“Pivotal year” for digital wagering companies as NFL kicks off Thursday

September 6, 2023 8:41 PM
Photo: Shutterstock
  • Buck Wargo, CDC Gaming Reports
September 6, 2023 8:41 PM
  • Buck Wargo, CDC Gaming Reports

As the NFL kicks off its season Thursday night with the Kansas City Chiefs playing the Detroit Lions, an American Gaming Association survey said 37% of NFL fans expect to place a bet this season in what one Wall Street analyst called “a pivotal year” for digital-wagering companies.

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The AGA survey showed that 73.5 million American adults plan to place at least one wager on an NFL game. Some 14% of American adults plan to bet online, while 5% plan to go to a physical sportsbook to wager, with the rest of the 73.5 million presumably betting via office pools, casual wagers, and the like.

“2023 should be a pivotal year for digital-wagering companies, as most are expected to turn profitable this year,” said Wall Street analyst David Katz with Jefferies Equities in a note to investors.

With the NFL season’s arrival, Jefferies conducted its fourth online-sports-betting survey of more than 1,400 bettors. Respondents were generally casual players; 69% bet $100 or less in the past 12 months and 53% bet only on major sporting events, Katz said.

“The most important take from our survey is that more people are betting than prior, with 44% indicating they have bet within the past 12 months versus 37% in January,” said Katz, adding that this is driven by more states launching sports betting and increased penetration in existing markets.

“There remain 22 states that have not yet legalized online sports betting, which implies significant upside in penetration remaining,” Katz said.

The NFL is still the most popular sports for bettors, though by a narrower margin than prior (58% versus 73%), while more bettors intend to continue betting on various sports throughout the year (25% versus 15%), Katz said.

Respondents continued to demonstrate loyalty, with 89% indicating they are likely/very likely to continue betting with their current accounts, versus 83% in January. Bettors are more likely to keep more than one sportsbook account, with 33% of respondents indicating intent to maintain just one account (40% prior) and 39% intend to have two (37% prior), while those intending to keep three accounts grew to 20% from 15% in the last survey, Katz said.

The survey showed that ESPN, which garners high recognition, has only a thin majority (53%) of bettors who would try the new online sports-betting app in a deal announced with Penn Entertainment to rebrand its sportsbook as ESPN Bet.

“ESPN Bet will launch mid-season, benefiting from access to ESPN talent, as well as promotional activities across all ESPN platforms,” Katz said. “We endeavor to further our understanding of how this entry could affect the space. Despite widespread recognition, 53% of respondents indicated they are willing to try the app. 57% and 38% indicated that promotional offers and familiarity and engagement with ESPN content were the primary drivers for trying the app. This should not be surprising, with the key issue being whether the offering will be sticky.”

Brand stickiness is higher than ever (89%) and ease of use remains most important, with FanDuel and DraftKings retaining leadership, Katz said. That only enhanced the view of online sports betting and digital gaming; DraftKings and Flutter (doing business as FanDuel) are the top picks among stocks, he added.

Consistent with prior surveys, ease of use is slightly more important than promotions, as 62% of the respondents indicated the former as important to very important versus 58% for the latter, Katz said.

In addition, when asked to choose three platforms with the best interfaces, 45% chose DraftKings and 34% chose FanDuel, reflecting the lead the legacy DFS operators have on land-based operators, though Barstool and PointsBet made some improvements, Katz said.

Of those surveyed, 80% indicated ESPN is their main source of sports information. Furthermore, 53% said they were most likely to at least try the app and 25% claimed they would probably use the app as their primary sports-betting platform. When questioned on what would drive users to try ESPN Bet, 57% indicated promotional offers, 38% focused on familiarity of ESPN content, and 37% preferred ease of use, Katz said.

The survey respondents continued to skew toward casual bettors, with 13% indicating they’ve spent less than $10 over the last 12 months, 25% at $10-50, and 32% at $51-100, Katz said.

Similarly, 53% indicated they’re primarily interested in betting on major sporting events, such as the Super Bowl, March Madness, and NBA Finals, while 22% bet occasionally when with friends. Meanwhile, 42% indicated interest in betting consistently throughout the regular seasons of major league sports, a significant increase from the 30% reported in the last survey.

“We also saw a modest upside in those who indicated interest in betting year-round on a variety of sports, at 25% compared to 15% in the last survey,” Katz said.