When New York launched sports betting in February of 2022, the entire business swarmed, jockeying for position in an attempt to gain access to the biggest market in the United States.
Since then, sportsbooks have complained about the unrealistically high tax rate and the need to fix the market for its long-term success.
Add on top of that the tech bubble – which hasn’t quite burst – but certainly had a mini pop when Silicon Valley Bank ceased operations, and billions of dollars were missing.
That crunch has forced sportsbooks – who are still in their growing phases – to get out of debt and into the black as quickly as possible.
PointsBet Sportsbook has made its plans known – they will be sold.
The company hired investment bank Moelis & Co. to help accelerate its exit from the North American sports betting scene.
But to who and for how much remains the question.
Will a bigger fish gobble up a smaller fish, leading to a chain reaction of mass consolidation that leaves us with a handful of major players?
Smaller companies are getting squeezed, and uncertain waters lurk beneath the surface of how the market should grow to maturity.
PointsBet will be sold, but to whom and for how much?
The seventh-largest sportsbook is now up for grabs – and there is a market.
“PointsBet represents an attractive opportunity to acquire a proven operational team, a proprietary technology stack, existing market share and user base,” Chris Grove, a partner at Acies Investments, told The Post.
Their company also offers a New York sports betting license, which most companies can’t match and was quite costly.
“Market access across several supply-constrained states like New York and Michigan,” Grove said. “The more of those boxes a potential acquirer needs to check, the more valuable PointsBet becomes.”
Potential candidates for a sale are tough to sort through.
An argument could’ve been made for the Michael Rubin-backed Fanatics Sportsbook.
But that seems unlikely given the slow progress to building their product, and they recently purchased source code from Amelco, putting them out of the running.
Depending on the price, some have postulated that Bally’s could be in the market.
And of course, DraftKings will listen as they have been the most active in buying up competitors.
As for the worth, WynnBet, which does have Michigan and New York access, wanted $500 million for their online sports betting business, The Post exclusively reported in 2022.
They did not end up selling, and it’s unknown if anyone met that price, but PointsBet has all proprietary technology and parlay-rich systems.
North of WynnBet’s half-a-billion dollar asking price is likely the best launching point for PointsBet.
FanDuel will gain more market share in 2023
The sports betting giant, FanDuel has battled DraftKings for supremacy among all of the sports betting apps.
And they are in the lead, with DraftKings settling in with the second-place consolation prize.
“Even though many believe the brand has hit a ceiling, the unique dynamics of the U.S. market and the compounding benefits of FanDuel’s scale offer an opportunity for the operator to continue to grab share – a goal they may be especially motivated to pursue given Flutter’s plans for a public listing in the U.S,” Grove said.
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Mass market gambling advertising is leading to a regulatory crackdown
Watching sports and tired of sports betting ads?
You’re not the only one.
“Sports betting advertising is everywhere – if you’ve watched any sports game from the Super Bowl to competitive cornhole, you’ve noticed that every commercial break contains one, if not more, sports betting ads,” Charles Gillespie, CEO and Founder of Gambling.com Group told The Post.
“Even when they’re not running commercials, you’re likely to see those omnipresent logos sponsoring your favorite sports news and analysis shows.”
Sports betting operators are in a battle for market share and customers, as evidenced by the massive $364 million that FanDuel and DraftKings spent in California an attempt to get sports betting passed on the ballot in November of 2022.
That money went to waste, as the measure did not pass, and they’ll probably still throw more at the West Coast in an attempt to gain access to the area.
But these rising costs and customer annoyance puts a limit to all of this, Gillespie says.
“After a while, you have to wonder if the hundreds of millions in high-profile advertising spend is actually getting through and translating to new customers,” Gillespie continued. “Many people are reaching the point of annoyance – the commercial you laugh at the first time becomes obnoxious by the fifth time you’ve seen it.”
And there’s a different set of concerns about ads reaching children and leading to increases in problem gambling.
This is a problem for the operators themselves to solve.
“Sports betting operators need to figure out a more effective marketing method or risk a severe regulatory crackdown,” Gillespie said of sports betting advertising.
“Whether online sportsbooks get the message in time, and slow their aggressive on-air marketing before regulators force their hand, remains to be seen. But in either scenario, the marketing strategies will inevitably need to shift to something more targeted and natural, rather than the costly spray-and-pray approach of blanketing the airwaves during every sporting competition.
“I predict that as regulators breathe down the neck of their licensed gambling operators to back off on the most aggressive advertising techniques, they will fall back to the tried-and-true performance marketing delivered by online affiliate companies,” Gillespie concluded.
Negative coverage of sports betting will drop off, at least temporarily
Sports betting advertising is all over your TVs, billboards, podcasts, and seemingly all walks of the sports world.
Many are frustrated with this influx of sports gambling culture and talk of parlays on telecasts, particularly in the NFL.
But sportsbooks adjusting their marketing tactics should help turn the sports gambling hate.
“Media coverage tends to come in cycles, there are only so many ways to write negative coverage of sports betting, and there are only so many versions of the same story that editors are going to approve,” Grove explained.
“Add to that an increased capacity and capability of the industry to play both offense and defense on the media front, we are likely to see a less combative media environment around sports betting, if only for a time.”
We know for sure that if sports betting is going to truly compete in the sports market, the narrative likely needs to flip as industry growth continues.
