FanDuel and DraftKings Blitz for New Customers as NFL Season Starts

From a Wall Street Journal story by Katherine Sayre headlined “FanDuel, DraftKings Blitz for New Customers as NFL Season Starts”:

The National Football League season kicks off today, and the battle for gamblers has already begun among sports-betting companies.

Companies like FanDuel and DraftKings view the NFL as the biggest opportunity to convince fans to pull out their smartphones and place bets, and some are offering increased incentives this year to lure such gamblers.

FanDuel has bumped up its sign-up promotion to $200 in bonuses for a $5 bet for the NFL season, up from $150 last year. It also made a deal with Alphabet’s YouTube to give its new and existing betting customers $100 discounts on YouTube’s NFL Sunday Ticket subscriptions for a $5 bet until Sept. 18. Sunday Ticket prices start at $349 for people who subscribe to YouTube TV.

“The reality is, we will probably have one of, if not the most, competitive NFL seasons that the industry has ever seen,” said Mike Raffensperger of FanDuel.

Fanatics, the sports merchandise company and betting newcomer, is giving $150 in credits for team merchandise such as jerseys for new customers who make a bet of at least $50. DraftKings is offering a $200 bonus for a $5 bet by new customers as it did last year.

Rivals FanDuel and DraftKings are fighting for the No. 1 position in the market. Newcomers ESPN Bet—a new partnership between Disney and Penn Entertainment—and Fanatics are introducing fresh competitive threats.

“This is the most important time of year,” DraftKings Chief Executive Jason Robins said. The company exceeded expectations in keeping NFL betting customers active into the basketball and baseball seasons, he said.

While sports-betting companies offered richer incentives in the earlier days of mobile gambling, they are now under pressure from investors to turn a profit after spending hundreds of millions on marketing over the past five years.

The companies are trying to strike a balance this season by offering enticing bonuses but not overspending.

DraftKings in its most recent quarter claimed a 35% market share in the states where it operates, the company’s highest since 2020. Marketing dollars will continue to target acquiring new customers, including the bonus for bets, said Stephanie Sherman, the company’s chief marketing officer. DraftKings hopes to retain those customers with the quality of their experience.

In August, the Boston-based company reported its first profitable quarter and improved its full-year guidance to a narrower loss in adjusted earnings before interest, taxes, depreciation and amortization. DraftKings reported about $73 million in adjusted Ebitda in the quarter ended June 30 and projects a loss of between $190 million and $220 million for the year.

FanDuel, owned by Flutter Entertainment, generated $100 million in adjusted Ebitda for the first half of the year. FanDuel expects that to increase to between $120 million and $240 million by the end of the year, with net revenue of $4.5 billion to $4.9 billion. FanDuel had 47% market share in the most recent quarter.

Fanatics is a latecomer to the sports-betting race after launching an app this year. It recently acquired the U.S. assets of sports-betting company PointsBet. For its first NFL season, Fanatics will offer sports wagering in 11 states, and in some states the app will operate under the PointsBet brand during the company’s transition.

Fanatics wants to cultivate a loyal betting audience from its database of about 100 million customers with a rewards program for more bets and merch. The privately held company has said it plans to invest $1 billion to build a sports-betting operation.

“We’re in this for the long haul,” said Jason White, chief marketing officer for Fanatics Betting and Gaming. “We’re not trying to rush into winning this year.”

The playing field is rapidly evolving for sports-betting companies. Sports betting has been legalized in 38 states and the District of Columbia, a rapid expansion after the Supreme Court cleared the way for the industry in 2018.

Mobile sports betting launched earlier this year in Ohio and Massachusetts, while mobile betting is expected to begin in Kentucky in late September. It remains illegal in several big states, including California and Texas.

Last year, sports wagering generated $7.6 billion in revenue, the amount companies receive after paying out winning bets. This year, revenue is projected to grow to $11.8 billion, according to Eilers & Krejcik Gaming, an industry consulting firm.

There have been several deals and partnerships forged in recent months as entertainment companies try to win share in the fast-evolving industry.

Fanatics paid $225 million for the U.S. assets of Australian company PointsBet. The move gave Fanatics access to more states where PointsBet already had gambling licenses.

Casino company Penn Entertainment, meanwhile, recently struck a $2 billion deal with Disney-owned ESPN to rebrand its sports-betting app ESPN Bet. Penn Entertainment also dropped the Barstool Sports brand and sold the Barstool media company back to its founder, Dave Portnoy for $1.

ESPN Bet, which the company says will launch this November, will be a test of whether the widely known broadcaster’s brand can give Penn a boost with consumers.

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