Sports gambling, in many ways, has been a lifeboat for the sports media industry. From online to radio to TV to inside arenas and stadiums, it has been nearly impossible for fans to avoid exposure to sports betting advertisements or promotions – even for an hour or two – for a couple of years now.
In this week’s newsletter, we will evaluate the current state of the industry and what look ahead to 2023 and beyond.
Are ads slowing down?
As the sports gambling marketplace matures, betting operators’ marketing spend will not go away altogether — the business has been mature in Europe for some time now, and you still see it advertised around soccer games and other European sporting events — but industry experts already see it starting to slow.
“Overall, the boom of aggressive sponsorship and promotional spend has slowed industry-wide, but many long-term relationships and partnerships still exist and will continue to drive value to sportsbooks,” PointsBet US CEO Johnny Aitken told The Post. “In 2023, there will likely be a far more targeted approach based on the jurisdiction and available properties as the days of broad-based marketing and sponsorship campaigns are coming to an end, particularly given the macroeconomic environment expected next year.”
Darren Rovell, a sports business expert who covers gambling for Action Network, also sees advertising spending already evolving.
“It has to be meaningful and add to ROI immediately,” Rovell told The Post. “I think TV is kind of fading away because someone won’t follow through with it in the moment. Someone thinking he should check out that bonus because he sees it on TV is probably less effective than an online promotion.”
Rovell gave the example of a series of promos on Action Network where you click on them and they lead directly to the site. They run “quick slips” where they post a bet, and when you click on it, you are taken to FanDuel with the bet slip already filled out when you log into your account.
Owned content
If we tried to name all of the content initiatives in the sports gambling space, we could be here all week. Penn Entertainment acquired Barstool Sports and has constant cross-promotion for the sportsbook. Caesars ambassadors include the Manning family, Trey Wingo and Kenny Mayne. PointsBet had Drew Brees as a pitchman, but parted ways with him this past week after Brees took a job on his alma mater Purdue’s coaching staff. DraftKings hired Mike Golic, Mike Golic Jr. and Jared Carrabis in 2022, and has a $50 million licensing deal with Dan Le Batard and John Skipper’s Meadowlark Media.
FanDuel rebranded TVG, its linear TV channel, as FanDuel TV. The network has a show hosted by Kay Adams, as well as one that includes Michelle Beadle, Shams Charania and Chandler Parsons, and FanDuel has ambitions to air live niche sports with live betting tie-ins.
In off-the-record conversations with keen industry observers, the expectation is that there may not be as much money available going forward to the proverbial middle class of sports gambling talents, but that people with large followings and a proven track record of being able to deliver their audience to sportsbooks in affiliate relationships will continue to have major financial opportunities.
Live betting
Live betting is going to be an increasingly important market for sportsbooks to nail.
Aitken identified three key aspects of live betting for 2023 and beyond:
1. Live betting same game parlay: Parlays combining multiple player props (broadly known as same game parlays) will continue to become an increasingly important component of in-game betting. The ability to add contextual data and relevant options to customers, depending on the stage of the game and what is happening play by play, will drive much of the innovation and growth in this area.
2. Lightning bets: The option to place bets on the outcome of the next play or the next drive will continue to grow as a trend. Longer time frame bets based on the end result of the game tend to be less entertaining for customers and continue to decline in popularity.
3. Impact on media: As customers become more attuned to lightning bets and a more seamless live betting experience, it puts pressure on data feed providers and broadcasters to share a product that is truly live. There is a latency today on broadcasts. The betting experience is always ahead of the live pictures, creating a disjointed experience for multiple-screen viewers.
Rovell, meanwhile, stressed the importance of user experience.
“You have to have a really great product,” Rovell said. “Because if you don’t have a best-in-class product, someone’s gonna take your promo money and they’re just gonna either cash out, or just say, ‘Hey, this doesn’t work,’ and go to another site.
“If you have a great promo but you’re buffering on a live bet and the guy can never get a live bet down because you’re suspending it or the odds are changing non-stop, people aren’t going to stay with that. There’s a simplicity that you have to have, and at the same time you have to have complexity on the back end where you can actually execute for the bettor.”
Sportsbooks at arenas
We have already started to see sportsbooks pop up inside arenas and stadiums — and this is something that will likely proliferate in the coming years.
FanDuel opened a sportsbook lounge inside Chicago’s United Center this year, and DraftKings has one under construction that’s attached to Wrigley Field. Caesars has locations inside the Grizzlies’ FedEx Forum in Memphis and Washington D.C.’s Capital One Arena, where the Wizards and Capitals play.
Mets owner Steve Cohen is pushing for a casino at Citi Field.
Fanatics is coming
Fanatics, the merchandising giant that has also conquered the trading card business, is entering the sports gambling marketplace – and the company has grand ambitions.
“People say that I’m nuts saying I think we’ll be the number one player in the space a decade from now,” Fanatics CEO Michael Rubin recently told the Washington Post. “But I do think that.”
The goal will be to leverage the segments of the market Fanatics already dominates, and their enormous customer database, for synergies.
“They’re going to do cross-marketing with jerseys and collectibles — they’re definitely going to play in that space to have some sort of synergy,” Rovell said. “Whether people want that or whether they just want money [from their promos] is going to be up in the air.”
It has been an open question as to whether Fanatics will build out its own sportsbook — a Herculean undertaking that involves finding the right oddsmakers for millions of derivative betting lines and the software staff to build a workable user experience.
“They’ve built so much already,” Rovell said. “I never believed that they were going to do it alone, but their structure suggests that maybe they’re going to do it alone because they’ve already hired more than 100 people for the sportsbook. You kind of wonder whether [Fanatics CEO Michael] Rubin would wait until there’s enough blood in the water [with stock prices that declined for gambling operators in 2022] and buy something. But it seems like they’re doing enough building themselves as well.”
Another interesting aspect to observe will be whether and to what extent Fanatics’ enormous database of emails from apparel customers can help them build out a big base of users without having to spend wildly on marketing.
“What percentage of people who buy sports merchandise are really bettors?” Rovell asked. “DraftKings and FanDuel had an unbelievably qualified database. They had like 85 percent of people who were doing daily fantasy converted into betting. What’s the percentage of merchandise or collectible buyers who are? It might be close [to 85 percent as well]. But then, how many people do you cross out because they are ‘late to the game’ and people have already been reached and already have their favorite sportsbook. What are they going to do to shift it over?”
iGaming is extremely significant
iGaming means the mobile/digital version of casino games such as blackjack, roulette, video poker and the holy grail for gambling operators — slots. The ongoing adoption of iGaming, which has bigger margins and a much larger market of addressable users than sports betting, is profoundly important for the gambling industry.
Though sports betting is now legal in more than 30 states, just six — Connecticut, Delaware, Michigan, Nevada, New Jersey and West Virginia – currently have iGaming.
“Although it is still at the very early stages of its evolution, iGaming plays a critical role in the mix of offerings that customers choose to engage with and typically provides outsized revenue contributions compared to online sports betting given the structural differences in each product,” Aitken said. “As states continue to expand the ability for licensed entities to offer further gaming products, iGaming is expected to grow and play a key role for the long-term sustainability of the digital gaming space.”
Rovell added that, unlike sports, which have set start times and discrete durations, iGaming is perpetual.
“There’s no time limit. You can keep playing them,” he said. “It can happen at any time. It doesn’t depend on an event.”
What states are next?
Maryland launched sports betting in November. Ohio and Massachusetts are both slated to launch by the end of January.
“There are several states that have already shown intent to legalize sports wagering and/or iGaming, most notably North Carolina and Missouri, given their recent attempts to enter the space,” Aitken said. “Indiana is another jurisdiction [that already has sports wagering] that we expect to consider expanding into iGaming in the new year.”
The three biggest remaining holy grails by population size are California, Texas and Florida. Florida legalized mobile sports betting, but the launch has been muddled by litigation.