Welcome to this week’s Igaming Focus newsletter!
In this week’s issue:
- Float like a butterfly: Flutter’s New York float well received, sector on the up
- NFL data points and download charts
- Boom and bust: what to make of ESPN Bet’s odds boost promo
- Affiliates: Sportsbooks already running interference on Super Bowl offers
- News shorts: Evolution in the dock, Scott Sibella pleads guilty, Barstool’s back
Flutter’s float drives sector uptick
Great things are predicted for Flutter stateside as industry numbers reveal gross win generated by iCasino.
Flutter went live with its U.S. listing on the New York stock exchange on Monday and the Jefferies team predicted that the news will impact positively on the group and the broader industry stateside.
- Flutter North America will be driven by the “#1 digital gambling brand FanDuel”, which will become the group’s largest division by EBITDA by 2026 and is set to account for more than “50% of group EBITDA by the end of 2030”.
- Jefferies said its analysis revealed “scope for a $2.6bn 2030 EBITDA opportunity in existing states alone”, with the figure rising “to c$11bn with further state legalization”.
- Meanwhile, ex-U.S. revenues were set for 5-10% growth and 25%-30% EBITDA margins to 2030, with the group able to draw from a “diverse geographic profile” that reduces over-exposure in any specific market.
- London looks set to lose another major listing, and not everyone agrees with the move, as the U.S. now generates around 40% of Flutter revenues.
- Macquarie meanwhile wondered aloud if “increased media attention (would) drive (more sports betting) legalization” in the U.S. as it has contributed to “stronger than ever NFL ratings”.
- In addition, “increased ESPN Bet advertising could ultimately lead to further interest/legalization over the next couple of years with only 50% of the U.S. population having access to OSB and 11% to iGaming”, added the Macquarie team.
- Its model estimated that OSB hold for 22-28 Jan was 7%, with Jan hold expected to reach 10% and the latest playoff games coming in at: 0% (spread), 18% (moneyline) and 0% on the over/under.
Full-year figures
Across both verticals, the North American online gambling market generated $18.5bn of gross gaming revenues in 2023, with 57% coming from online betting and 43% (c$8bn) of the total coming from online casino.
- The average OSB state generated “c$500m in GGR compared to $1.3bn for the average iGaming state”, said Jefferies.
- The $18.5bn figure likely “underestimates the ‘true’ size of the legal market today” as Kentucky and Maryland launched in 2023 and North Carolina is yet to launch.
Jackpot: The worth of regulated iCasino to the industry is obvious from Jefferies’ figures. The average state grew 55%, 26% and 25% in its first four years and “no state has ever exhibited a year-on-year decline” or an “iGaming GGR per capita” drop.
- “In fact, no state has seen iGaming GGR per capita grow at anything less than a double-digit percentage. New Jersey’s +16% growth in 2023 is the lowest year-on-year rate recorded among all iGaming states,” noted Jefferies.
NFL data points
Numbers game: As San Francisco and Kansas City prepare for their SuperBowl showdown in Las Vegas in less than two weeks, operators will focus on customer acquisition (more on affiliates and the Super Bowl below) in the lead up to the event, said JMP.
- Quality control: Noting that “players acquired during this period are often not the highest quality”, JMP said the 500,000 downloads on Super Bowl Sunday 2023 “represent 2x any other day during the year”.
- In focus: JMP said it expects legal online and retail wagering on the Super Bowl to reach $1.5bn-$1.6bn and industry watchers will zero in on the numbers from newer OSB states such as Massachusetts, Kentucky, Maine and Florida (Hard Rock-only).
- At 501,000, the number of betting app downloads (Tuesday to Sunday) were down 25% YoY as they faced “a tough comp with the Ohio launch” in 2023.
- Movers and shakers: Worth noting that at 6% Fanatics’ share of downloads “increased to its highest levels since the start of the NFL season” and is a stark contrast to the “paltry 2%” figure CDC highlighted last week.
- Download charts: FanDuel had 29% download market share, DraftKings 25%, ESPN Bet 11%, BetMGM 14% and Caesars, Fanatics and Bet365 were all on 6%
- Give us our daily fantasy: In DFS, PrizePicks was far ahead with 48% share of app downloads, Underdog Fantasy was at 18% download market share and Sleeper had 12%.
Boom and bust
ESPN Bet’s odds boost promotion during the Ravens-Texans match saw arbs pile in to take advantage of the operator’s offer, but was puzzling to industry observers. As ESPN’s David Payne Purdum wrote after the match, “boosts usually involve player props or parlays, not typically main markets like point spreads” and betting limits on the boosted odds are usually low.
- However the offer’s “prices were more advantageous than what was being offered on the same bets elsewhere” and created the perfect “arbitrage opportunity”.
- Cut a long story short, ESPN Bet and its parent Penn Entertainment faced major criticisms and quizzical musings from industry executives.
- Another contact said they were still “confused about why everyone is convinced (ESPN Bet) lost”. “Penn knew the liability and could use the hedge with the promotion until they got the risk to their liking”. In other words, even if not ideal, Penn had control of the risk and “without knowing the liability” it’s impossible to know if it lost heavily on the promo.
- JMP meanwhile said the liability on the offer was “supposedly eight figures”; was such volume difficult to hedge? One source also made the point that “the higher the risk, the higher the chances that you will act recklessly to minimize losses and that your margins will be neutral (at best), if you’re able to hedge”.
- Better stats: Macquarie said ESPN Bet’s GGR share averaged 8% in December vs. 14% in November (post-launch). The figure compared favorably to the group’s “2.5% share in the prior months of 2023 and ~5% share in 2022”.
- In terms of NGR (GGR minus promos), ESPN Bet reduced its losses of “roughly $9.5m per state in November to losses of $1.5m per state” the following month.
- “We think it will take 3-6 months to get a better depiction of normalized market share going forward,” added Macquarie.
Running interference
Turnoff: One “significant operator” has already told some affiliates that it plans to turf off the majority of its network and will not accept “new affiliate registrations around the Super Bowl from February 1 to 11”, reports Steve Ruddock in his Straight to the Point newsletter.
- Most of the customers signing up “are bonus hunters, not interested in being a returning customer to our book… [that] will not reap an ROI to the business” and the operator would rather not bother at all with affiliate activity during that busy period.
- Have your cake and eat it: Whether in the U.S. or Europe, operators have always done as they pleased when it comes to suddenly changing affiliate deals or simply canceling them, as this latest example shows.
- In this instance, the operator is also taking advantage of the fact that the Super Bowl will provide huge exposure and, regardless of bonus hunters who have always been around, there will be minimal need for the traffic that affiliates usually deliver.
- “This is not the environment we were promised,” Ruddock notes, “when everyone was trumpeting the above-board behavior and transparent oversight of the legal betting industry. We need more of that cleansing light.”
News shorts
Caesars Entertainment has extended its relationship with the Eastern Band of Cherokee Indians in North Carolina and will bring its sports betting products to the state’s residents when online wagering goes live on 11 March.
FairPlay Sports Media, the company that runs OddsChecker, has acquired Quarter4, a data, content and sports predictions specialist for an undisclosed sum. FairPlay will roll out Q4’s products to existing partners like Gazzetta Dello Sport and DAZN and plans to incorporate more sports betting services as part of its ‘BetTech’ vision.
Portnoy’s not complaining: With his Barstool sports media brand back under his control, Dave Portnoy is said to be in the final stages of negotiating a marketing partnership with DraftKings. The deal would be “multiyear” and “pay Barstool in the low eight figures per year”, according to Sportico. Recall, Portnoy bought Barstool back for $1 having sold it to Penn for $550m in total.
Former Resorts World president Scott Sibella has pleaded guilty to federal charges of failing to report illegal gamblers who were playing at MGM Grand when he worked there in 2018.
In the dock: Live casino market leader Evolution is the subject of a class action lawsuit that claims it misled investors with regard to its exposure to unregulated markets.
Further reading: Industry source on Gambet DC: “Frankly, it’s been a sh*tshow from the word go.”
