Will online betting be legalised in California?
In an Interview with Third Bridge Forum, the specialist said betting operators like DraftKings, FanDuel and PointsBet could be the biggest losers if Proposition 27 fails. They told us these players are predominantly “online-only”, and therefore have the most to lose if the online gambling focused proposal does not pass. We also heard that “investors” from the aforementioned companies could benefit from the referendum failing, given it would have impacted operators’ chances of reaching profitability by 2023.
Native American tribes that run US casinos would also gain if Proposition 27 fails given they are offline focused, according to the specialist. The tribes would also gain from Proposition 26 passing, and the specialist is optimistic it will. They told us it would be a “good… baby steps, Nevada style” entry into sports betting for the state.
The specialist discussed different betting markets in the US including New York and New Jersey. They told us New York has had a “faster ramp-up” than they anticipated, while New Jersey continues “holding its own” despite expectations it would lose customers to operators in New York.
Meanwhile, the specialist said there has been a material decline in promotion and customer acquisition cost points as operators attempt to reach profitability by 2023. While the specialist still expects spikes in marketing spend during key sporting months, they believe overall it will continue trending down. Lower advertisement spending will likely come at the expense of market share, the specialist added.
During the Interview, the specialist debated the profitability outlook and competitive advantages of different betting operators. They believe FanDuel is the best at “stretching” player lifetime values but that Penn Entertainment has one of the better apps compared to competitors. They told us they are “most worried” about DraftKings and Caesars Entertainment – the latter they warned is likely to “lose a lot of customers”. Click here for more insights on Caesars Entertainment.
The specialist said they are excited about “big disruptor” Fanatics, which is expected to hit the betting market in 2023. They told us the company will have gone live in 10-12 of the most “valuable” betting states by the start of the next American football season but not in New York.
The specialist will be monitoring how Fanatics comes out of the gates next year. Will it be a DraftKings or FanDuel and “spend crazy amounts of money from a war chest” or will it be like Penn Entertainment, which has obtained sign-ups through more “cost-effective” methods? For the sake of bringing profitability to the industry, the specialist hopes it is the latter.
Click here to access all the human insights in the Third Bridge Forum Interview “Online sports betting industry – California adoption scenarios and operators’ roads to profitability”.
The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.
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