If you build it, they may not come.
The U.S. sports betting sector is littered with the remains of operators who may have thought a few good apps, websites, and partnerships would be enough to make a go of it stateside.
But the recent news that Betfred is pulling out of Maryland and Tipico is selling its U.S. bookmaking business to MGM Resorts International’s LeoVegas hammers home the message that American sports betting is no longer the land of plenty.
No, U.S. sports betting is now more like a dog-eat-dog world of politics, same-game parlays, and preexisting bettors who weren’t technically bettors, just daily fantasy fanatics. It’s a business that's neither easy nor fair, and you may need more than just a good idea and some smart folks to succeed.
For proof, one need only look at the growing list of shuttered (or shuttering) online sports betting brands in the U.S. Fubo, MaximBet, TwinSpires, Sports Illustrated, Unibet, Barstool, PointsBet, WynnBET - all had interesting ideas and approaches to how they would become going concerns, but then they just grew concerned and were gone.
Whoa! Massachusetts Gaming Commission Executive Director Karen Wells says PointsBet is withdrawing their bid for a mobile sports betting license in the state.
— Geoff Zochodne (@GeoffZochodne) February 23, 2023
Granted, not all of those names are dead. TwinSpires is still running retail books and its parent company, Churchill Downs, has become a provider of horse racing technology to other operators. PointsBet is still trying to claw out market share in Canada.
Meanwhile, other bookmakers have stepped up to replenish the numbers, such as Fanatics, ESPN BET, Betr, Underdog, and Prime Sports. Time will tell how they fare and whether they are still with us five years from now.
Yet it’s becoming increasingly apparent that unless your name is DraftKings or FanDuel — or perhaps Hard Rock in Florida — you’re behind from the moment you launch.
Investment banking firm Jefferies told clients in a note on Sunday that FanDuel was responsible for 45% of gross gaming revenue in the 18 online sports betting states that have reported May data thus far. DraftKings was second with 34%. A distant third was BetMGM, with 6%, and then Caesars, ESPN BET, and Fanatics with a 3% market share each.
This is also revenue, not profit, meaning operators are forced to fork over a certain amount of that income to states, partners, employees, suppliers, and the federal government.
Physical and mobile casino gambling help flatten the playing field somewhat, as operators such as BetMGM and Caesars are familiar faces for slot and table players. Linking sports betting to brick-and-mortar gaming can also be fruitful.
However, operators must contend with the fact that just a handful of states have legalized iGaming, compared to the 30 or so jurisdictions with mobile sports wagering. The pace of legalization is not keeping up with the desire of operators that could benefit from more online casino gambling.
So what?
Which brings us to the biggest question: is this bad?
Having fewer online sportsbooks to choose from is undoubtedly a bad thing. It means less choice for bettors, who have fewer places to turn when they shop for the best odds or if they find their wagering limited by some operators. It could also breed complacency among the top dogs who may no longer feel they need to offer competitive products or innovate what’s currently available because there are no rivals left to fear.
It’s also a possible boon for the black market. When there's nothing legal left to be desired, bettors will still find ways to bet. It just won’t necessarily be with what’s legal in a state.
There’s some good to the current market landscape, though. Sports betting, like all gambling, is a serious business. Operators are surely disabused of any notion that the U.S. sports wagering market is easy money. You can’t launch without awareness of those who came and failed before you. And you can’t just roll out something bland or identical to what else is out there. Come to market with something good or different or don’t come at all.
More to come...
But we’ve arguably not seen the end of this story. Tipico plans to close up shop in the U.S. before 2024 is over, but it’s unclear where Betfred is headed. Is Maryland the first of several states it plans to leave, or is this a one-off? A spokesperson told Covers on Monday that they had no further comment.
Meanwhile, Betway's parent company is reviewing its U.S. strategy and an exit is not out of the question. ESPN BET is also attached to PENN Entertainment Inc., which is being circled by activist investors interested in changes, including to the company's online sports betting business.
“As the US market continues to regulate, it remains unclear to what extent other players outside the top few will be able to win market share,” consultants at PwC warned in December. “What remains clear is that unless operators have the appetite to undertake significant investment in the market, it will remain challenging to gain traction resulting in more licensed players continuing to exit the US market going forward.”
With word today that Betfred has officially launched in Maryland, the state is now up to eight online sportsbooks actively taking wagers:
— Geoff Zochodne (@GeoffZochodne) February 9, 2023
-Barstool
-Betfred
-BetMGM
-BetRivers
-Caesars
-DraftKings
-FanDuel
-PointsBethttps://t.co/NkvAybSbDz pic.twitter.com/pn5FpStBbz
That prediction has come true. And, in thinking about it, I’m reminded of how the first European explorers in North America claimed they found fish so plentiful near Newfoundland they could throw a basket over the side of a ship and haul in a nice catch. It’s no longer the same (if it ever was) with sportsbook operators trying to scoop up U.S. customers. You need more than a ship and a basket to find the fish.
Perhaps some of the above might give regulators pause and consider some changes of their own to try to stoke competition, such as lowering taxes or licensing fees. As of yet, it doesn’t look like that’s the case.
This is partly because there are still operators willing to try their luck. In Maryland, for example, Betfred told regulators that it plans to cease retail sports betting operations in the state on June 30 and then shutter its mobile sportsbook on July 31. However, Bally’s and Betr, among others, are still working toward launching in the state.
“This is not the first time this has happened in Maryland,” said John Martin, director of the Maryland Lottery and Gaming Control Agency, during a meeting last week when the subject of Betfred came up.
Martin then added: “I don’t think it’s going to be the last time.”
