The six years since the repeal of PASPA have seen online gaming and betting boom across the U.S. But is the goose still golden heading into 2025?
That question was addressed by panelists at SBC Summit in Lisbon, where moderator and SBC Advisory Partners Managing Director Anton Kaszubowski and several experts discussed how challenger brands can be relevant and impactful in a market dominated heavily by the duopoly of FanDuel and DraftKings.
Fervent gold rush has ended
While handle and revenue continue to climb, there was evidence in 2024 to suggest the ground is shaky.
Numerous sportsbooks have scaled back or dropped out of the market altogether after failing to get a foothold or make a dent in the landscape. One example is Betfred, which will enter 2025 live in just two states after numerous U.S. shutdowns in 2024. The CEO and chair of the firm’s American arm, Kresimir Spajic, explained that the initial boom is over.
“After four years of the gold rush, people realized it’s not such a great market for everybody and the capital markets were also not very favorable,” he noted. “Now, we have a massive exodus because the top five competitors hold around 95% of the market share.”
Other panelists, too, opined that the road has become a hard one. Former Pinnacle CEO and Founder of Life Winning Paris Smith suggested that the fight for market share and profitability has changed the game.
“It’s actually deterred from the original intention which was to serve customers and create a tax advantage for the government,” Smith said. “Now, I think it’s more about everyone getting a piece of the pie, so it’s become very difficult and there have been a lot of exits.”
Room to grow still there for those who innovate
So, is all hope lost for brands that are not already cemented in the U.S. second tier? Not so, said some panelists.
While Spajic said the industry should expect growth to wane in the coming years, Internet Vikings Founder and CEO Rickard Vikström noted that online gambling’s year-on-year expansion is the envy of many sectors. “A lot of industries want that,” he acknowledged. “We’re sitting here a little bit spoiled.”
Michael Moskowitz, CEO and chair of Canadian brand NorthStar Gaming, said the industry still has “tremendous opportunity to grow,” pointing to yet-to-open markets like Alberta. In the U.S., Missouri is coming in 2025 and other states are set to make a renewed push for legalizing gambling.
Meanwhile, on the online casino front, a key determinant could be whether more states embrace legalization. Kaszubowski noted the slow rollout of iGaming is “driving the attritional nature of the market” and Spajic emphasized that more online gaming opportunities would “completely change the picture.”
Ultimately, there’s room for optimism, stressed Jared Beber, CEO of Canadian online gaming and betting brand Bet99.
“Despite the concentration that exists right now, we’re still really in the middle innings,” added Beber. “There is absolutely room for new players to come in, to challenge the status quo and to differentiate and create an even more engaging experience.”
Personal touch key for challenger brands?
Doing that is easier said than done, as new entrants such as ESPN Bet have found out in the U.S. Even harnessing the power of a world-renowned sports brand and a big-name gaming operator in PENN Entertainment, ESPN Bet has struggled to make a noteworthy impact.
Smith posited that “there hasn’t been a proof of concept” that leveraging a sports media platform to strong gambling industry effect works.
“You can’t just take a bunch of players and put a sportsbook in front of them and hope they go. It’s not working. What they have to do is start to differentiate.”
In Ontario’s highly saturated market, north of the border, Moskowitz’s NorthStar and Beber’s Bet99 have focused on delivering a localized, personalized experience.
“Revenue doesn’t exist without engagement…” stressed Beber. “Understanding cultural nuances that exist… is what really allows you to penetrate the market in some unique ways.”
The panelists agreed that finding a USP and a way to meaningfully connect with a specific audience is vital for challenger brands looking to land with effect in the market.
“You need to figure out what’s your forte and where you can find competitive advantages… and become a local champion,” said Spajic. “You’re going to see smart, nimble companies focusing on niche markets where they don’t need a billion [dollars] but maybe 20 million will be enough to take 5% in one particular market.”
“The next generation of brands will lead by creating community first,” concluded Beber. “Create a more holistic entertainment proposition for them… Make them feel a part of something greater.”
