Which US Sportsbooks Will Win the War for Market Share?
At the same time the US sports betting industry is expanding at an accelerated pace, the marketplace is becoming extremely competitive. More and more new online sportsbook operators are launching betting sites and mobile apps while the existing competitors dial up their efforts to attract US bettors to their sites.
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Since the industry first started to expand in 2018, FanDuel and DraftKings have led the way. Part of the reason is each site’s head start due to an existing presence in daily fantasy sports. A bigger reason is the strong financial support tied to each book’s corporate structure.
FanDuel’s parent company is Flutter Entertainment. This UK-based sports betting giant is the result of an earlier merger between Paddy Power and Betfair. Flutter has invested heavily in the US sports betting industry over the past few years through the FanDuel brand.
Based in Boston, DraftKings went public through a SPAC. This is short for a special purpose acquisition company. Once again, deep pockets from an investment standpoint have helped DraftKings emerge as a major player in the marketplace.
Currently, these two sportsbook operators hold the top two spots in the US sports betting industry in terms of market share. A Las Vegas-based casino gaming and entertainment giant has also made an immediate impact with its sports betting brand.
MGM Resorts partnered with Entain, as another major sports betting operator in the UK. The end result of this strategic partnership was BetMGM. Behind heavy advertising, marketing and promotional budgets, this US sportsbook operator ranks now third on the list in market share.
The big three of the US sports betting market control more than 80% of the industry in terms of market share.
Also in the mix is Caesars Entertainment with the newly branded Caesars Sportsbook. This is the new direction the company is taking in the US market after acquiring William Hill as one of the biggest sports betting operators in the world.
Wynn Resorts was somewhat late to the party. This Las Vegas casino gaming giant formed its own interactive division which led to the development of WynnBET.
As a strong regional casino gaming and entertainment company, Penn National Gaming decided to partner with Barstool Sports as a highly popular media property. The end result of this collaboration was the launch of Barstool Sportsbook.
While this US sportsbook operator does not have the overall market reach of the biggest players, the mobile betting app has made some major inroads in states where Barstool Sportsbook has gone live.
As even more sports betting operators enter the marketplace, industry analysts are already pointing to consolidation from a long-term standpoint. Most industry experts agree that three to four US sportsbooks will dominate this market down the road.
Interestingly enough, DraftKings tendered a $22.4 billion offer to buy Entain, but the company recently backed away from that offer. As a 50-50 partner with Entain for the BetMGM brand, MGM Resorts still has a vested share in how any deal to acquire the UK betting giant impacts the US market.
If potential megadeals such as this are popping up in the early stages of the US sports betting industry, there are bound to more moves towards consolidating business down the road.
The growth potential for sports betting in the US is staggering. By the end of this year, around 30 states plus the District of Columbia will offer sports betting in some form.
Keep in mind that Florida, Texas and California are not on that list. New York is working through the process to add online betting to its existing regulations.
If this market does expand to all 50 states in the coming years, it will be interesting to see which US operators end up controlling the lion’s share of the business.
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