According to the new CEO of FanDuel, a race to gain a share in the US sports betting market is not sustainable.
Amy Howe, who was appointed head of the fantasy sports and betting business on Monday, said that ‘this market will eventually settle with three, four, five competitors. There are currently too many competitors to maintain this level of spending. ”
Since the federal ban on sports betting was lifted by the Supreme Court in 2018, U.S. and overseas companies have spent large sums on marketing to win a share of what could become the world’s largest regulated gambling market.
The competition to attract and retain new customers for sports betting has led to businesses pouring millions of dollars into promotional bonuses, promotions and advertising campaigns, especially around major sporting events, such as the recent launch of the NFL season.
In Arizona, which last month became the newest state to legalize sports betting, seven companies have already started gambling operations, with another eight offering sports betting there by the end of the year. Since 2018, sports betting has been legalized in 23 states.
FanDuel, which owns Flutter Entertainment in Dublin, spent £ 225 million on marketing in the first half of this year, saying it has benefited from more than $ 1 billion in marketing investment since its acquisition of Flutter in 2018.
Flutter said it expects FanDuel to be profitable in 2023, depending on the speed at which states regulate sports betting, and that it expects the market for its brands to exceed $ 20 billion by 2025.
Its rival DraftKings, another fantasy sports business that turned to gambling in 2018, spent $ 495 million on sales and marketing in 2020 from $ 614.5 million in revenue.
In most countries where sports betting is legal, FanDuel tends to lead the market, with DraftKings standing second. BetMGM, the joint venture between the American casino group MGM and the British listed gambling company Entain, is increasingly challenging for second place in terms of market share.
Last month, DraftKings had a £ 18.4 billion bid for Entain. It has until October 19 to make a fixed offer.
Courts said FanDuel, which had around 1.5 million active users last quarter, had a ‘very clear advantage’ and benefited from Flutter’s assets and expertise, which included British sports betting Paddy Power and SkyBet as well as the online owned poker business PokerStars.
She added that the company was on track to generate between $ 1.8 billion and $ 2 billion in revenue by the end of this year “which will put us about 50 percent off the field”.
Courts joined FanDuel in February as president of the “commercial core functions” from the ticket website Ticketmaster, where she was chief operating officer. She said that her Ticketmaster led it to be ‘paper-based’ to digital ‘and that it was positioned for’ explosive growth ‘.
According to the New York Post, she was appointed interim CEO of FanDuel in July following the unexpected departure of his former boss Matt King, who later joined the sporting goods company Fanatics.
Analysts at investment bank Davy said Howe’s “previous record-breaking digital business and her apparent leadership skills suggest that she may have always been seen as a possible future leader of the business”.