Analysis: Can FanDuel keep the top spot in New Jersey?

A year, the saying goes, is a long time in online gambling. But in the US online betting market, a month is a long time. FanDuel Group came in second in the inaugural EGR Power US Rankings, published in March. And it’s fair to say if the list was published one month later, FanDuel could well have taken the top spot.

The firm took over the market lead for online betting revenues in February, and hasn’t looked back since, putting clear water between itself and the chasing DraftKings, including an estimated $5m gap in April.

“The FanDuel Sportsbook is the clear number one sports betting operator in New Jersey, a notable achievement just one year since the overturn of PASPA,” the operator said in a statement put out after the April figures were published.

“Our leadership extends beyond just market share, as we offer over 50% more markets per event than other operators.” The breadth of offering is one of the things that has helped FanDuel storm into its current position of market leader, but it’s far from the full story.

Source: Eilers and Krejcik Gaming

Deep database

The most obvious advantage the firm had was of course the database of DFS players that unsurprisingly are also keen punters. FanDuel has been clear that something like half of its sports betting customers came directly from the DFS database, and even those that weren’t acquired directly from there will have no doubt heard of FanDuel from various adverts or sports sponsorships over the years. Perhaps the best way to illustrate the power of that database is to compare FanDuel to a firm which has a similar backing and heritage on online gaming.

“If anything, FanDuel’s success should be judged against William Hill’s performance,” says Joe Brennan, the CEO of SportAd. “Hills’ long-held hostility toward DFS has come back to haunt them, as the two big DFS brands have excelled at cross-marketing from their fantasy player base. A year ago the press was touting William Hill as the potential “big winner” post-PASPA, but they’re not getting the traction that was expected when NJ opened up.”

It’s worth pointing out that FanDuel’s database was truly unique in the market. It also had horseracing bettors to tap into through TVG and the Betfair Exchange, as well as the Betfair Casino, which was one of the most successful casino brands in NJ, even before it started benefiting from cross-sell back from the sports business.

FanDuel Group president and COO Kip Levin told EGR earlier this year that the TVC racing customers in particular were high-value customers who were previously betting on sports in the black market but were transferring their spend increasingly to the FanDuel sportsbook.

Looking sharp

Of course it’s wrong to pin FanDuel’s success on database alone. After all, it’s an advantage also enjoyed by DraftKings which is now someway behind FanDuel, so what else is the firm doing well?

According to New Jersey-based professional bettor Jack Andrews, the firm has gained a reputation for its trading and willingness to stand a proper bet despite “tripping out of the gates last summer”.

“They debuted with a 30-cent line, some head-scratching lines (-115 on one side of the point spread, -110 on the other), and sub-par customer service (famously closing their B&M book before the end of the night’s MLB slate),” Andrews says.

“Now, nearly a year later they have a standard and sometimes aggressive pricing strategy and receive high marks in how they treat both sharp and public bettors alike.

“As a sharp bettor, FD is a key book for me because they trade independent of the market. They’re not afraid to step outside the Don Best drumbeat in booking their daily action. I think the biggest reason they are able to do this is their liquidity. Larger liquidity allows them to seek action from both sharps and public. Their move towards more aggressive pricing is a sign they may take up the mantle as NJ’s high-volume/low-margin leader.”

Levin told EGR earlier this year that aggressive pricing was a deliberate focus for the firm and is something of a departure from Flutter’s (Paddy Power Betfair’s new name) business in Europe which is increasingly focused on recreational bettors.

“Their brand in NJ has become that of a solid, successful sportsbook willing to take big action on anything and everything,” Andrews adds. “For a region that takes betting very seriously and has an entrenched underground market, those adjectives carry a lot of weight. The pulse of the NJ/NY area is ‘I’m not going to take shit from anybody’. FD doesn’t give anyone any shit and it works well for them.”

Marketing edge

If trading and pricing is helping the brand and keeping big bettors onside, FanDuel is also doing plenty to keep casual fans and part-time bettors coming through its digital doors thanks to marketing and CRM expertise, acquired through decades of experience in Europe and Australia with other brands.

“The number one reason for their leadership position is marketing,” says one exec from a European sportsbook firm, speaking on condition of anonymity. “FanDuel is benefiting from the years of experience Flutter has in digital marketing, customer acquisition and retention, bonusing, and so on.

“They sent some of their best guys across to the US to lead FanDuel’s efforts here. Their rivals are kind of finding their feet with this. Marketing sports betting is different to marketing DFS or casino products. Having this experience and skills on board shouldn’t be understated. They know how to get the best out of their marketing spend.”

And FanDuel is keen to press this advantage home as the firm has upped its marketing spend in recent months according to anecdotal reports from NJ, at the same time as DraftKings has wound it down somewhat.

“I rarely see DraftKings while I see FanDuel in ad breaks of most live sports,” says one rival New Jersey sportsbook exec, speaking off the record. It’s fair to say FanDuel has made the most of its parent company in both marketing and trading, which has helped it gain an edge on DraftKings.

It’s important too not to underestimate the power of the Meadowlands. It’s far and away the market leader for retail betting in the state, and more than just being a profit center in itself, it acts as a major acquisition channel and permanent enormous advert.

And while New York continues to waffle over the introduction of sports betting, FanDuel and the Meadowlands continues to flourish. Flutter CEO Peter Jackson said the firm gets 25% of its online customers from New York, partly via the Meadowlands and also partly because the FanDuel site and app is visible in New York whereas others like DraftKings are not.

“If you are going to make the effort to drive over the border, you’re probably going to want to check the lines first and therefore bet with FanDuel when you do drive to NJ,” the sportsbook exec notes.

Target on its back?

There’s an obvious follow-up question to all this success; is it sustainable in New Jersey and is it replicable in other states?

Starting with New Jersey, it’s fair to say some rivals have gifted FanDuel a lead – even with little things like DraftKings blocking New York players from seeing their odds. The casino giants too have been slow off the mark. “The big brick-and-mortar casino brands have released poor products so far, and kind of left the door open for the DFS brands,” the sportsbook exec remarks.

However, the likes of GVC/MGM and William Hill are working on new platforms for US products this fall, while FanDuel could find itself hamstrung by a complicated technology stack that includes parts from GAN, IGT and Flutter. As the New Jersey exec notes, the FanDuel app hasn’t been updated in five months and the tech itself isn’t a clear standout in the market.

The Meadowlands effect is also unlikely to be replicated in other markets, and while the unique power of the TVG and DFS databases won’t go away, when the media brands like Fox Bet and theScore join the market those advantages may be somewhat neutralised.

The benefits of experience will also dissipate as operators like MGM and The Stars Group get up to speed and even newer brands like SugarHouse learn from their NJ experiences. “They will remain a leader but the gap will close a lot,” says one source who asked not to be named because of his work with FanDuel.

Chris Grove, managing director at Eilers & Krejcik Gaming, says the upcoming NFL season could spell the end of FanDuel’s dominance, as the marketing spending gap is closed by rivals. “DraftKing’s historical approach with DFS has been to unleash a torrent of marketing at the start of the NFL, and I don’t expect them to deviate from that strategy with sports betting,” Grove says.

The launch of a host of new brands like Fox Bet and theScore, as well as new products from William Hill and MGM will also eat into FanDuel’s market share. The DFS giant has thus far been good value for its market lead in online sports betting, but the sharp money looks to be on that lead not lasting for much longer.