Market Share Holds As Key Metric For U.S. Sports Betting

August 23, 2023
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Although a variety of metrics have been used to tout success or put a rosier spin on underperformance, market share has remained the dominant metric used by the U.S. sports-betting industry’s power players to measure their operations.

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Although a variety of metrics have been used to tout success or put a rosier spin on underperformance, market share has remained the dominant metric used by the U.S. sports-betting industry’s power players to measure their operations.

Even as industry leaders FanDuel and DraftKings have refocused on proving their ability to turn a profit to shareholders, market share is often chosen as the best path to doing so.

“I do think there’s opportunity … if we can gain more market share to generate top line as well,” said DraftKings CEO Jason Robins on the company’s quarterly earnings call this month.

In its presentation, the company touted year-on-year market-share growth from 27 percent of handle and 20 percent of gross gaming revenue in the second quarter of 2022 to 35 percent of handle and 32 percent of revenue this year, closing the gap on market leader and chief rival FanDuel.

“I think in H2, we feel we’re going to have the best product in the market ... and I think that’s the big difference maker,” Robins said. “We’ve obviously closed the gap quite a bit between handle share and GGR share, and I have no reason to believe that we can’t continue to do that.”

For its part, Flutter’s top brass expressed satisfaction with its position at the top of the leaderboard, even if that lead had been somewhat chipped into.

“When I look at our performance in Q2 with a 47 percent market share, I’m very, very pleased with that,” said Peter Jackson, CEO of Flutter, on FanDuel’s parent company’s own earnings call. “I mean, yes, it is down a bit on the same period last year, but I think for context, we should remember that a number of operators were sort of pulling back from the market last year.”

“But still, 47 percent is a very, very strong performance,” Jackson continued. “We should also recognize that people are making changes and improvement to their products, of course they are, but we are a fast moving target.”

As for the MGM-Entain joint venture BetMGM, MGM Resorts CEO Bill Hornbuckle said the group’s sportsbook product was “not where we want it to be,” but said he hoped ongoing improvements would help bolster the company’s share as competitors narrow BetMGM’s lead on online casino and chip into the company’s sports-betting share.

“I think the moves that we’re now making though with Entain or with the moves we’re going to make with Angstrom as an onboarded partner for BetMGM will get us to a place where we’ll be back in that game in a meaningful way and hopefully begin to gain some share back,” Hornbuckle said.

The importance of market share as the key metric was reinforced by the deal announced earlier this month by Penn Entertainment and ESPN, a partnership whose very survival is largely dictated on meeting specific market share targets, rather than relying on other metrics to define the success of the newly branded ESPN BET.

“We’ve all watched market share in online sports betting continue to consolidate really amongst the top two players, and you’ve got to have scale to compete,” Penn CEO Jay Snowden said in discussing the partnership. “There’s a certain recipe to get to scale … and we think we check the boxes with that recipe and we’re ready to compete at a scale level.”

Although additional incentives kick in if ESPN BET captures a 20 percent market share, the Penn-ESPN deal includes a provision allowing each side to terminate the ten-year agreement after three years if market share fails to clear a certain threshold.

That threshold was not publicly disclosed, but Snowden implied during the call that it is at least 10 percent of the U.S. market, which would be a significant jump over the slightly more than 2 percent the company’s Barstool Sportsbook held of the market in the first quarter of 2022, according to VIXIO GamblingCompliance research.

“We’re not doing this deal to be 4 percent or 5 percent market share players,” Snowden said. “That’s not going to be acceptable for us, it’s not going to be acceptable for ESPN, and so, you should assume if those are the ranges we’re in, that’s not going to work out long-term.”

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