Sportsbook companies have seen a sharp increase in revenue due to the proliferation of online sports betting and casino gaming in the United States; however, competition for consumers’ money is expected to intensify.
In a market where several businesses are vying for market share, Draft Kings has emerged as the dominant player after releasing quarterly results on Thursday that exceeded Wall Street’s expectations.
The gaming company reported that as it enters new markets, grows its clientele, and encourages current users to continue spending money on its platform, its revenue increased 57% to $790 million for the third quarter that ended on September 30. Its success, which caused shares to rise by more than 16% on Friday, was fueled by both online casino games and sports betting.
Other companies in the rapidly expanding industry have adopted this strategy because it works. However, on November 14, The Walt Disney Company intends to introduce ESPN BET in 17 states, adding even more competition to a market that already has brands like Fan Duel, Caesars, MGM, and Fanatics.
According to data from research firm Statista, the total revenue from online sports betting is expected to reach $7.6 billion in the United States by the end of 2023, primarily due to its introduction in more states over the previous year. By 2027, revenue is predicted to increase by 17.3% annually to a projected market volume of $14.4 billion.
Following a 2018 Supreme Court decision that gave states the authority to enact their own sports betting laws, the sports betting market started to take shape. Nowadays, over half of the United States allows legal online sports betting.
According to Statista data, the online gaming market is expected to generate $19.1 billion in revenue by 2023, even though it is only legal in six states. Online wagering is available for classic casino games like slots, poker, and blackjack. Online gaming is expected to generate $31.1 billion in revenue by 2027, growing at a rate of 12.9% per year.
“We’re triumphant”
From the pool, Draft Kings has become the undisputed leader in the online gaming and sports betting industries. With the company’s shares rising by almost 200% this year, Wall Street has been pleased with what it has seen.
According to market research firm Eilers & Krejcik Gaming, Draft Kings surpassed rival sportsbook Fan Duel last month in market share to take the lead in online sports betting and casino gaming in the United States.
According to Eilers & Krejcik, Fan Duel’s market share dropped to 30% in the third quarter through August 23 while Draft Kings accounted for roughly 31% of online sports betting and casino gaming revenue.
In a Friday conference call with analysts, Draft Kings CEO Jason Robins declared, “We are winning.”
In the upcoming months, the company intends to expand into new markets with launches in Maine and North Carolina, subject to regulatory approval, he continued. At present, the company has introduced iGaming in five states and mobile sports betting in 22 states.
Companies stand to gain more potential revenue as more states legalize online gaming and sports betting. However, this does not imply that several rivals can survive in the market over time.
According to Lance Vitanza, an analyst with TD Cowen, “the market isn’t big enough to support more than maybe two or at most three platforms.”
According to Vitanza, Wall Street has been putting pressure on sportsbook operators to increase their profits. He claimed that in their competition for market share dominance, the companies have been depending too much on marketing and promotional activity to expand their customer bases.
According to Vitanza, “their whole goal is to gain enough market share so that eventually everyone else will give up and they can stop being as promotional.”
On Friday, Robins informed investors that DraftKings intends to scale back its promotions in 2024 and is ready for the heightened competition.
Executive director at Eilers & Krejcik Chris Krejcik stated that it is unclear if Draft Kings will be able to maintain its lead.
“Fan Duel is still not far behind, and with ESPN Bet soon to launch and Fanatics picking up steam, the competition is going to get much more intense,” he stated.
