US Sports Betting Update – Fubo Sportsbook Pulled After Struggling to Compete with Powerful Rivals
FuboTV pulled the plug on its online sportsbook this week after struggling to compete with powerful rivals in the burgeoning US sports wagering industry. It was launched to great fanfare last year, promising to deliver a “holistic, hyper-personalized betting experience” for sports fans. The idea was to link the sportsbook to its streaming services, which aggregates content from broadcasters such as CBS, ESPN, FOX Sports and NBC, allowing users to place live bets on the games they are watching. However, the concept failed to take off, and the company has now decided to shutter the sportsbook.
It is the latest of the fierce competition that has proved so challenging for smaller sportsbooks in the United States. In February, TwinSpires announced that it would wind down its online sportsbook, as chief executive Bill Carstanjen said it could not live with rivals that showed “limited regard for short-term, or potentially even long-term, profitability.” It had already failed with an online sportsbook called BetAmerica. TheScore Bet has also pulled out of the US market after failing to carve out market share, and more operators could soon fall by the wayside.
FanDuel has taken a commanding market leadership position within the US sports betting sector. It has three main rivals – DraftKings, BetMGM and Caesars Sportsbook – which are all investing very heavily in promotions and marketing initiatives. Smaller sportsbooks have struggled to keep up with that quartet. Fubo Sportsbook launched in Arizona, Iowa and New Jersey. Its market share in Arizona was just 0.07% in July, while it only managed to capture 0.13% of the market in Iowa, where it suffered a loss.
Elevated Sports Entertainment Experience Falls Apart
Fubo Sportsbook was a bold, ambitious project. It pledged to offer “an elevated sports entertainment experience that will bring increased interaction and engagement between sports viewing and betting.” Users could synchronize the Fubo Sportsbook app with their FuboTV subscriptions, and it would recommend interesting bets based on their viewing habits and show live wagering options on the games they were watching.
It also offered a competitive sign-up bonus: a risk-free bet of up to $1,000, plus one month’s free subscription to FuboTV. Players only needed to deposit $10 and wager it on any sport to qualify, and they would be able to watch FuboTV for free for a month, which is worth $70. However, it struggled to lure customers away from the likes of FanDuel and DraftKings, and in August, Fubo chief executive David Gandler announced a strategic review of the company’s online sports betting arm.
Fubo Sportsbook had already tied up market access deals for Indiana and Ohio, where it had partnered with the Cleveland Cavaliers. However, Gandler revealed that “we’re not planning to go out and actually launch” in those markets. Instead, it sought a partner or a buyer for its sports betting arm. That search proved unsuccessful.
Customers Awaiting Payouts
“Effective immediately, Fubo Sportsbook is no longer taking bets,” said the company in a statement. “While multiple parties expressed interest in the business, none of these opportunities would have allowed Fubo to lower its funding requirements and generate sufficient returns to shareholders. “We have concluded that continuing in this challenging macroeconomic environment would impact our ability to reach our longer term profitability goals. We are working with necessary parties to make sure players and their existing accounts will be appropriately handled.”
In the immediate aftermath of the announcement, customers were unable to withdraw the funds from their Fubo Sportsbook accounts. However, regulators are confident that everyone will be reimbursed. The sportsbook had only been live in New Jersey for a month, and liabilities there are limited. The Iowa Racing and Gaming Commission said that players in the Hawkeye State are owed around $150,000.
“They indicated apps would be shut down for a brief period of time while they disabled the ability to bet, then users will have 30 days to withdraw funds and checks will be mailed for future bets,” the commission revealed. “We’re trying to figure out how long that brief period of time is. We will gather all relevant information and subsequently work with the licensee to ensure the smooth cessation of operations and appropriate protection of the betting public.”
Innovation is Crucial for Upstarts
Fubo used similar language to TwinSpires when announcing its decision to pull out of the ultra-competitive online sports betting market. The early stages of the industry felt like a gold rush, with new and ambitious operators springing up on a continual basis, but it is now starting to settle down and consolidate. Caesars Sportsbook bought William Hill, ensuring it a place in the top four, while FanDuel, DraftKings and BetMGM have left smaller rivals in the dust. They are mainly operating at a loss right now, but they aim to see off more competitors and then switch to pursuing profitability.
The likes of BetRivers, Barstool, WynnBET, Unibet and Bally Bet are still hanging in there, but more sportsbooks are likely to fall away in the coming months. Operators with a point of difference are perhaps more likely to last the distance. Fubo Sportsbook had an innovative approach to live betting, but to all other intents and purposes, it was very similar to FanDuel, DraftKings and BetMGM, plus European hopefuls like Betway, Bet365 and Betfred.
That is not the case for PointsBet, which offers a unique sports spread betting service, while a startup called Prophet Exchange is trying to create a niche for exchange betting. Another way to compete is to offer better odds than the competition. SBK is the only true reduced juice sportsbook on the market right now, and it has just expanded out of Colorado and into Indiana, offering far sharper lines than its rivals. We may eventually see Pinnacle launch in the US. It also offers reduced juice betting lines, but it has always operated offshore. Pinnacle has now announced plans to launch as a regulated operator in Ontario, suggesting it could be gearing up for a US launch in the future.