Consumer preferences for igaming and online sports betting (OSB) were the subject of a recent Truist Securities survey. Now the results are in and analyst Barry Jonas reported that DraftKings was “a clear winner … though we also received positive feedback around ESPN Bet.”
The favorable ESPN Bet response, Jonas wrote, “reinforces our belief in its potential to succeed longer term.” He added, “Consumer-health responses were about what we expected, as a more expensive cost of living seems to be having a moderate impact” on the frequency of betting.
On the one hand, according to Jonas, the Truist survey affirmed the brokerage’s upbeat outlook on digital gambling. On the other hand, recent news headlines have reinforced the regulatory hazards of the business.
“We do see the larger, more established incumbents as best positioned (unfortunately along with illegal gaming) if there were any new major restrictions imposed,” Jonas chronicled. Those major legal players were also the ones (“in many cases”) that Jonas espied at the forefront to promote responsible play and consumer protections for gamblers.
Consensus, though, was difficult to achieve when the subject was new OSB regulations, let alone legalization, the analyst wrote. However, attempts at federal regulation or intervention could spark a states-rights pushback, he opined, adding that state budget deficits could prompt a further spread of igaming as a budgetary fix.
Survey respondents used DraftKings more than competitor FanDuel (29 percent to 22 percent), with consumers who visited both expressing a preference (61 percent) for DraftKings. “Reasons for that preference were generally mixed, leading us to believe the consumer generally views the two as largely equal today.”
Although Jonas predicted that DraftKings will be the long-term winner of the marketing war, he believed both it and FanDuel could coexist in the online ecosystem. He wondered whether either would innovate to further move the needle and if so, which one would do so.
The analyst reiterated a liking for ESPN Bet, explaining his August downgrade of Penn Entertainment stock as a reaction to the difficulty of executing a new launch, given costs that would impede profitability, especially compared to the incumbents. Still, Jonas took a wait-and-see attitude toward ESPN Bet, expecting its market share to increase, but without having enough clarity to see how much of that would translate into profit.
To the benefit of ESPN Bet, it was survey-respondents’ first choice for checking scores (44 percent); 64 percent expressed a desire for betting integration beyond the lines that the app lists. The majority of those respondents (52 percent) found it likely that ESPN Bet would become their primary betting site.
Fully three-fourths of those polled said they were mostly placing parlays bets, although a substantial number (39 percent) said they were doing that less, compared to 2o percent who were betting more parlays and 41 percent who were holding steady. “We were surprised to find parlay betting is cutting across sophistication levels and even skewing more toward more serious bettors,” Jonas added.
As for the high rollers, those who wager over $5,000 a month, 90 percent were between 21 and 44 years of age, a demographic that represented 69 percent of the overall response sampling. Two-thirds of the VIP-player subset were younger than 38.
Players were found to frequent three OSB sites per month, depositing funds with at least two of them. But almost a third of them (and 71 percent of high rollers) employ illegal offshore sites as well.
DraftKings (27 percent), FanDuel (18 percent) and BetMGM (14 percent) were the preferred online providers of igaming. Caesars Digital aggregated 15 percent between its Caesars Sportsbook and igaming apps, “a positive proof point for the rollout of its dual strategy. … A majority of players (62%) stated they prefer to play icasino on the same platform they sports bet, speaking to the importance of cross-selling and retention,” Jonas noted.
He assured industry figures that the study showed little or no cannibalization of brick-and-mortar play by igaming. Fifty-seven percent of those responding said “their igaming budget does not eat into their land-based budget.”
Sounding not entirely convinced, Jonas wrote that he’d received mixed reports as to whether or not this was indeed the case, observing that it seems to be the leading hangup when states are deciding to legalize igaming. He saw Rhode Island, in which Bally’s Corp. enjoys both terrestrial and digital monopolies, as the ideal situation.