Igaming Focus: U.S. sports betting marketing – on a different level

January 26, 2021 3:30 PM
  • Jake Pollard, CDC Gaming Reports
January 26, 2021 3:30 PM
  • Jake Pollard, CDC Gaming Reports

The levels of marketing and coverage of sports betting in the U.S. are above anywhere else in the world, but scrutiny of the industry is just as likely to rise in parallel.

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The number of media partnerships and the level of broadcast and mass market exposure betting brands are getting in the U.S. is some levels above anything seen in other regulated markets.

A quick run through of recent agreements and product tie-ups between betting and brands and media groups: William Hill-CBS, DraftKings-Bleacher Report, BetMGM-Verizon, PointsBet-NBC, Ballys-Sinclair Broadcast; gives an idea of the level of activity and reach of the industry.

It speaks of a level of acceptance that is a huge positive for the industry.

However, access to such major media platforms also raises questions around marketing scale, value and brand differentiation, whether smaller operators can really compete and if the industry can expect major pushback from gambling opponents when it comes to responsible gambling once the COVID crisis has abated.

Early market phase

The U.S. market is in its earliest stages and that has a major impact on marketing currently, says Lloyd Danzig, founder of iGaming investment firm Sharp Alpha Advisors.

“From a game theory perspective, it is a bigger risk for any individual operator to market too little than too much. There is only one chance to gain a first-mover advantage. The most effective sports betting brands will differentiate their marketing approaches by leveraging original content, personalities, experiences and communities.”

This content will also be leveraged by ‘traditional’ affiliates driving traffic with tools and information that are of genuine value to end users, adds Danzig.

An industry contact who has worked in TV and is currently with a listed operator agreed to speak to CDC anonymously. They said: “Barstool Sportsbook has shown that the foundations of the model are market access, a database and a brand; but the brand is almost agnostic to the first two: once you have access and funds there is no specific reason why a DraftKings or Barstool is any more synonymous with betting than an MGM.

“The reason (for engagement and staking) is having the database and the reach and ability to build and maintain it are the central ingredients. If you can start with a database, you’re further ahead than if you’re having to build it up.”

Database development 

Indeed, for all its marketing partnerships, DraftKings has relied on the databases it bought from a number DFS rivals in its earliest years. Caesars and Bally’s have gone down the same route with their recent deals for SuperDraft and Monkey Knife Fight, respectively.

As for Bartsool, its numbers in Pennsylvania are impressive, but as Sara Slane, founder of Slane Advisory, says, the Keystone State “is unique because of the high tax rate that is offset with bonusing, so it’s difficult to draw hard conclusions. Nonetheless, the Barstool brand and marketing are very strong and it’s a powerhouse among millennials.”

Barstool’s numbers also show that its players are mostly recreational and not particularly price-sensitive and it hasn’t signed up to major media tie-ups or sponsorship agreements (so far).

“Even Dave Portnoy’s harshest critics must admit that the man can drive not just media attention but commercial revenue as well. Through Barstool, Penn has acquired access to a loyal community of engaged, passionate users that will likely be easier to retain than those acquired purely on a promotional basis,” says Danzig.

As for whether smaller brands can truly compete, “it really depends on how you look at it,” says Sara Slane. “There will be a handful of national players, but on a state-by-state basis, can you be a smaller brand in just a few states? Of course you can, and some sizeable states are yet to regulate. If you have effective execution coupled with a strong casino strategy that works the two verticals in concert, you can generate strong margins.”

This point is echoed by CDC’s industry contact: “Smaller operators can thrive; for example, they might generate less in handle but more in revenues or will have agreements with strong local casinos. Where there is a risk is when brands spread themselves too thinly by launching in too many states and burn through their cash instead of focusing on a number of key jurisdictions.”

Anti-gambling backlash?

The level of exposure sports betting is getting in the U.S. is beyond anything experienced in Europe, where the U.K. is experiencing an anti-gambling backlash; while Italy banned gambling advertising in 2019 and other countries are thinking of doing the same.

As much as U.S. media brands want the revenue and operators the exposure, is there a risk of a backlash happening stateside once the industry has settled down and the COVID-19 health crisis has abated?

“Absolutely. We’re currently seeing backlash in the U.K., where they’re reviewing gambling laws,” David Purdum, gambling industry reporter for ESPN, says without hesitation.

“The U.S. is on the path to repeat many of the same mistakes that led to the review in the U.K.: oversaturation of advertising and lack of sincerity when it comes to problem gambling. Gambling media companies, state regulators and the sports leagues are being way more aggressive with sports betting than I, perhaps naively, expected after the 2018 Supreme Court ruling.”

For Sara Slane, it is too early to say categorically whether the industry is dealing with issues of social responsibility appropriately, while CDC’s industry contact says comparing the U.S. with the U.K. is off the mark because there are so many eyeballs on Sky Sports as the dominant sports-only TV network.

Increased scrutiny

“The coverage in the U.S. is spread across many more TV and online outlets. It’s not the same levels of concentration and there is so much more content to watch, while ESPN, which is part of Disney, is following more of an affiliate route and will always be super cautious about how they approach sports betting.”

Lloyd Danzig says many European markets have seen huge rises in marketing and media budgets which has resulted in prescriptive measures from regulators.

David Purdum is clear: “The U.S. sports betting industry is growing quickly, but I’m not sure it is maturing at the same rate. Short-term greed is taking the industry down the wrong path on some issues and, in my opinion, threatening the long-term health of the sports betting market and increasing the likelihood of severe backlash down the road.”

As more states look to regulate, the current levels of activity and marketing around U.S. sports betting are not going to abate, but it is also reasonable to assume the levels of industry scrutiny will rise accordingly.