Six years in, America’s sports-betting craze is exceeding expectations and still growing, executives of three major sportsbooks said Wednesday.
And they pointed to a bonus: The state-by-state framework, while presenting challenges from multiple sets of regulations and laws, generates more innovations and opportunities than a one-size-fits-all nationwide approach would have.
“It’s going to be a local market versus a national market. The national and local storylines in sports are very different, so there’s a lot of benefit on the innovation side,” Greg Karamitis, chief revenue office for DraftKings, said.
Chris Rogers, chief strategy and legal officer for Penn Entertainment, said sportsbooks draw many new customers to Penn’s traditional casinos, because they “love the energy around watching sports with other people,” then stay to play table games or slots.
Jonathon Edson, senior vice presidents of business development for FanDuel, said more than half of the online sportsbook’s New Jersey customers have visited Meadowlands casino to cash out winnings or add to their online accounts.
The three spoke at a panel discussion titled “Next-Level Bets: The Future of Sports Betting in North America” on the second day of the AGS GameON conference at Encore Boston Harbor. Moderating was Geoff Freeman, president and CEO of U.S. Travel Association and former president and CEO of the American Gaming Association.
Karamitis said online sportsbooks must pair their technology with real-time knowledge of what’s happening in the sports universe, from the bodycheck controversy involving the WNBA’s Caitlin Clark and Angela Reese to the hottest MLB teams with big followings to events such as the NFL draft. “You have to be at the forefront of all that content at all times, so you’re in your customers’ heads around what they want to bet on now.”
He said the size and activity of today’s sports betting market is “much larger” than DraftKings initially anticipated. Instead of most bets going to who wins or covers the spread, betting action is heavily focused on individual player performance and parlays. Edson cited New Jersey, the first state outside Nevada to legalize sports betting, which report $300 million in sportsbook GGR in the first four months of 2023, then topping $400 million in that period this year. “Not only is the market much bigger than we (originally) thought it was going to be, it got much bigger faster than we thought.”
One reason for the growth, according to Rogers, is the number of casual gamblers, including some who had never placed a bet before, embracing sports betting and the expansion of wagering options such as parlays. “You can have the instant-gratification product that appeals to people who like scratchoff lottery tickets.”
Edson pointed to the entertainment factor of parlays. “People are putting down less than 10 bucks, because it makes it more fun to watch. That’s a big difference from what we were expecting.”
Karamitis said basketball games in general and the WNBA in particular are enormously popular with bettors now. The sport’s focus on individual players and reliance on multiple statistics give it “enormous” momentum and staying power.
Edson said FanDuel has seen a renewed interest in horse racing, with this year’s Kentucky Derby posting the company’s second-highest day of the year for number of bets placed. “Since we integrated horse racing into our core app, we’re seeing it bring lots of people who weren’t necessarily horse betters in the past.”
Karamitis said MLS is gaining popularity among U.S. bets, starting with the arrival of Argentinian star Lionel Messi in 2023.
The Illinois Legislature’s recent decision to raise the tax on sports-betting revenue from a flat 15 percent to a maximum of 40 percent on revenue over $200 million shows one challenge of dealing with states individually.
“We look at each state as its own opportunity,” Rogers said. “What’s the market size and the contribution margin for that state? We made an investment decision based on the tax rate that was in effect at the time and now it’s changing. That’s unfortunate. We’re constantly evolving on where can we get the highest return on our investment. Higher tax rates will naturally shift our investment into places where we can get a higher ROI.”
