The winners have taken it all

It’s become a popular observation that at some point – likely in the late 2000s – much of Western popular culture became “stuck”. 

If you watch a film or television show set in 1980 and 1990, it would be obvious which is which, with the fashion, technologies and soundtrack. But something set in 2010 would look an awful lot like today. Rather than something new, we’ve spent much of the last decade and a half chasing nostalgia. 

In US sports betting, there’s no doubt that there will continue to be innovation: products will vastly improve and new ways of betting will emerge.

But in terms of market share and which brands matter, we may have reached the point where we’re stuck.

The leaders emerge

In fact, we got most of the way there before PASPA was even repealed: FanDuel and DraftKings established themselves as two of the most obvious candidates to be market leaders during the daily fantasy craze. The business that would eventually become Flutter was smart enough to recognise that and snap one of them up.

At around the same time, the launch of online casino in New Jersey set the stage for land-based giant MGM to partner with what was then GVC Holdings, setting the stage for an eventual joint venture.

Now, with Q2 results from all the major players coming in, the hierarchy for sports betting has been locked in: it’s FanDuel as the market leader, with BetMGM and DraftKings in a tier below. 

Behind them, there’s a big gap to Caesars, and then the remaining challengers.

FanDuel, it seems, to rip an analogy from US sports, can pretty much line up in victory formation and kneel out the game. As announced today, the business is already profitable, and with the Flutter behemoth behind the brand, Peter Jackson has no problem with keeping the ads running while all rivals pull back.

Full details on BetMGM’s performance will likely come later, but it’s clear that it’s already on the right path, with losses down to around $60m in Q2. In online casino, it’s the market leader, but even just in betting it’s established itself, to the point where it’s taken a clear second place when the two verticals are combined. 

And BetMGM part-owner Entain surely understands how quickly a pecking order can be locked in after a jurisdiction regulates these days. After all, earlier this year it moved to acquire Dutch overnight success story BetCity rather than rebuild the market share that its existing brands had built up before the country’s Remote Gambling Act came into effect. It clearly feels the same about Eastern Europe, where it has agreed to acquire SuperSport and plans to buy up more market leaders.

Meanwhile DraftKings, yes, is still losing a lot of money. But last Friday’s (5 August) earnings update was a major cause for optimism. The business dramatically slashed marketing spend compared to Q1, but revenue remained strong. There’s a first-mover advantage to serious marketing spend, and it now seems that DraftKings has genuinely built some loyalty that will help going forward.

Not too little, but definitely too late

The other businesses mostly just made their serious pushes too late. Take the most aggressive of those, and most established in the US’ much larger land-based market: Caesars.

No business has been more aggressive on marketing. The idea of a $3,000 sign-up bonus seems like something that could only exist in a bettor’s wildest dreams. And at the same time it offered a product that had won major market share in other jurisdictions.

Yet while revenue drastically improved in Q2, it’s a long way off the leaders, with marketing now being scaled back. While a brand like DraftKings was at least throwing free bets on undecided customers, Caesars put its offers before bettors who already had a favourite sportsbook, and struggled to convince them to switch.

For other operators it’s a similar story. By the time they were running ads, agreeing partnerships and matching the market leaders on bonuses, customers were already elsewhere.

The house of mouse

Those who think there’s more battling for market share to come in the US will often cite a handful of businesses that could enter the market and make people take notice. Chief among them is ESPN.

At this point, an ESPN sportsbook has been the subject of speculation for years. Comments from Disney CEO Bob Chapek at the company’s earnings call earlier this week gave reason to continue that speculation for a while longer.

Chapek said that the business has “been in conversations for quite a long time now” to “add some utility” for betting, and that Disney hopes to announce something soon. 

Most likely, this will look more like an expansion into the affiliate space than the launch of its own sports betting product.

But even if that’s a full launch of an ESPN sportsbook in the near future, powered by a genuinely top-class platform, don’t expect it to rocket to the top tier in market share. 

Yes, ESPN is dominant in sports media, but it’s not easy to seamlessly integrate media and a betting product. Penn National Gaming and 888 each secured deals with notable media brands: both are much smaller than ESPN, but judging by the impact of the Barstool and Sports Illustrated sportsbooks at an earlier stage in the market, it’s hard to see ESPN’s version rising to the top.

And in a world where operators have signed media deals with just about every notable figure in US sports, how much is promotion from Stephen A. Smith worth?

Could another business make an impact?

If ESPN doesn’t have the brand power to be a market leader, then another sports giant certainly doesn’t. Apparel giant Fanatics has the cash to be interesting, but it might be better-placed acquiring a recognised market leader such as DraftKings than attempting to either go solo or partner with a business that has failed to crack the US. 

Bet365’s success across the globe might make it appear a candidate, but it’s not going to play the game it takes to be a market leader. There’s no reason to think the business would move focus from all its other markets to concentrate on the US, and without that focus. It might expand its US presence into more states, but if so it likely won’t aim for the mass-market type of customer it has in markets like Great Britain.

In fact, approaches aimed at specific cohorts other than mass-market will general be the way forward for those looking for a specific demographic, casual players, “sharp” bettors or players within a single state.

Still to play for

But what of casino? 

Don’t be too optimistic on somebody new grabbing the top spot.

Like FanDuel has secured a hold of leadership in online wagering, BetMGM might well have done so in casino.

But the appeal here is that while it might be tough to dislodge BetMGM from the top spot in online casino rankings, there could be so much more money to go around. Plus casino often lends itself to a larger number of viable brands than betting.

The legalisation of online casino did not sweep the nation in the way many expected after a wave of sports betting bills became law. But legislatures won’t hold out forever. As long as online casino is illegal in most states, money is going straight to black-market operators.

When more states do open up, this is where there are still battles to be fought.

But in sports wagering, it feels as if the rankings have become more or less frozen in time.