The U.S. betting and gaming juggernaut is ready for the new NFL season, but it is highly likely the new advertising campaigns will also lead to more criticism about their prevalence around sporting events. The industry would do well to listen and engage with critics.
The NFL caravan is set to restart this weekend and with the online sports betting industry set to roll out its vast array of betting offers, promotions and broadcast adverts, it seems near certain that we will see increased levels of criticism about the spread and prevalence of gambling advertising across U.S. media platforms.
Most operators, especially the biggest sportsbooks, have taken an off-season break with regard to their advertising output, but marketing levels are expected to surge from this weekend on as they gear up for their busiest six months of the year. That they will advertise heavily during the NFL season is logical, especially when they have taken a step back during the off season.
The slowdown, partly due to timing following the Super Bowl, was also implemented as a way to address market concerns and commentary over the millions of dollars being spent seemingly indiscriminately on advertising and promotions.
Those spending levels were being announced at the same time as the operators were recording huge, if broadly predicted, losses. But as talk of macroeconomic issues, inflation and recession dominated the airwaves, a sense of gloom descended on the industry.
The doubt levels have not dissipated entirely, but with operators such as DraftKings reporting lower than expected second quarter losses and, more importantly, FanDuel being profitable during the period, the mood has lifted somewhat.
As the analysts at Macquarie noted recently, operators’ more positive results in the second quarter led those “with online exposure to outperform the S&P 500 by 15% last year from Aug 1 – Sep 30.” To put that statistic into context, online gaming stocks have been down 55% over the past 12 months compared with -13% for the S&P 500.
But of course the marketing push by FanDuel during the second quarter, and subsequent market share increase just as competitors pulled back, will also have had the impact of motivating those rivals for the upcoming NFL season.
As has been widely reported, over the past six months, FanDuel has extended its market share lead. The data makes for impressive reading for the group and some industry observers already believe the likes of DraftKings, BetMGM and Caesars will not be able to catch up.
For examples of FandDuel’s dominance, the group generated 89% of New York state’s gross gaming revenues for the week ending June 19th and, in April, its parlay GGR numbers also overtook those of all its main rivals across all bet types, while in the state of Illinois it recorded more GGR from parlays from March to May than its rivals did across all bet types.
With such market share trends, BetMGM, DraftKings and Caesars will not only have to do their utmost to close the gap, they’ll have to do so in order to just keep FanDuel within view.
It may seem like stating the obvious, but advertising levels for sports betting have risen massively in recent times. To illustrate this, a report produced by iSpot.tv in June showed that U.S. sportsbook brands spent $280m on TV advertisements between September 2021 and May 2022 and generated more than 18 billion impressions as a result.
Both figures are significant increases, of 281% and 48.4% respectively, on the previous year and the growth is likely to continue in the next 12 months. The levels may not be as eye-catching in 2022-23 because regulation has already spread to a number of highly populated states such as Michigan, Illinois and New York. In addition, Ohio, Louisiana, Kansas and potentially Maryland, will soon be live.
So the scale of advertising, both local and nationwide, is likely to ramp up even more and the industry’s presence across mainstream media platforms will be even higher. In real terms, this translates as more consumers being exposed to TV, radio and online advertising for sports betting and, as shown by similar experiences in other markets in Europe, it is highly likely to lead to a corresponding rise in levels of criticism aimed at the industry’s seeming omnipresence during NFL matches and other sporting events.
One of the key features of the U.S. market also comes down to regulatory timing. Unlike individual European markets such as Spain or France, where operators all launched campaigns at roughly the same time (and in the process addressed significant size populations), states are regulating at different times in markets of varying sizes.
This means waves of sports betting advertising being rolled out at different times, which can lead to an impression of seemingly ceaseless gambling marketing. Such a feeling will only grow should more major states (Texas, California, etc) regulate.
And as data from the iSpot.tv report showed, with just 37% of sportsbook advertising impressions being local ads, there is still a significant portion of the U.S. population that does not have easy access to regulated mobile sports betting. This means there is plenty more room for more sports betting advertising at both local and national levels.
This is not necessarily bad, but there is a strong likelihood that more critical articles will appear in the press in response. In addition, U.S. operators must beware how they are perceived, but just as importantly, how they respond to criticism. As mentioned in these pages, the UK industry has, over the years, produced an object lesson in how not to respond to critics, while in countries like Italy and Spain, the authorities have unilaterally imposed highly restrictive advertising bans.
The U.S. is a completely different market with a distinct mode of operation, but some of the criticisms being already aimed at its operators are eerily familiar to those long heard in Europe. The industry must take them into account if or whenever they appear in the U.S.