It’s official: America is bonkers over sports betting. Each time a new state passes a bill to make gambling on sports legal or changes a law to allow more competition among betting platforms, known as sportsbooks, it becomes ground zero in a battle between market leaders DraftKings and FanDuel, whose efforts to beat back rivals often resemble a game of Whac-a-Mole.
Take Illinois, whose most recent $483.5 million monthly “handle” (the total amount wagered on sports) and $42.2 million in gross revenue from sportsbook operators make it the fourth-largest sports betting market by revenue behind Pennsylvania, New Jersey and No. 1 Nevada. All told, Americans placed nearly $35 billion on sports bets in 2020.
With casinos facing ongoing closures due to the COVID-19 pandemic, Illinois Governor J.B. Pritzker has repeatedly suspended a law requiring bettors to register in person at a casino before they can place wagers online with their mobile devices. That ruling has opened the door for DraftKings and FanDuel, which dominate the online market, to narrow the gap with BetRivers, the first mobile sports betting app to go live in Illinois when the state legalized betting last March. U.K.-based Willam Hill and Australian firm PointsBet have been expanding in the U.S. and launched in Illinois in September. PointsBet is now blanketing the airwaves in major media markets including Chicago, a sure sign of more ad wars to come.
Similar stories are playing out across the country. DraftKings and FanDuel are the most widely recognized sportsbook names and together comprise roughly 80% of the U.S. market. But scores of competitors are now angling for a piece of the action in a torrid sports betting category that could outgrow sales of alcohol and all legal cannabis, reaching as high as $20 billion annually in the U.S., according to some Wall Street estimates.
But brands and agencies drawn to this huge opportunity should be forewarned: Sports betting is not an easy business to break into—or break through. DraftKings and FanDuel are both owned by large public companies with deep pockets to spend on marketing, and both have vast legal and compliance teams to help navigate a patchwork of complex regulations that vary from state to state. Startup costs are steep, and in a category where most betting platforms offer essentially the same service, brands may have trouble separating themselves from the pack.
“Brands are fighting this long hard battle for market share, rising customer acquisition costs and getting high churn rates,” says Dave Edwards, exec VP of global business development at R3 Worldwide. “It’s hard for these sportsbook companies to differentiate themselves. Legally they’re really all the same, all regulated by the state and licensed.”
Agencies, meanwhile, must be able to work quickly in the legal sports-betting marketplace, where rules can change on a dime. Both DraftKings and FanDuel keep the majority of creative duties in-house (Horizon handles media buying for FanDuel) because they say it allows them to respond more quickly and efficiently to rapidly changing conditions in any given market.
“Each state is a market unto itself, and there isn’t just regulatory complexity but marketing complexity,” says FanDuel Chief Marketing Officer Mike Raffensperger. “As we think about media markets, promotions and local influencers, it is a question of where are the places we can leverage our assets at scale, and how do you put the right people and resources in place?” The company appears to be finding the right mix. Says Raffensperger, “In every state where we’ve launched, the opportunity has exceeded our expectations.”
FanDuel this week bolstered its marketing bench, announcing the hire of former Priceline and Anheuser-Busch marketer Andrew Sneyd as its new brand senior VP, overseeing creative and brand strategy, consumer insight, product marketing, team and league marketing, press relations, integrated campaigning and creative operations.