The Global Gaming Expo (G2E) kicked off Monday at the Venetian in Las Vegas, and if there was a quote that summed up the sentiment at back-to-back panel discussions about the future of sports betting, it came from moderator Adam Krejcik, who said, “Once we can order a pizza on DraftKings or FanDuel, we should be in good shape.”
To be sure, Krejcik, a managing partner at Eilers & Krejcik Gaming, was cracking wise, but his quip bore no small amount of practical wisdom. Moments earlier, Andrew Fabian, the Betcha co-founder who now heads up Citi’s online sports betting and iGaming operation, used Uber to illustrate how sports betting companies will have to evolve if they hope to survive in a hyper-competitive marketplace.
“Uber has become obviously the top player in the ride-sharing business, but they didn’t stop there,” he said. “If you go into the app, it’s a super app. You can get food delivered. You can get alcohol delivered.”
Fabian added that there are about nine or 10 things on Uber’s app that have nothing to do with “the market they disrupted, which was the local taxi market,” and brought up Fanatics as a company with diversified offerings and a massive database of existing customers “who can be cross-sold into gaming.”
The question at hand was whether sports betting’s current financial model, in which the average cost per acquisition has been estimated at $200 to $400 per customer, is sustainable. The answer, at least according to Marina Bogard, Betsson’s North American managing director, is no.
“At some point, you need to start making money,” she said. “Investors and shareholders are going to be looking for profit. We know it’s unsustainable. Now the question is how we get to that area of profitability.”
Fabian, meanwhile, hedged a bit with an answer that he boiled down to “Yes, but.”
“There’s a clear path to changing how the market is operating,” he said. “This is a brand new market. As we think about the path forward, there are so many operators and there’s such a pot of gold at the end of the rainbow, then people are going to keep fighting for it.
“You need to find more ways to monetize. Fanatics, they’re moving into this space, but they’re a profitable business in merchandise and apparel. I think there’s an opportunity for gaming businesses to do something similar — moving into adjacencies like ticketing, to super-serve the fan.”
Remarks from the participants in the second workshop, titled “Key Developments in Online Sports Betting and Gaming,” echoed this theme. Gaming attorney and panel moderator Bill Gantz said he saw the industry evolving toward an “omniverse,” with “everything available in one place.”
Referring to FanDuel, DraftKings, and, to a slightly lesser extent, BetMGM, Matt Sodl, founding partner and president at Innovation Capital, said, “The reality is there are two to three winners [in the sports betting space] who have 75 to 80 percent of market share.”
As other panelists did, Sodl predicted consolidation and stressed the importance of “added products to create customer loyalty.”
To that end, David Lane, CEO of Sports Illustrated Tickets, said, “The one overarching challenge that everyone is facing is barrier to entry, the challenge of maintaining loyalty, how are you differentiating yourself. If I bet on football and you won’t see me for nine months out of the year, how are we reaching out to that fan? We can’t pay $200-$400 for somebody who may only bet $50.”
Lane then outlined a scenario in which a Michigan Wolverines fan is able to one-stop shop for game tickets and football apparel and receive a $25 wagering bonus and a special halftime prop bet — all through Sports Illustrated and its SI Sportsbook.
Unique among panelists, Simplest and Betr founder Joey Levy expressed a desire to “do one thing 10 to 100 times better than everyone else” before diversifying a company’s product offerings.
In the case of Levy and Betr, that one thing is micro-betting, which involves wagering on individual occurrences — whether the next pitch in a baseball game will be a ball or strike, for instance — within the course of a sporting event rather than the final result.
“We’re not going to emphasize free bets,” he said. “We want people to load up our app because they’re really engaged with the product experience.”
Echoing something Bogard said during the earlier discussion, Levy observed that “there’s no product differentiation” among sportsbook operators, adding, “They’re all kind of effectively the same with a different brand and color scheme on top. There hasn’t been somebody who’s come in and asked the question, ‘Is this what a sports betting experience should look and feel like?’
“It’s inherently challenging to capture brand affinity in this industry,” he continued, calling Barstool “the only one who’s actually gotten this piece correct.”
Late in the discussion, an attendee asked Levy how he planned to discourage problem gambling on Betr. Levy replied that he planned to have bet limits for users between the ages of 21 and 25, reasoning that “we’re not gonna be successful if we’re preying on problem gamblers.”
He then added, “Responsible play is incredibly important to us. The type of customer we want to acquire is not the type of customer who’s susceptible to problem gambling. We want users to use Betr in the same manner that they go to the movies and spend $20 on a movie ticket. When you use Betr, maybe you’ll put $5 on this pitch to make the live sporting event more entertaining than it would be otherwise.”
https://sportshandle.com/sports-betting-resemble-uber/