FanDuel CEO Expects Further Consolidation of Legal US Sports Betting Industry
Posted on: October 5, 2021, 12:02h.
Last updated on: October 5, 2021, 04:23h.
FanDuel CEO Amy Howe was only officially appointed today, October 4, 2021 as the permanent chief executive of the sports betting and daily fantasy sports giant. But the new boss and gaming industry power player is already generating a flurry of headlines.
Speaking with the Financial Times in London this week, Howe issued her opinion on the future of the escalating sports betting industry in the United States. FanDuel is a subsidiary of Flutter Entertainment, a British-headquartered gaming conglomerate.
Howe believes there are currently too many sportsbook firms operating in the US in the more than two dozen states that have authorized such gambling. In the months and years ahead, the FanDuel chief expects the number of operators to dwindle.
Ultimately, this market is going to settle out with three, four, five competitors. There are too many competitors right now to sustain this level of spend,” Howe opined.
Flutter Entertainment is no stranger to the M&A game. The corporation was formed in 2016 through the merger of Paddy Power and Betfair. Flutter acquired The Stars Group, one of the world’s leading internet poker brands, in May of 2020.
Sports betting is legal and live in 27 states, plus the District of Columbia. Another five states have passed legislation legalizing sports gambling, but have yet to commence operations.
Howe says the numerous sports betting entities that have received licenses from state governments are engaged in a costly battle for customers. The FanDuel exec reveals that the company spent more than $300 million on advertising in the first half of 2021. Since its 2018 acquisition by Flutter, FanDuel has invested north of $1 billion on marketing.
DraftKings, FanDuel’s longtime rival dating back to their DFS days, disclosed recently that it spent nearly half of a billion dollars on marketing and promotions last year alone.
Sports betting companies are spending heavily in hopes of being one of the last few standings when the customer race plays out. Howe’s prophecy regarding the future of sports betting companies is shared by a leading gaming analyst.
Brendan Bussman of Global Market Advisors in Las Vegas agrees that consolidation is the name of the sports betting game in the immediate and long-term future.
“M&A activity is going to continue to be robust, not only in the short term but in the long term as well,” Bussmann, who is the director of government affairs for Global Market Advisors, told the Las Vegas Review-Journal.
Playtech, a gaming software company that provides business-to-business turnkey sports betting solutions, isn’t as convinced that the market will consolidate. In fact, Playtech CEO Mor Weizer thinks newcomers might arrive in legal sports betting states.
During a recent earnings call with investors, Weizer expressed his opinion that sportsbook operators licensed in one or two states will seek further access.
I believe a lot of existing operators that focused on a limited number of states will extend to other states,” the Playtech CEO opined. Weizer’s opinion, he says, is based on an expectation that more states will legalize and regulate sports betting, and thereby usher in more customers and a larger market.
“A lot more states will regulate and a lot more casino groups and other operators will penetrate the market,” Weizer concluded.
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