The rapid development of sports betting in the US has been astonishing. Currently, 32 states have legalized various forms of sports betting, with 28 offering mobile or online access. Among these states, there are five where tribal operators are the sole betting option. Additionally, eight states are considering legalizing sports betting in the near future.
Despite the growth, the sports betting market is highly competitive, leading to large sign-up bonuses and soaring costs of customer acquisition. Major sports book operators such as DraftKings, Caesars Interactive, and Flutter Entertainment’s US division have reported significant losses. While some companies view these losses as part of a strategy to gain market share, others have exited or scaled back their efforts.
The US sports betting market can be categorized into tiers, each with its own dynamics and influences. The tiers include:
- Tier one: DFS Kings (DraftKings and FanDuel) – Leaders in the market with a focus on market share.
- Tier two: PLC challengers (BetMGM, Barstool/Penn National Gaming, Bally’s) – Striving to secure top-five status.
- Tier three: Omnichannel converters (Caesars, Golden Nugget, Resorts, Hard Rock, Rush Street) – Associated with land-based casinos and focused on conversion and omnichannel success.
- Tier four: The newcomers (PointsBet, Kindred, Bet365, PlayUp) – European and Australian brands entering the US.
- Tier five: The land-based operators (tribal and commercial) – Focused on driving business to their local facilities.
- Tier six: The black market – Unregulated operators offering better odds and posing challenges to legal operators and regulators.
There are areas of turbulence on the horizon for the US sports betting market. Major companies will need to rationalize their spending, leading to opportunities for competitors focused on efficiency and ROI. The quest for profitability may face challenges in the tribal gaming market, and the relatively low tax revenue from sports betting compared to online gaming could drive legislators to expand mobile sports betting and igaming options. Lastly, there should be a greater focus on addressing the black market through market protection measures.
Overall, the US sports betting market is evolving rapidly, presenting both opportunities and challenges for operators, regulators, and legislators.
