the gambling business on its app because it is the licensee.

MGM recently signed a deal to be the official gaming partner of the NBA, but its only exclusivity is sponsor designation. The AAF deal marks the first time any sports organization has sold exclusive in-game betting rights to a sportsbook.

"What's great for us is the access, provided that it's single entity, all the teams and venues are all aligned and there isn't any union issues," said Scott Butera, MGM's president of interactive gaming who was formerly the commissioner of the Arena Football League.

The latter point is important because the league and MGM will put wearables on players to collect second-generation stats that will be used to better assess odds for in-game betting. Pro sports unions have strongly opposed the use of sharing any information from wearable data with outside parties.

"We'll collect the data and then be able to have the algorithm sort out what is relevant," Ebersol said, giving an example of a quarterback's greater chance of throwing an interception based on a certain amount of ball speed on his throws.

After taking in the data from the tech on the field, the numbers are crunched and new odds are immediately set. Gamblers, Butera said, will also be able to bet on the data itself -- including speed on the field and speed of the ball, among other things.

The MGM sports app is, so far, only available legally in Nevada and New Jersey, as states that have gotten into sports gambling after the Supreme Court reversal of the Professional and Amateur Sports Protection Act in May contemplate the costs of going mobile.

Ebersol also says that the opportunity exists to allow the league to disproportionately pay players whose prop bets are bet on more, as MGM has promised to share its betting data with the league.

"In our system, there's really a limitless cap on what a player can make," Ebersol said. "Money from the amount of bets placed on them is one of the ways."

Butera said he can imagine the tech the AAF is creating to one day be used by other sport leagues and bookmakers.

"It's why we didn't just sponsor it, we invested in it," Butera said.

While the live betting will technically take place on an MGM interface, Ebersol said the app run by the league will have an enhanced fantasy product that can be played by people of all ages. Ebersol plans to exclusively sell those rights to a partner.

Through Sunday night, the AAF had signed 332 players and assigned them to teams in eight cities -- Orlando, Atlanta, Memphis, Birmingham, Salt Lake City, Phoenix, San Antonio and San Diego. The league's first game will be played Feb. 9 on CBS.