Two of sports betting’s main players took the stage at a theater in New York on March 3 to discuss the current state and future of the industry. They were joined by an understudy who has yet to enter stage right but may one day be the star.
At the Barrett Sports Media Summit, Joe Fortenbaugh of ESPN’s Daily Wager moderated the “Betting on Sports Media” panel that featured:
- DraftKings Chief Media Officer Brian Angiolet
- FanDuel Chief Marketing Officer Mike Raffensperger
- Fanatics Chief Commercial Officer Ari Borod
In Pennsylvania, FanDuel Sportsbook has been the top operator for revenue and handle since they launched in the summer of 2019. FanDuel takes about 36% of all bets placed online in the Commonwealth. DraftKings has maintained its position as the No. 2 sportsbook out of PA’s 14 sports betting apps.
Fanatics, an online sports merchandising retailer, is headed by CEO Micheal Rubin who also co-owns the Philadelphia 76ers. Fanatics does not currently operate a sportsbook in any state. Their joint bid for a sports betting license in New York was not selected.
FanDuel, DraftKings and Fanatics on the current state of sports betting
Fortenbaugh opened by asking how they were feeling currently about where they are at.
“The brand has good core elements for us and allows us to move into some other elements like Marketplace. There is good synergy between the customer base of DFS, sports betting, NFTs, and Marketplace. If you look at this early stage and being in that position, growing and bringing in new products and services, we feel really good at the moment.”
“Phenomenal. We are winning. The early results show there is a unique advantage fantasy sports companies have given their massive customer base and funded wallets. We are thrilled to be the No. 1 sportsbook in the country with about 40% of the market. I’m thrilled with the work we’ve done on the brand. Three years ago I challenged the team when I said I wanted to be the American sportsbook of record. I still hear people say ‘Vegas has the line at this.’ Why the hell are we referencing a town in the desert?”
“We are very bullish on the sports betting space. Over the last few months, people have seen a correction in the market that doesn’t scare us off at all. We aren’t going into this industry to win for 2 years. We are looking at this 5-10 years from now. Everything Fanatics has done to date, the gaming business can take zero credit for. They have built an incredible business by putting the sports fan at the forefront. It’s about what are the best aspects of the fan experience and how do we play a role in that. We are bullish on this industry long-term.”
New York sports betting launch, high tax rate
Online sports betting launched in New York on Jan. 8 with a 51% tax rate. In 24 days, New York shattered U.S. sports betting records with $1.7 billion in wagers and $125 million in revenue. Fortenbaugh asked if the 51% tax rate would be a “boilerplate” for other states moving forward. (Pennsylvania has a 36% tax on PA sports betting revenue.)
“We went live the first minute in New York. There will be a more rational path (regarding the tax rate) in New York.”
“No. I don’t think it will be a template other states will use. I think it was a last-gasp of a disgraced governor, shall we say. We’ve been operating in New Jersey for over three years, running a lot of advertising and acquiring a lot of customers who live in New York. It’s not totally surprising we came out of the gate strong. We will work with our regulating partners and to create sustainability in that marketplace. At 51%, it will be treated differently than other states. It will impact our ability to partner with media, local teams and the generosity we give to the customers because ultimately, we are looking to serve customers a decade from now. A lot of other states have recognized what is a sustainable practice for encouraging business and every state has its own perspectives.”
“I think it has to be a one-off. Now, the customers in the state will feel it. Whether it’s being less generous with promotions or committing time to product development. We are encouraged by New York and the numbers which included the crazy bonus money. We look at it and it only emboldens us to build the best product for the customers and take our time to do it until the market is in a good spot to set up a long-term business.”
Sportsbooks partnering with big personalities
Pat McAfee signed a four-year deal with FanDuel for $30 million per year. Dan LeBatard’s company, Meadowlark, announced a deal with DraftKings for three years and $50 million. Fortenbaugh asked if sportsbooks signing talent to big contracts is a more effective way of creating an audience rather than paying for radio and TV spots.
“Talent being at the forefront that has personality, authenticity and can represent the brand is really good in the mix. We seek to do more but it will always be part of a mix.”
“I did the deal so I had to believe it. I don’t think it’s an either/or. Pat is a very unique individual with a very unique platform. I have described him as a unicorn on more than one occasion. He moves the needle for our business. He is in our business and we are talking about crafting the app and the betting experience. It really is a partnership in the true sense. It is undeniable that what works is finding someone that has an authentic relationship with their audience and an authentic relationship with sports and gaming and integrating with them in an interesting way. I have never written a single ad copy for Pat McAfee. If I did, he would probably laugh at me.”
“Yes (we are seeking to identify talent) with the caveat that a lot of what’s happening now, there is a craziness with the money that is going into this industry and what the paths are to profitability. Ultimately, you want to build a successful business because 5-10 years from now, you need to have a stable business to keep serving the customers. Portnoy and McAfee are deeply invested and the companies are deeply invested in them. We are going to look, ultimately, what is going to bring the best experience to the customer and we need to know this person is really bought in.”
Streaming rights, betting on TV
Fortenbaugh asked if sportsbooks would look to acquire streaming rights to events and integrate live betting into broadcasts.
“One of the questions is timing and if the consumer is ready for the experience. If you look at the behavior today on real-time betting, it’s a consideration and the demand is there. There’s a lot to be said for operational things like latency and a consistent experience for users across jurisdictions. In a hypothetical future, it comes back to segmentation. If you have a core audience of people who are heavily invested in their fandom – betting, DFS, collecting – media is a logical adjunct to that and sports rights can be a part whether it is with integrated betting or not.”
“If you are in business and you don’t have a content plan you aren’t doing a good job. For live streaming rights, it has to be a good user experience. If it’s on a slower delay than the broadcast and not great HD quality, why would people want that? If you get out of major sports that traditional media companies have trouble monetizing… that can be interesting. FanDuel and DraftKings do a lot of it. FanDuel airs more live sports than any other company in America today.”
(TVG, the horse racing network is a part of FanDuel and has races nearly 24 hours a day.)
“It needs to be level-set. The key can’t be let’s squeeze as many dollars as we can to get the streaming rights. We want to set this up to work well for years. The dream for sports betting is all about fan engagement. Has the mass sports fan adopted sports betting? Probably not at the scale we would have hoped. The dollars have been there but it’s coming from a small group of the population. If we want to expand that group, we need to make it more accessible. We have a database of 100 million customers and we are going to be able to speak to the more casual fan.”
Lead image by Katie Kohler: From left: Borod, Raffensperger, Angiolet