Despite only minor state launches planned for this year, the U.S. sports betting industry is on a roll – even though its public portrayal continues to worsen.
When it comes to the general vibe surrounding its sports betting industry, the U.S. market is already resembling the more mature markets around the world that have been regulated for many years.
In other words, in particular after the mass regulation that has taken place over the past three years, the mood music, comments and perspective that currently surround sportsbooks and gambling are not good.
With the new football season getting underway with its usual pomp and hype it feels inappropriate to start on such a gloomy and negative tone, but there is no doubting the general atmosphere that is starting to cover the industry stateside.
Observing this from outside the U.S., there is a feeling that history is repeating, and the risk is that, blanket-like, a general air of negativity will spread over the industry, with mainstream news stories constantly highlighting the negative impacts regulation has had on the wellbeing and finances of Americans, especially those of young men and low-income families.
Some will say that this has been happening for some time already and that it is the lot of gambling companies wherever they operate, but all in all it is still disappointing to see such a turn of events as U.S. gambling companies have been warned repeatedly this would happen.
Hearts and minds… and comms
However, for all the negativity, there is also no doubt that it is being offset by the performance of the industry’s leading brands, and operators across the (leader)board have no intention of slowing down.
All of them are pressing ahead with new products and as the number of states set to launch continues to reduce, they are planning more upgrades and tech improvements that they hope will create more wagering volume and lead to higher engagement levels from bettors. ‘The critics will love it,’ the cynics might smirk, but such is the mirror-world the industry operates in.
But for all the rhetoric, at heart the ongoing war of words between operators and their opponents is about communications and public relations, or winning hearts and minds, to use a more direct analogy.
A number of recent reports and surveys by interested parties illustrate this point. Last week Igaming Focus reported on two recent research papers that had been highlighted by industry investor Chris Grove. The reports analyzed millions of consumer credit datasets and transactions and said the vast legalization of online sports betting since 2018 had negative impacts on consumers’ financial health and led to overall increases in gambling rather than reducing spend in favor of betting on sports.
On the marketing front, academics at the University of Bristol in the UK said social media messages by BetMGM, DraftKings, ESPN Bet and FanDuel routinely breached the industry’s marketing guidelines.
More recently an American Gaming Association survey of 2,000 people found that (lo and behold) 75% of respondents said the gambling industry behaved responsibly and embraced “casino and sports betting as acceptable forms of entertainment”.
The data also revealed that 65% of those surveyed said they were satisfied with operators’ commitment to dealing with problem gambling, a figure that was at just 40% in 2018.
Reality bites?
That number also goes up when speaking with actual casino players (81%) and sports bettors (88%), which is up from 70% and 78% respectively in 2023, while more than 76% said the gaming industry has a positive impact on the U.S. and local economies, job creation and tourism.
For all that, and leaving the cynicism aside, the fact that the AGA sample might include ‘real life’ gamblers is an interesting nugget. It may well prove to be completely bogus speculation, but if the theory holds it would suggest that people who are familiar with casino or sports betting are able to distinguish and identify what the industry is doing (or trying to at least) when it comes to responsible gambling and player safety policies.
Which of course is a major difference with surveys that contact Americans who have never gambled or are made aware of the activity only when viewing the betting advertisements that air during NFL or NBA games.
In the UK the Campaign for Fairer Gambling, which is also active in the U.S., recently commissioned research and found that (lo and behold #2), the rise in online gambling has been “detrimental to the British economy” and diverts money from other sectors that create significantly more economic activity.
As Hannah Gannagé-Stewart writes in her column, how the industry portrays itself and how it is covered by mainstream news outlets is a clear illustration of the difference in how it is perceived.
Maturing bandwagon rolls on
When it comes to commercial growth, with FanDuel and DraftKings reaching EBITDA profitability and hoping to extend their lead over the chasing pack, the analyst team at JMP noted the “2024-2025 football season represents the smallest portion of the U.S. population entering online sports betting for its first season”.
The new season also marks the moment when “the overall size of the highest-quality customer pool is at its lowest point entering a new season”, but this is offset by reactivation investments into existing states and CPAs becoming more attractive, while handle continued to grow in the second quarter (+28%) and app downloads were up 28% year-on-year.
This growth is generated by operators enjoying “impressive growth across legacy, and more recently launched states” across products like single-game bets and parlays. In addition, with $33-35bn worth of sports betting revenue forecast for this year and football-only parlays accounting for $10bn or c30% of that handle, “positive sport outcomes for betting companies will result in ‘higher highs’ for gaming margins and upward estimate revisions in the coming months,” noted JMP.
So as the industry matures and the critics gather, the U.S. sports betting bandwagon shows no signs of slowing down.
