U.S. sports betting companies cut their advertising spending by more than $200 million in 2023.
According to a study commissioned by the American Gaming Association (AGA), sports betting companies reduced their ad spending by 21% in 2023. Overall, gambling advertising was down 14% in 2023 from the prior year.
The study, using data from Nielsen’s Ad Intel, looked at gaming/gambling industry ad spending across various categories (i.e. Casino, Lottery, Fantasy, Sports Betting, etc.) throughout monitored advertising mediums.
This ad spending downdraft may not necessarily be a cause for concern. In fact, it could be a healthy sign for the legal sports betting sector.
All grown up
U.S. sports betting is a relatively young industry. Most of it developed following the 2018 U.S. Supreme Court decision, which overturned a 1992 law that effectively banned sports betting.
Today, 38 states and the District of Columbia offer legalized sports betting. As each new state opened, sports betting companies clamored for new customers — at almost any cost.
Ad spending and promotional bonuses flooded newly legalized states. The big publicly traded companies, such as Flutter (the majority owner of FanDuel) and DraftKings, told investors that it could take up to three years for each new state to become profitable, given the steep customer acquisition costs.
The pace of sports betting legalization, however, is starting to slow. So, too, is the need for the same level of promotional spending.
Additionally, investors are expecting a profitable 2024 — or at least a positive EBITDA — from sports betting companies. As a result, companies are paying more attention to cost management.
That said, the slowdown in sports betting ad spend may just be a sign of a maturing industry, rather than a worrying trend.
Minimal impact on ad revenue
Television ad spending took the brunt of sports betting’s cutbacks. The AGA study noted a 23% drop in the sector’s television 2023 marketing expenses when compared to the prior year.
Sports betting makes up a small percentage of total television ad revenues. Over the past three years, wagering hasn’t exceeded 1% of expenditures.
Meanwhile, the pharmaceutical industry accounts for more than 13% of total TV ad dollars, and fast-food companies make up 4% of revenue.
