Challenges Loom for Early Leaders in US Sports Betting
Date: 2024-01-18 Author: Dima Zakharov Categories: SPORTS BETTING
Tiers and Turbulence in US Sports Betting
The Boom in US Sports Betting
The United States sports betting industry has experienced a remarkable boom in recent years. Currently, 32 states have given their nod to some form of sports betting, with 28 of them allowing mobile or online access to enthusiasts. This rapid expansion has seen various operators enter the market through partnerships with land-based casinos, be they tribal or commercial.
The States Yet to Make a Move
While eight more states are contemplating legislation to join the betting fray, there remains a group of states resistant to adopting sports betting laws. Notably, some prominent tribal gaming states like Minnesota, Oklahoma (due to its proximity to Texas), and the massive California have been hesitant to embrace this trend.
The Troubling Sign-Up Bonus Wars
The industry's meteoric rise can be attributed to fierce competition among operators, resulting in extravagant sign-up bonuses, often reaching thousands of dollars. Unfortunately, this intense rivalry has driven Customer Acquisition Costs (CPA) to astronomical levels, sometimes exceeding $1,000.
Sustainability Concerns
Major sportsbook operators like DraftKings and Caesars Interactive have reported significant losses, with DraftKings posting a staggering $1.5 billion loss in 2021. Caesars Interactive reported a $476 million EBITDA loss in the same year, followed by a $576 million EBITA loss in Q1 2022. Flutter Entertainment's US division also recorded a negative EBITDA of over $320 million.
Survival Strategies
While some companies argue that these losses are part of a long-term strategy to secure market share, others, such as Wynn Resorts and Las Vegas Sands, have either exited the sports betting market or scaled back their efforts. Experts suggest that industry consolidation might be on the horizon as these operators face mounting pressures.
