Make Some Room

Does the US sports betting industry have space for challenger brands and what kind of market share can they claim? That was one of the topics at the SBC Summit NA.

May 15, 2024

NEWS: Differentiating: How can a second-wave US sports betting operator carve out market share?
BEYOND the HEADLINE: Two recent news items offer a glimpse into sports betting’s future.
NEWS: Three news items from Canada: iGaming coming to Alberta? iGaming Ontario wins lawsuit. A push to restrict gambling ads.
NEWS: DOI files response in Florida sports betting case.
AROUND the WATERCOOLER: MGC will host a roundtable on banning and limiting sports bettors next week.
STRAY THOUGHTS: A job well done.

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Is There Room For a Sports Betting Challenger Brand(s)

A very complex discussion was broached at last week’s SBC Summit North America during a session called: “Late to the Game: Which Second Movers Will Win a Saturated Gaming Market?”

CDC Gaming Reports Rege Behe did an excellent job covering the panel discussion, which I’m leaning heavily on below.

One of the more interesting comments came from IGT President of Sports Betting Joe Asher, who sees an opportunity for someone or multiple someones to come in and shake up the market.

Asher compared it to the titans of the automobile industry, Ford and General Motors, losing market share to Toyota, Hyundai, Kia, and Tesla, all of whom came in with new ideas and strategies.

“It happens in other industries, so I don’t see why this industry would necessarily be different,” Asher said. “Clearly, there’s room for people who are thinking differently to become significant in the industry.”

In a forthcoming podcast episode with Better Collective’s Chris Altruda, we discussed the pitfalls the second-tier operators have fallen into.

My general thoughts on this are:

Tier 2 operators need to decide whether they are content in Tier 2 or trying to move into Tier 1. If the latter, they need to first win Tier 2 and then challenge the Tier 1 operators.
Too many are trying to beat FanDuel and DraftKings at their own game instead of carving out a unique niche. They are trying to beat a stronger opponent with strength or trying to overcome strength with finesse when the only option is some combination of both.

One entity content with a second-tier status is Caesars. Caesars Eric Hession said during the panel that the company’s target is 10% market share and profitability - not supplanting DraftKings or FanDuel.

“The focus on market share, we think, is misguided,” Hession said. “You have two of the three profitable companies from an EBITDA perspective sitting up here, and our market share summed up probably doesn’t even equal the third-place operator.”

Rush Street Interactive CEO Richard Schwartz echoed Hession’s comments, per SBC Americas reporting: “Profitability is what matters most. It’s less about share of GGR and more about how we engage users and retain customers. It’s less about overall size and more about how profitable we will be in the long term.”

Schwartz went on to say that customers want “something that’s not available anywhere else,” and there are plenty of things sportsbooks “can do beyond offering the same betting markets or the same game concepts as everyone else.”

Beyond the Headline: The Sportsbook of Tomorrow

Where is sports betting heading? Two recent news items provide a good indication of its future, which looks increasingly like it will be highly customizable real-time wagering integrated into numerous platforms.

The first was the acquisition of Sports IQ Analytics by DraftKings. Earnings+More wrote of the deal, “The news from Sports IQ points to the extent to which operators are now hoping to weapon up in the sports data space, racing to provide their customers with more customized and unique odds offerings.”

The second was an under-the-radar announcement of a strategic partnership between Kero Sports and Novibet “for the release of FlashBets, a groundbreaking micro-betting experience offered through the Novibet sportsbook.”

Per the release, “FlashBets introduces players to a dynamic experience where they are able to wager on every play and moment throughout a match, offering an exhilarating opportunity to immerse themselves in the action like never before.”

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Dispatches from the North (AKA Canada)

There are three important updates to relay from Canada.

Dispatch #1: The Ontario Superior Court has dismissed a case brought by the Mohawk Council of Kahnawà:ke, which argued that the regulation of online gambling in the province was illegal and unconstitutional.

Per iGaming Ontario, the “model is consistent with the Criminal Code and that iGaming Ontario is conducting and managing iGaming in the province.”

Dispatch #2: There is a push to rein in online gambling advertisements further.

The latest news comes from Prince Edward Island Sen. Percy Downe, who supports Ontario Sen. Marty Deacon’s bill, S-269, that would create a national framework to regulate sports betting advertising.

Downe called the ads annoying to most but potentially problematic to some and wants gambling advertisements to face the same restrictions as cigarettes and alcohol:

"My particular concern is the impact on young people. These ads [feature] a lot of sports heroes, a lot of celebrities. Young people may be aspiring for that lifestyle, thinking, 'Oh, I can make some easy money.'
"Are we expanding the number of gamblers, and are we growing the addiction problem in the future?"

The legislation is not a dog and pony show, as it is gaining traction. Per CBC Canada, “The bill passed second reading in the Senate last week. It will eventually need to pass a third reading before going back to the House of Commons so that MPs can weigh in.”

Dispatch #3: Alberta is on the short-list of Canadian provinces likely to regulate online gambling, and it looks like it’s progressing.

The province has set aside $1 million to explore regulation, a process it plans to begin later this year, according to Canadian Gaming Business.

“The province has not formally announced a timeframe for taking solid steps toward exploring the potential of gaming in the province,” CGB reports.

A spokesperson for Minister Dale Nally said:

“The province will engage with traditional casino operators, Racing Entertainment Centre operators, and First Nations starting this year to hear their perspectives on opportunities to expand iGaming in Alberta in a way that makes sense for our province, its market, and Albertans.”

Quick Hitter: DOI Response to Supreme Court

The Department of Interior has filed a 30-plus page response to West Flagler’s writ of certiorari in a case that will determine the fate of mobile sports betting in Florida and for tribes across the country.

In a cake-and-eat-it-to argument, the Department of the Interior argues that the compact between the Seminole Tribe and Florida only authorizes sports betting on tribal lands, while a provision in the compact extends tribal land to the entire state of Florida.

The main arguments in the DOI brief are:

“IGRA expressly provides that such compacts “may include provisions” relating to certain topics.
IGRA does not limit or otherwise alter a State’s authority within the State on non-Indian land.

The big question now: Will the Supreme Court accept the case?

For a deeper dive, I recommend Robert Linnehan’s column at Sports Betting Dime.

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Around the Watercooler

Social media conversations, rumors, and gossip.

As previously reported, Massachusetts is the first state to examine the limiting or banning of sharp bettors, a standard practice in the sports betting industry.

The X account Fair Play Initiative has been following this closely and recently tweeted about a scheduled roundtable discussion on the topic.

From today’s MGC meeting agenda:

In the thread, Fair Play Initiative went on to say:

“This is only one step in what would be a long process should regulators decide to change the status quo re: how sportsbooks manage sharp player accts. It's a tall task for one state to tackle alone, so hopefully, they are consulting with other states on these issues.
“It does lead nicely into the NCLGS Gaming Legislators Conference in mid-July, where these efforts could be highlighted and possibly expand to other states.”

Stray Thoughts

Big shout out to everyone who covered last week’s SBC Summit North America. I don’t want to list them, as I’ll leave too many out, but I’ve been linking to their stories and tweets for a week.

The on-the-ground reporting was stellar, and outlets need to consider how vital this coverage is for the industry. The articles won’t get the views and signups that “Best Caitlin Clark Future Bets” will, but they are far more valuable to all of us in the long run.

So make sure you don’t just scroll by their tweets; like and retweet them. Don’t just read their articles; share and discuss them.