US Sports Betting Update – New FanDuel Chief Executive Says Sportsbooks Will Fail Amid Market Consolidation
The new chief executive of FanDuel has warned that the current battle to seize market share in the U.S. sports betting industry is unsustainable. An increasingly large group of rival sportsbooks are investing heavily in promotions as they fight to carve out a slice of the burgeoning sector. Amy Howe, who was appointed chief executive at FanDuel this week, told the Financial Times that “there are too many competitors right now to sustain this level of spend”. She believes that ultimately the market will settle out with between three and five competitors, and the rest will fall by the wayside.
FanDuel was one of the first brands to launch an online sportsbook in the U.S. after the Supreme Court overturned the federal sports wagering ban in 2018. It quickly surpassed rival DraftKings to become the number one sportsbook in New Jersey, FanDuel and several other states. At the time, FanDuel was mainly competing with DraftKings, William Hill and a couple of other players, including Unibet, 888 Sport, PointsBet and BetRivers. However, over the past year the number of competitors has exploded.
Caesars Sportsbook, which purchased William Hill, and BetMGM have emerged as major players, while the list of smaller brands continues to grow at a dizzying pace. TwinSpires, WynnBET, FOX Bet, Barstool Sportsbook, Bally Bets, MaximBet, PlayUp, Golden Nugget Sportsbook, SBK, Parx Sportsbook, Sky Ute Sportsbook, PlayMaverick, SuperBook and theScore are just some of the operators vying for market share. European heavyweights like Bet365, Betway, Betfred and Tipico are making inroads in certain states. 888 recently launched SI Sportsbook.
New operators are arriving all the time. It is great news for sports bettors, as these operators must invest in great promotions, competitive odds and high-quality mobile apps to stand out from the crowd, but the companies must spend heavily in order to do so. This leaves them at risk of failure.
Howe predicts an impending shakeout. Signs of consolidation abound. Caesars could not make its own sportsbook work, so it bought William Hill. DraftKings has already purchased Golden Nugget, and it has mounted a huge bid for Entain, the co-owner of BetMGM. FanDuel itself is owned by London-listed Flutter Entertainment, the world’s largest online gambling company, which also owns FOX Bet.
Howe said that FanDuel had around 1.5 million active users in the past three months. She believes the brand enjoys a “very clear scale advantage”. It has also benefited from the technology and operational expertise of Flutter, which owns Paddy Power, Betfair, SkyBet and PokerStars. Howe said the company should earn between $1.8bn and $2bn in revenues by the end of this year “which would put us about 50% ahead of the field”.
FanDuel is highly likely to be one of the survivors in any market shake out. It is hard to see DraftKings, BetMGM or Caesars going anywhere, while Bet365 has the operational flair and nous to become a leading light in the industry if it makes a concerted play for the U.S. market, and a differentiated operator like. All the smaller brands could either be gobbled up or exit the market after suffering losses if Howe’s projections prove to be correct.
Driving Continued Success
Howe joined FanDuel in February 2021 as president, with responsibility for leading
the company’s core commercial functions across its sportsbook, casino, racing, and daily fantasy businesses. She previously served as global chief operating officer at Ticketmaster. Howe has been running the business as interim chief executive since Matt King stepped down in the summer.
“I am very pleased to be appointed the CEO of FanDuel at such an exciting time,” said Howe. “Since joining the business, I have been very impressed by the quality of our team and the strategic advantages we enjoy in terms of brand reach, product quality and the broad expertise we leverage from being part of the wider Flutter Group. That said, we must avoid complacency and remain focused on executing on our long-term strategy to build the embedded value of the business. I look forward to working with Peter and the wider team to drive FanDuel’s continued success.”
Peter Jackson, Flutter chief executive, added: “I am delighted to confirm the appointment of Amy as our new US CEO. Since joining the business at the start of this year she has done an excellent job of leading our commercial functions and ensuring that we execute well at this critical phase of growth for our business. The expansion of the US market represents the single most exciting opportunity for Flutter today. Amy’s track record of leadership and experience in scaling a digital business will be invaluable as we look to grow our leadership position there.”
King’s departure put Flutter’s plans for a U.S. public listing on ice, but that idea could be revived now that Howe is in the hot seat. Flutter has seen its share price decrease 3% this week in line with the broader market. Rival DraftKings has been able to fund a major acquisition drive thanks to its lofty valuation on the NYSE, and FanDuel may now want a piece of the action.
Connecticut Online Sports Betting Launch Delayed
FanDuel, DraftKings and SugarHouse should have launched their online sportsbooks in Connecticut this week. Retail sports wagering is already underway, as FanDuel has opened a book at the Mohegan Sun Casino and DraftKings has opened another at Foxwoods. Online gambling was supposed to follow on October 7, but it was postponed due to an unexpected delay at the federal level.
The issue stems from a delay in the publication of Connecticut’s amended gaming compacts in the Federal Register. The Mohegan will host FanDuel on its new master license and the Mashantucket Pequot will host DraftKings. It published the Mohegan’s compact on September 15, but waited until September 27 to publish the Mashantucket Pequot’s compact, and this delay has prevented online sports wagering beginning in time for Week 5 of the NFL season. The Department of Consumer Protection said bettors should not expect a “lengthy delay”.