Pulse
SPORTS BETTING US BTOBET
BtoBet: How bright is the future of sports betting in the US?
The roll out of sports betting post-PASPA has been swift and the demand for sports betting has boomed. But is the US reliant on too few firms accounting for too large a percentage of the total market? How can other operators even hope to make an impact as FanDuel, DraftKings and BetMGM grapple over market share?
What is the market’s potential and how does the industry today compare to pre-Covid? What is the outlook for the short term?
One has to start by stating that the opportunity that the iGaming industry represents in the US right now is garnering a lot of interest. Whilst one could argue that the US industry is still in its “infancy stage” business intelligence company Vixio Gambling Compliance forecasted that the US sports betting industry will generate US$6.7bn to $8bn in gross revenue this year.
When it comes to a more extensive outlook, VIXIO takes the year 2025 as a reference. Te company forecasts the US sports betting market to be worth $12.1bn to $17.7bn in total annual gross revenue by 2025, depending on key state legislative developments. Meanwhile it further stated that the total revenue from all US online gambling, inclusive of sports betting and iGaming in certain states, will reach $17.3bn to $22.6bn by 2025.
To better discern the growth one can crunch the numbers. For February, the combined commercial gaming revenue from land-based casino games, sports betting and internet gaming reached $4.42bn, resulting in a 17 per cent increase from February 2020 and up 37 per cent from a year ago.
It is safe to say that 2022 has seen the industry’s fastest ever start to a year, with $8.96bn in commercial gaming revenue generated in the first two months, up nearly 20 per cent from the previous record set in 2020. Furthermore 19 of 27 commercial gaming states that were operational two years ago saw revenue growth from February 2020.
P76 WIRE / PULSE / INSIGHT / REPORTS
Dima Reiderman Chief Operating Officer. BtoBet
How do you see the US operators’ market share developing in the long term? Will it continue to be dominated by a small number of operators?
If one was to take a look at the US market, we could see the market composed of five main operators that today have a market share of circa 80 per cent. We are talking about Daily Fantasy Sports companies that have a base of old customers, and also historic brands in the casino industry. All of these well established operators can leverage their customer base for purposes of cross selling, whilst focusing on strong retention plans to hold on to their fold of players in the future.
Of equal importance is the very significant amount of budget that these operators are pumping in terms of marketing activities, whether it is advertising or bonuses. Tus taking in consideration all of these factors there is general consensus that the US’ major operators will maintain a dominant presence in the future, maximising their first-mover advantage in the
market. Morgan Stanley’s Tomas Allen even stated that he expects the top five operators – Flutter (FanDuel), DraftKings, BetMGM, Caesars, and Penn Barstool – to gradually increasing their presence to about 85 per cent of the total market share. Yet, this also means that the market also provides opportunities to eventually accommodate other operators.
Overall there has been a rush amongst operators to acquire a predominant market share. Is it still possible for less well known brands to gain a foothold in their respective markets?
Again, this boils down to market entry and financial resources allocated for marketing activities. Tere are examples of certain operators that entered late in states and they have not performed as well as expected, whether being present from day one would have resulted in a different scenario altogether.
Tis first-mover advantage is further augmented by market experts expressing their surprise about the customer retention that they have seen in the US.
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