FanDuel, Rush Street Interactive Boosting Promo as Football Season Intensifies
Posted on: September 26, 2022, 04:00h.
Last updated on: September 27, 2022, 04:57h.
Tonight’s edition of Monday Night Football marks the end of week three of the NFL season, week five in college football. With the 2022 football campaign heating up, so is promotional spending by sportsbook operators.
In a note to clients today, Wells Fargo analyst Daniel Politzer addresses that topic, noting that some big names in the sportsbook industry are elevating promotional spending as the 2022 football season gains momentum. In particular, Politzer highlights FanDuel and Rush Street Interactive (NYSE:RSI).
From Sept. 18 to Sept. 25, FanDuel dropped its “Bet $5, get $150 in free bets” promotion in favor of a “second chance bet up to $1,000,” while Rush Street Interactive went to a $ 500 second chance bet over the previously used $250 deposit match bonus, according to Politzer.
Why FanDuel, Rush Street Moves Matter
Football is the most wagered-on sport in the US. So it stands to reason that following the summer sports calendar, during which baseball is the dominant team sport, bettors are enthusiastic about the return of football. Sportsbook operators are obliging with bigger bonuses.
At issue is profitability. FanDuel recently turned the first profitable quarter in the history of the still-young US online sportsbook industry, and analysts widely believe BetMGM and Caesars Sportsbook are nearing that enviable status, too. On the other hand, promotional spending intensity during football season could hinder operators’ efforts to get out of the red.
Specific to the aforementioned FanDuel and Rush Street Interactive news, Wells Fargo Pollitzer notes those operators’ recent promotional moves bring them in line with rivals BetMGM, Caesars Sportsbook, and DraftKings, indicating promotional spending is already somewhat elevated during football season.
That’s potentially worrisome on several levels. First, there are still 14 more regular-season NFL games. Second, NBA and college basketball — two more popular sports among bettors — are right around the corner. Third, combine the first two factors, and analysts and investors are right to be concerned about the profitability outlook for sportsbook operators.
FanDuel Has Advantages
When it comes to the often competing objectives of pleasing Wall Street and investors while leveraging promotional spending to acquire new customers, FanDuel has some advantages its rivals don’t possess.
First, the operator is a unit of Flutter Entertainment (OTC:PDYPY) until Flutter proceeds with a spin-off. So, for now, FanDuel isn’t a freestanding company under scrutiny by analysts and the buy side.
Second, as noted above, the sportsbook operator already notched a profitable quarter. Finally, it has the largest market share in the US online sports betting market without operating in Nevada.
That’s a sign the marketing spending is paying off, at least in customer acquisition. FanDuel’s lead on BetMGM and DraftKings could signal proficiency at either customer retention or efficiently replacing lost clients.
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