According to the American Gaming Association, more than $220 billion has been wagered at legal gambling establishments in the five years since the U.S. Supreme Court cleared the way for states to legalize sports betting. This amount is expected to increase as more states legalize betting. According to the AGA, sports betting is currently legal in 35 states as well as Washington, D.C.
While other major players like Caesars and Bet MGM have looked to carve out their own niche, the industry leaders Fan Duel and Draft kings, together holding more than 80% of the U.S. sports betting market, have benefited greatly from the continued growth.
Even though there is already a lot of competition in the sports betting market, other large corporations are vying for market share. In collaboration with Penn Entertainment, Disney’s ESPN debuted a sportsbook in August under the name ESPN Bet. The sports merchandise company Fanatics, founded by Michael Rubin, purchased Points Bet’s US operations following a multi-year quest to enter the sports betting industry.
Although the sports betting industry is still in its infancy, Fan Duel CEO Amy Howe said in an interview with CNBC’s Contessa Brewer at the CNBC Global Evolve virtual summit on Thursday that she expects to see more “well capitalized, very strong competitors on the field” and that there are reasons why other major players haven’t succeeded.
We are aware that you need to have an exceptional product experience, correct? Howe, who joined Fan Duel from Ticketmaster in 2021, stated, “At the end of the day, if your product doesn’t work, it doesn’t matter how great your brand is. You got to have a really phenomenal experience.” But concurrently, one of the trends we’re witnessing is that scale is essential, which is similar to many e-commerce sectors.
Being a division of Flutter Entertainment, Fan Duel operates in all 50 states and has affiliations with broadcasters, teams, and leagues such as the NFL, NBA, MLB, and NHL. Google also purchased the rights to NFL Sunday Ticket last year.
Howe stated, “Like any e-commerce company, we’re still in our infancy, so there’s a race for eyeballs and a race to make sure that we can responsibly bring the best consumers onto our platform.” “We have been forming these partnerships for a long time, even before online sports betting became legal in the United States.”
On Thursday, rival Draft Kings revealed a 57% rise in quarterly revenue along with decreasing losses.
According to Howe, the company should turn a profit on an EBITDA basis by the end of the year. Being the first U.S. operator to do so will help it further distance itself from other competitors in the market.
“Entry barriers are high in a world like online sports betting…. You must navigate a very complicated regulatory environment and obtain a license. Developing an excellent product and technology platform comes at a high cost. Oh, and you’re spending a lot of money to ensure that you can attract customers to your platform in a responsible manner as well,” Howe remarked.
It’s undoubtedly not something for the weak of heart. Furthermore, it simply gets more difficult to reinvest in providing what customers want if you’re sitting there with a low single-digit share and you don’t have that scale advantage over time, the speaker added.
