Five years late
FanDuel and DraftKings, the two champions of US sports betting, immediately entered the market upon the repeal of the Professional and Amateur Sports Protection Act in 2018. In the five years since, they have cemented their positions as the leaders in market share across the US.
FanDuel controls a staggering 45% of national market share
In fact, FanDuel controls a staggering 45% of national market share, while DraftKings has secured 32%. The remaining 23% is being hotly contested by a string of sportsbooks attached to big names in the US gaming space, including chiefly BetMGM, Caesars Sportsbook, and WynnBet.
The fact that much of the market is already sown up is not scaring off new sportsbooks from entering the space, however. Merchandise company Fanatics, sports media firm ESPN, and even controversial YouTuber Jake Paul are now all hoping to take home a piece of the sports betting pie.
That said, entering the market five years after its launch undoubtedly puts these sportsbooks on the immediate back foot. Cases of other failed sportsbooks tell us that it’s no easy feat entering the US at this point, but could these new offerings provide something that bettors are craving?
A sportsbook graveyard
While some have found success in the market, the US sports betting sector has also become a graveyard for sportsbooks unprepared for its highly competitive nature. In 2021, American Gaming Association President Bill Miller deemed this the result of an “unsustainable arms race” of costly marketing.
Australian betting powerhouse PointsBet is one of the highest-profile sportsbooks to accept defeat in this race. In confirming his firm would sell US operations this year, PointsBet CEO Johnny Aitken pointed to the high marketing cost that his brand couldn’t keep up with. Fanatics has since bought PointsBet’s offering for $225m.
FOX Bet will soon exit the market completely
Even sportsbooks attached to well-known brands have bit the dust. Earlier this month, Flutter Entertainment and Fox Corporation announced the collapse of their betting brand. FOX Bet will soon exit the market completely. Barstool Sportsbook had a similarly poor experience, although this can be blamed mainly on its controversial founder Dave Portnoy, who announced his repurchase of the company earlier this month:
Meanwhile, when Maxim Magazine-founded MaximBet closed its US sportsbook operations in November last year, the operator cited “challenging macroeconomic conditions and an increasingly cost-prohibitive marketplace.” FuboTV closed its gaming operations just one month prior, although it blamed not being able to find a suitable partner.
With other closed sportsbooks including Kindred Group’s Unibet and Churchill Downs’ Twinspires, there is undoubtedly a question mark over whether any new sportsbooks can hope to survive. So who is mad enough to attempt it?
Fanatics – Sports merchandise to betting
Michael Rubin, Fanatics CEO, sold his stake in the Philadelphia 76ers and New Jersey Devils to pursue his sports betting aims in 2022. As one of the largest sports merchandise companies in the world, Fanatics already has a solid base of followers. The sportsbook is already fully live in four states and has access in many other states too thanks to its PointsBet purchase.
The odds may be stacked against Fanatics, but Chief Product Officer Scot McClintic seems to believe that his company can offer bettors something a little different. He said: “We are laser-focused on solving pain points facing customers by offering a faster, easier, and more rewarding sports betting experience.”
a bettor secured $214,500 from a soccer wager after BetMGM posted incorrect odds
There are certainly areas to exploit in this regard. All the major sportsbooks have faced backlash at some point from users suffering through bet payout mistakes and technical issues. In one recent instance, a bettor secured $214,500 from a soccer wager after BetMGM posted incorrect odds. The Virginian teacher is now suing the operator to retrieve his cash, which BetMGM has refused to pay.
Not only will Fanatics try to offer a more seamless experience, the firm also has the backing of one particularly high-profile figure to help boost its reputation. Rap superstar Jay-Z helped Fanatics raise $325m ahead of its sports betting expansion in 2021. That said, even star power has its limits. The artist’s name appeared on Fanatics’ application for a New York sports betting license which was subsequently rejected.
ESPN Bet – Leaving controversy behind
While Fanatics is taking on the betting world for the first time, Penn Entertainment is giving it a second shot. The casino gaming giant first attempted to break into the betting space by acquiring Barstool Sports – an acquisition that it completed in February of this year. Just months later, however, the company offloaded Barstool for pennies and moved on to a new prospect.
saw Penn stock tumble and even prevented Barstool from getting market licenses
Like the companies mentioned in our second section, the failure of Barstool demonstrates the difficulty inherent in breaking US betting. It could be argued that the firm was doomed from the start due to its controversial founder and owner Dave Portnoy. A number of harmful claims emerged about the business mogul over the past couple of years that saw Penn stock tumble and even prevented Barstool from getting market licenses.
Understandably, Penn eventually decided enough was enough and hooked the “white whale” of sports media, ESPN. The pair will launch ESPN Bet this fall:
While it is a general consensus among analysts that Penn has a better shot at success with its new partner, there are those who doubt it can make much of an impact so late in the game. Sports business analyst Joe Pompliano, for instance, deemed the ESPN deal a “hail mary” for the two partners. He believes that they are five years too late and desperate for success due to the failure of Barstool for Penn and declining cable viewership for ESPN.
That said, industry insiders quoted by Business Insider argue that the ESPN deal could “shake up the industry” due to the media brand’s strong following. Penn CEO Jay Snowden predictably agrees, arguing that it is “an opportunity to really appeal to the masses.” He said the partnership will deliver “a robust menu of promotion and integration across all of ESPN’s platforms.”
Betr – A YouTuber-backed offering
Jake Paul is better known for stirring up controversy online and trying to fight everyone in the world of combat sports, but now the media personality is taking a stab at betting too. He has launched Betr in partnership with now CEO Joey Levy, along with the backing of some major investors, including IA Sports Ventures, FinSight Ventures, and Florida Funders.
Jake Paul comes with his own long list of controversies
Much like Portnoy of Barstool, Jake Paul comes with his own long list of controversies. Among them are accusations of sexual assault, a federal search warrant exercised on his property, COVID-19 hoax claims, and accusations of scamming his fans. He has had to address these issues with various gaming authorities but, perhaps surprisingly, has managed to quell any concerns thus far.
As a result, Betr sportsbook has launched in both Ohio and Massachusetts, gained a license in Virginia, and has plenty more states in its sights. Initially, the sportsbook’s unique selling point was in-game micro-betting, which allows users to wager on mini events within games. Now, however, the company has pushed into the world of traditional betting too. It set itself apart during March Madness by offering 0% margins on all pre-match opportunities for tournament games.
Despite this, the operator hasn’t had the best of starts in its active markets. In Massachusetts, the firm took in just under $593,000 in total handle in its launch month this May, resulting in just $45,626 in revenue. For comparison, Fanatics took in $41,770 in the same month, despite only having the beta version of its sportsbook up and running for the final week of the period.
The same goes for Ohio, where Betr spent around $133,000 in promotional offers in the month of April. It made $33,000 of that back for a net loss of around $100,000. This means the sportsbook firm is spending far more on promotion than it is bringing in, a promo-to-revenue ratio of almost 400%.
Evidently, Betr has some work to do if it plans to keep up with our other newcomers.