The month in US sports betting: Are the days of casino-first brands underperforming in online sports betting over?

Will FanDuel, DraftKings, and BetMGM form a super consortium of “platform providers” and bid together for a New York online sports betting market entry? An arrangement like this would likely effectively guarantee a place for all three brands in the populous Empire State. And if the trio agree to share an egregiously high percentage of their revenue with New York, perhaps this would disincline the New York regulator from authorizing additional so-called “platform providers.”

There are plenty of holes to poke in this hypothesis, of course, but it’s interesting to consider. We note that the three brands have begun lobbying together in a handful of states (e.g. Maine, Texas), suggesting that there is shared interest in protecting their leading positions in the US online sports betting market.

US online gambling: Three things that have surprised us in 2021

And the winners are …
1. The novel contours of newly adopted policy: A 60-skin online sports betting market in Maryland. A commercial online sports betting market in Arizona in which sports stakeholders and gaming tribes are the master license holders. This list goes on. Increasingly, past in US sports betting policy (e.g., the New Jersey model) is no longer prologue.
2. The ramp rate of Michigan’s online casino market: In just its second full month (March), Michigan’s online casino GGR per adult (~$12) was greater than the more mature Pennsylvania market (~$11) and within shouting distance of the far more mature New Jersey market (~$16). Boosted by a perfect storm of factors (e.g., Covid, peak sports seasonality), Michigan’s ramp up has been singular.
3. There apparently is such a thing as a ‘tri-exclusive’ partnership and the NFL inked one: There was something apt about the NFL finally taking the sports betting plunge via an agreement that reads like a logical impossibility. The NFL’s participation in US sports betting, after all, was long regarded as an impossibility.

Casino-first brands ready US online sports betting offensive

Are the days of casino-first brands underperforming in US online sports betting drawing to a close? The BetMGM case study suggests so. The MGM-Entain joint venture has captured 15% share of the national online sports betting market in the three months to March, per our estimates – a far cry from any of its casino-first peers. It’s used a combination of factors including in-house product, Europe-honed operating nous, very aggressive bonusing and advertising, and cross-sell from its land-based player database to carve out a meaningful slice of the market.

Next to vigorously contest the national market will be Caesars and Bally’s. Caesars completed its acquisition of William Hill and plans to pump money into a new Caesars-branded online sports betting offering that will debut this fall and run on the William Hill stack. Bally’s will also run on in-house tech (Bet.Works) and will pursue the US opportunity through its media integration with Sinclair. Soon(ish), we expect these two casino-first brands to begin to ratchet up the competition for national share, and to put the FanDuel-DraftKings-BetMGM triopoly under a bit of pressure.

A new player in town?

New York-based investment firm Apollo is now the owner of Yahoo Sports. A key part of its turnaround plan is making Yahoo into a “powerful” sports betting platform, but what does that look like?

The so-called Yahoo Sportsbook is currently an affiliate skin for BetMGM. And despite some speculation, we’re hearing Yahoo is likely to remain an affiliate, with Verizon still owning 10% and unwilling to get licensed. One low-hanging next step could be a deepening of ties with BetMGM, which noted in its recent Investor Day presentation that Yahoo is becoming an increasingly productive source of FTDs. Yahoo’s fantasy sports business, which also features a series of BetMGM integrations (e.g., player prop odds), could serve as another point of expanded strategic overlap between Apollo and BetMGM. Watch this space.

Eilers & Krejcik Gaming estimates that BetMGM captured 15% of the national sports betting market in Q1

US sports betting partnership landscape shifting

This month, we published our US Sports Betting Operator-Supplier Partnership Tracker to subscribers of our new Enterprise tier. One early takeaway is that big online sports betting brands are increasingly taking their tech in-house.

Here are a few notable examples:
• Bally’s will debut on technology from Bet.Works, which it recently acquired.
• Barstool, which runs almost exclusively on third-party tech, is interested in moving more of its stack in-house “over the long term.”
• Caesars will launch soon on William Hill tech, raising questions about whether current supplier SG Digital will be retained for online.
• DraftKings is in the midst of transitioning to its SBTech platform. Its aim is to complete the transition by Q3 2020.
• FanDuel recently transitioned to an in-house PAM.

Upshot: This trend doesn’t bode well for major third-party sports betting suppliers which are angling for a slice of the US sports betting opportunity.

What Iowa tells us about William Hill’s moat in Nevada

William Hill’s share of Iowa’s fast-growing online sports betting market has nosedived since in-person registration (IPR) expired in January. Indeed, in the three months to March, William Hill had 29% GGR share, down from the 51% share it had in the October-December period. The downturn was most pronounced in March, when Hills posted a worst-ever 22% GGR share, and when an ascendant DraftKings took the market lead for the first time with 31% share.

William Hill has seen its share of the betting market in Iowa plunge since in-person registration was axed in January

The Iowa trend is a flashing warning sign for William Hill Nevada, whose effective stranglehold on the Nevada online sports betting market – like its early dominance of the Iowa market – is a function of its sizable IPR site footprint. We note that Nevada is considering whether to change its policy regarding IPR.

Eilers & Krejcik Gaming LLC is an independent research and consulting firm with branches located in Orange County, California, and Las Vegas, Nevada. The firm’s focus is on product, market, as well as policy analysis related to the global regulated gambling market. Clients include operators, suppliers, private equity and venture capital firms, institutional investors, as well as state governments. To learn more about the firm, visit http://www.ekgamingllc.com