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November 18, 2022 World

FanDuel to new rivals: Good luck with sports betting − you’re going to need it

FanDuel CEO Amy Howe is predicting that her company will defend its leading share of the online sports betting market in the U.S. − and even widen the gap with its competitors.

The remarks go against expectations in the gaming industry that FanDuel will cede some of its dominance as new players work to grab a bigger share of the sports betting market. FanDuel projects the market will grow to $22.6 billion by 2030, based on more states legalizing it and the industry expanding in places where it’s already allowed.

In January, sports memorabilia and collectibles giant Fanatics is planning to launch its own sports betting operations.

Without mentioning Fanatics by name, Howe threw down the gauntlet.

“It should be clear that new entrants that are entering now at this point may face a real challenge taking on scale players who have more than a four-year head start,” Howe said at the company’s Capital Markets Day on Wednesday.

Howe’s comments came a day after Fanatics, valued a more than $27 billion, held its own investor day. Fanatics CEO Michael Rubin has laid out an ambitious goal: launching sports betting operations early next year and rolling out gambling across the nation by the start of NFL season in 2023. CNBC reached out to Fanatics but the company declined comment.

“We’ll be in every major state other than New York, where you can’t make money,” Rubin said at a Sports Business Journal World Congress of Sports event in October. Last fall, Fanatics applied for a mobile-betting license in New York, but was not selected.

Rubin predicts sports betting and Fanatics’ other business segments “could be $8 billion, even in the next decade, in profits.” He said his built-in network of 94 million sports fans will allow the company to differentiate itself by spending less on marketing and promotions to win customers.

But Rubin is facing an increasingly crowded space.

And FanDuel boasts a 42% market share, based on published reports by state gaming regulators. It has maintained its position as market leader and widened the gap over time.

“FanDuel is America’s number one sports book by a wide margin,” Howe said Wednesday. Company executives insist they can use that advantage to acquire customers more efficiently and retain them for longer.

Of the 59 sports betting operators in the U.S. in October, only three had double-digit market share. Draftkings and BetMGM, jointly owned by MGM Resorts and Entain, hold the second and third place positions, respectively.

“Almost 90% of the operators have a sub-2% share of the market,” Howe said.

Smaller players are struggling. On Wednesday, MaximBet announced it would cease operations, citing “challenging macroeconomic conditions and increasingly cost-prohibitive marketplace.” The company operated Colorado and Indiana and had planned to expand to more states.

Last month, FuboTV also said it would shutter its sportsbook immediately due to a “challenging” economy.

“It’s hard and size matters a lot in the sports betting industry,” Mike Raffensperger, FanDuel’s chief commercial officer, told CNBC.

Following FanDuel’s presentation, CBRE gaming analyst John Decree raised the price target on FanDuel parent Flutter from 140 pounds to 148 pounds ($166 to $176).

Source: https://www.cnbc.com/2022/11/17/fanduel-to-new-rivals-good-luck-youre-going-to-need-it.html
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