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The deal between FanDuel and Boyd Gaming to reacquire five percent of the sports betting giant’s equity serves as a reminder of how much the sports betting industry has changed in terms of acquiring market access.
The two companies announced earlier this month they had come to terms on a deal for FanDuel to acquire the 5 percent of the company owned by Boyd for $1.755bn, valuing the sports betting leader at around $31bn in total.
That five percent equity in FanDuel was acquired in August 2018 as part of one of the earliest bulk market-access deals between an online sports betting company and a land-based casino operator.
In exchange for the five percent equity stake, FanDuel would receive coveted “first-skin” access in any of the ten states where sports betting was legalized and tethered to a land-based casino property.
“Flutter and FanDuel have done a remarkable job over the last seven years or so in becoming the industry leader in online sports betting and casino, they've created tremendous value, both for themselves and for us,” said Keith Smith, CEO of Boyd Gaming. “And over the last seven years, our partnership with FanDuel has continued to grow in value and represents a significant asset for our company.”
“Between our market-access fees over the last seven years and our 5 percent equity interest in FanDuel, we've created nearly $2bn in value for our shareholders, all from a $10m investment,” he added. “Pretty fair return, I think.”
That deal gave FanDuel immediate market access in a number of key states, including Pennsylvania and Indiana, and later in states such as Illinois, Ohio, Louisiana, Kansas and Iowa, all states that effectively required online operators to be tied to an existing land-based entity.
It also was the first domino to fall in a number of large market-access partnerships between operators looking to gain access.
Unlike Boyd, which effectively conceded the idea of offering a nationally competitive online sports betting product, some companies, such as Caesars Entertainment and Penn Entertainment, sold market access in certain states while also retaining the ability to offer their own product.
Those deals included offering access only in states where the company operated multiple properties, or offering second and third skin access in states that could potentially allow casinos to partner with more than one operator.
The deals were often speculative, the sports betting equivalent of searching for oil, with companies acquiring second and third skin access in states that to this day have yet to legalize sports betting.
For instance, Penn’s 2019 deal with DraftKings included first skin access in Florida and Texas, access they likely won’t be able to use over the deal’s ten-year term.
It also included second and third skin access in several states for theScore, which was then a Canada-based operator looking to gain traction in a highly competitive U.S. market.
In the deal, Penn Interactive took on a 4.7 percent equity stake in theScore, which became the first step in ultimately acquiring the company entirely in 2021 for a $2bn price tag.
Another major player, MGM Resorts International, went the opposite direction, choosing not to empower any competitors through allowing them to use the company’s market access and focus its efforts on promoting its BetMGM joint venture with Entain.
Since these deals, however, the landscape has changed drastically. Market access has become more available, as many states have pivoted away from the model that tethers licenses to existing land-based casinos toward models that include direct licensing or partnerships with tribal entities.
In addition, the land grab for market access in a market that once included more than 30 companies offering a mobile sports betting product in at least one U.S. state has largely subsided, as the market has consolidated around several major players and a handful of other companies either offering niche products in a few states or using sports betting offerings to supplement their casino offerings rather than seeking a competitive national product.
In the long run, Boyd’s approach may ultimately prove to be the most profitable of any of the large casino operators that had multistate market access to offer.
Caesars may be the most competitive, as the company reached market-access agreements with multiple operators, including DraftKings, from which the company collects a revenue share and an undisclosed share of equity.
However, the company also reached deals with several companies that have since withdrawn from the U.S. market entirely, including Unibet, PlayUp, and Tipico.
Its own Caesars Sportsbook has also languished around the fifth place position in national market share, according to Vixio GamblingCompliance research, after an initial aggressive marketing push that the company pulled back on within a matter of months.
Penn’s sports betting issues have been well-documented. Upon announcing their market-access deals, the company said they would use the returns to fund their own efforts, which was initially the Barstool Sportsbook before the company scrapped the brand in favor of a new agreement with ESPN.
However, the ESPN Bet platform has fared no better than the Barstool effort, with the company having spent almost $2.7bn combined on just its acquisitions of theScore and Barstool and its $150m a year agreement with ESPN, and faces another key inflection point in 2026 when parent company Disney can opt out of the deal if market share is under 10 percent.
And in MGM’s case, the company quickly surged to a podium position in national market share, as well as strong performance in online casino, but their share in both has continued to trail off and while it has largely maintained its third place standing in both categories, upstart Fanatics is quickly closing in on the sports side and FanDuel and DraftKings continue to widen the gap on the casino side.
