Conversion corner: Seizing the opportunity for the NFL season

Football season is always an exciting time for sports and for the gaming industry. Books are looking forward to the end of the dog days of summer where historically June, July, and August are the slowest betting months. With a few major states going live at the start of 2023 like Ohio and Massachusetts, the tables are set for a big football season.

From a customer acquisition perspective, there are a few developments that are worth exploring as we hit this exciting time for the industry. The entire focus for many of the operators has evolved over the past 12 months. The industry has moved from operators focusing on growth to profitability, and this has and will have a direct impact on marketing and bonusing spend during the football season. There have been some interesting changes recently in operators’ partnerships with major media companies that will launch during the football season.

Lastly, the listed affiliates have all released their quarterly figures and most of them are posting record numbers, either earning costs per acquisition (CPAs) or, what is now becoming more popular, sharing in the revenue the players bring to the operator.

This part of the industry will certainly be on the rise over the next 12 months as digital marketing spend follows the same downward trend as most other industries. We are already in football season and that is the growth season of the year. October through December are always top handle months while the start of football season (August and September) is a massive sign-up opportunity for all the books.

Interestingly, I think we will continue to see the slowing of growth for the industry. The jump from 2021 to 2022 was over 60% and we won’t see that from 2022 to 2023. We will see handle bottom out again in July and August before another meteoric rise in handle again in September to the end of the year.

Customer acquisition efforts are at their peak in the lead up to football season in the US. Football dominates live TV. Last year, over 80 of the top 100 TV shows were US football games, which has a knock-on effect to all the mediums where sports are discussed.

It is also the time of year that operators bonus the most (either due to sign-up bonuses or reactivation bonuses). On the right is a graph of the betting bonuses issued in the state of Pennsylvania. They are
relatively flat even though the handle is increasing year over year. I’m sure we will see similarly muted bonusing from the operators as the focus on profitability continues to dominate the headlines.

Leveraging media partnerships

There have been a few major developments of late in the mainstream media partnerships leading into this football season. While Fox Bet couldn’t leverage its relationship with Fox Sports, Fanatics purchased PointsBet this past summer and subsequently took over PointsBet’s relationships with NBC. With NBC’s restructuring of the original deal with PointsBet, NBC will still earn over $60m per year for the next five years from Fanatics.

If PointsBet was converting NBC sports viewers and readers into bettors, the deal may not have needed restructuring, but the number of players on PointsBet have never indicated that the deal was working well for PointsBet.

At a fair market price per player, PointsBet should have had millions of players and be worth more than $150m or even $225m. Fanatics sportsbook and its leverage of the NBC relationships should be a good indication of the success of the acquisition.

While Fanatics does immediately have licenses in over a dozen states and a fairly good tech platform with pricing, the return on investment (ROI) on the outlay of over $250m to NBC over the next five years for customers will be a good measure of the success of that acquisition. The beginning of the relationship starts this football season, so it will be interesting to see how Fanatics leverages the NBC relationship.

In another move by an operator looking to leverage a major media company, PENN Entertainment decided to sell Barstool Sports back to its owner and sign a 10-year $1.5bn deal with ESPN. The deal includes PENN licensing the ESPN brand and using it instead of Barstool’s name and brand in its casinos,
but there’s a need to leverage the ESPN brand following for new customers in the retail and online book. The assumption is that a major mainstream media following will sign up and bet with a book of its namesake.

This didn’t work well for Fox Bet but that may have more to do with other challenges in running a book (such as tech) than the singular issue of those that watch sports on Fox Sports don’t want to bet with Fox Bet. Paying $150m per year to ESPN indicates that PENN should be able to convert millions of bettors
from ESPN’s multimedia platforms to sign up, make a first deposit, and place a bet. There isn’t much evidence this will work out well for PENN Entertainment.

They’ll need time, a great product, and an even better transition from the media company to the book. Rather than partner with a book, Gannett signed a deal with Gambling.com, a brand name of GDC Media, back in February. GDC Media, recently listing in the US, is a top-five affiliate with affiliate licenses in states that have betting and knows how to convert traffic into firsttime depositors.

Gannett is a humble multimedia company that has taken a different approach and decided to partner with an expert in affiliate marketing. Rather than be tied to one particular book, GDC will provide betting content and analysis to leverage all 47 million users of Gannett assets to convert them to sports bettors on a state-by-state basis.

While this may not have been a headline-making deal, it feels more measured and realistic, with both parties winning should there be success. This football season will be the first time the relationship
will leverage the unique state and regional sports sites for both Gannett’s and GDC’s benefit.

With most of the listed brand affiliates recently announcing quarterly results, it seems that there should be more and more deals like the Gannett and GDC deal. Better Collective recently announced that it will achieve over $100m in US revenue, while GDC achieved over 400% increase in revenue in the US from 2021 to 2022. In 2023, GDC should make over $50m in revenue from North America. While Catena may have hit a bit of a speed bump recently, the firm is aiming for $125m in revenue from North America in 2025.

This football season, every operator is leveraging knowledge from the previous years, but with profitability at the top of their lists, there will be some adjustments in bonus spend, reduction in media spend, and an increased reliance on the channels that provide affiliates with customers. While a few operators will spend big with major media companies, there is very little evidence those relationships
will be worth the costs from a customer acquisition perspective.