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Opinion: US Sportsbook Marketing War Near Breaking Point


In the US, sportsbook operators are in the midst of a battle for market share, and it is costing them far too highly in the form of promotional spending. [Image: Shutterstock.com]

A new Cold War

Between the 1940s and 1990s, the US and Soviet Union battled it out for world dominance by arming themselves with as many weapons of mass destruction as possible. Ultimately, both sides knew that any use of those weapons would constitute signing their own death warrant – mutually assured destruction – yet they continued to build the bombs at an alarming rate.

competitors are investing millions into marketing

Although the potential ramifications are much less severe, the US sports betting industry has found itself in a similar battle. One in which, instead of plowing money into bombs, competitors are investing hundreds of millions into marketing to acquire new customers. Those efforts are costing operators highly.

In December last year, American Gaming Association (AGA)  president Bill Miller referred to this as “an unsustainable arms race.” He warned that media saturation will ultimately lead to intervention from lawmakers and regulators. Although such issues have not yet arisen, operators should take notice of the cracks that are certainly starting to show in the market.

The first casualty

It is clear that the US betting market is growing at a substantial rate. Not all states have reported December handle for last year, but the nation has already well surpassed its total of $21.5bn in 2020. In fact, it should more than double that total for the full year based on record-breaking monthly figures already reported.

Although a growing market is certainly good news for businesses, it’s also a highly competitive sector. Among others, DraftKings, FanDuel, Caesars Sportsbook, BetMGM, and PointsBet are all fighting for market share. As each company increases its promotional spending, others are forced to do the same, and so the cycle continues. 

painful losses from stiff taxes and costly promotions.”

If reports prove correct, this battle could soon see its first casualty. Only this week, a New York Post source reported that Wynn Resorts intends to sell its WynnBET sportsbook and iGaming brand. Not only that, but the company has slashed the price from $3bn to just $500m. Providing some reasons for the drop, the source cited “painful losses from stiff taxes and costly promotions.”

During a November earnings call, Matt Maddox, outgoing CEO of Wynn, shared the true price of the marketing war. He said WynnBet had cost the company $100m in both Q3 and Q4 last year, adding, in words similar to the AGA’s Miller, that the online gambling market is “not sustainable.”

Earnings and share prices tumble

Testament to current issues in US betting, the nation’s sportsbook operators have seen their earnings and share prices drop over the past year. VSO News’ list of the US gambling sector’s biggest losers of 2021 included two of the market’s major competitors; DraftKings and PointsBet.

DraftKings saw its stock plummet by 40% in 2021 to $26.98. Among other issues, namely a few legal challenges and a poor choice of words from its CEO, DraftKings can attribute much of its decline to missed revenue forecasts. In that same year, however, the operator more than doubled its sales and marketing spending in the first nine months to $703m.

Meanwhile, PointsBet provides an example of how the marketing race can affect even those who choose not to engage. The company’s share price fell 43% in 2021 to AU$6.71 (US$4.79) and analysts have blamed the poor performance on its aversion to waging an all-out marketing war.

PointsBet CEO Sam Swannell has repeatedly affirmed his reluctance to enter a marketing “arms race” to attract new customers. Partly as a result of this stance, the operator’s market share slid in all seven active states during Q3 2021, led by New Jersey where it fell by half to just 4%.

A plea for peace

The US betting market is the global gambling industry’s most exciting new prospect. It has already reached and surpassed many of the expectations held for its success, and there is now an opportunity for sportsbook operators to share in the spoils, but this ongoing marketing battle is making life difficult.

forced to engage at great cost or step out of the way

As evident from the cases of DraftKings and PointsBet, this affects all sportsbook operators in the US. Unless those with the deepest pockets decide to down their arms and reduce spending, others are forced to engage at great cost or step out of the way completely. As Miller suggested, this level of marketing will also eventually lead to regulatory intervention.

Much like the Cold War, opponents must come to some form of agreement for lasting peace. Otherwise, only one thing is certain at the end of this “unsustainable arms race” – mutually assured destruction.



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