FanDuel has secured the No. 1 position in U.S. sports betting market share largely thanks to its new bet offerings and ability to price them, company officials claimed Wednesday.
During an investor presentation for parent company Flutter Entertainment, FanDuel officials cited thousands of new bets and increasing opportunities to stack them together as key drivers of the company's status as the clear national leader in gross gaming revenue market share. These new offerings, most notably single-game parlays, have expanded FanDuel’s base while increasing profit margins.
“Make no mistake, it is the product innovation that our teams are doing beautifully across the board that is driving this engagement and these numbers,” FanDuel CEO Amy Howe said during the presentation.
Key FanDuel figures
FanDuel projects it now has 46% of the nation’s legal sports betting gross gaming revenue market share, up from 30% in 2018, the year the Supreme Court struck down the federal wagering ban. DraftKings, FanDuel’s fellow daily fantasy sports pioneer-turned-sportsbook operator, has seen its share decrease from 50% to 32% during the same timeframe.
FanDuel's success has been driven by gross gaming revenue margins improving from 7% in 2020 to 12% in 2024. DraftKings only increased its margins from 6% to 9% over the same period.
Meanwhile, the rest of the industry saw its margins decrease from 8% to 7%.
The nation’s two leading books by market share have improved margins largely through thousands of additional bets and the creation of single-game parlays that stack these wagers together. These offerings hold substantially higher profit margins for sportsbook operators, spurring them to create more options – and incentives for customers to play them.
Unsurprisingly, customers have flocked to these new offerings.
The average number of legs in a parlay placed at FanDuel have increased by 38% between 2019 and 2023; FD's investments in new betting offerings (prop bets, single-game parlays), have seen more parlay bets placed with an increasing number of average legs per bet
— Ryan Butler (@ButlerBets) September 25, 2024
Flutter’s flagship U.S. brand has increased its customer base from 3 million active monthly users in the fourth quarter of 2022 to more than 4 million by the end of 2023. In the second quarter of 2024, FanDuel’s app was downloaded 1.2 million times compared to 900,000 for DraftKings.
These customers are also placing more complex bets; the average number of legs per parlay placed at FanDuel has grown 38% between 2019 and 2023. Industry financial data shows that sportsbooks' profit margins increase with each additional leg added to a parlay.
Company officials Wednesday reiterated prior bullish sentiments that these innovations will continue to ensure FanDuel’s position as the U.S. market leader.
“No one else in this category has been able to achieve the levels or the rate of growth and our structural margin advantage that FanDuel has,” said Mike Raffensperger, FanDuel’s President of Sports.
US sports betting background shapes current market
FanDuel’s dominance is an impressive consolidation of what six years ago seemed a wide-open new market.
More than two dozen sportsbooks entered the U.S. in the months after the Court’s decision that permitted mobile and retail sportsbooks outside Nevada to take single-game wagers.
Established American brick-and-mortar gaming operators such as Wynn and Churchill Downs left the states despite millions in investments. Combined with several larger European brands such as 888 (SI sportsbook) and Betfred, roughly a dozen of these initial books no longer accept bets.
FanDuel was acquired by Flutter, the owners of well-known European brands such as Paddy Power and BetFair, in 2018. Using its platform and bookmaking background, combined with FanDuel’s American brand recognition and customer database, the new book emerged by early 2019 as one of the U.S. leaders.
It wasn’t until the proliferation of new tech such as single wallets across state lines and, more importantly, single-game parlays, that FanDuel and DraftKings cleared the field of competitors. They took what had been a somewhat competitive race against BetMGM and Caesars, two iconic U.S. casino operators also boosted by European tech investments, and made the national market a de facto duopoly.
US sportsbook gross gaming revenue share percentage between second half of 2018 and the first half of 2024:
— Ryan Butler (@ButlerBets) September 25, 2024
FanDuel: 30% -> 46%
DraftKings: 50% -> 32%
All other sportsbooks: 20% -> 22%
[Per FanDuel investor relations presentation]
Massive customer acquisition expenditures undoubtedly played a role in boosting DraftKings and FanDuel to the top.
Raffensperger disclosed Wednesday his company has spent more than $10 billion in just free bets, bonuses, and markets. But both FanDuel and DraftKings have continued to stress novel products (new bets and bet types) and pricing (the ability to offer these smaller bets without giving up their financial advantage).
Raffensperger said the company had created more than 500 individual products and 10,000 updates to FanDuel’s pricing model, “each one” boosting the book’s structural margin, improving the customer experience, or removing friction.
“This is what it would (take) for a nascent competitor to catch up to FanDuel’s leadership position,” Raffensperger said.
