DraftKings, a fantasy sports website
The expansion of online sports betting and casino gaming across the U.S. has led to soaring revenue for sportsbook corporations, but an already crowded race for consumers’ dollars is about to get more competitive.
DraftKings, which reported quarterly results that beat Wall Street’s estimates on Thursday, has emerged as the largest player in an area where several corporations are jockeying for market share.
The gaming company said its revenue jumped 57% to $790 million for its third quarter ending Sept. 30 because it expands into recent jurisdictions, broadens its customer base and keeps existing customers spending on its platform. Its success, which sent shares greater than 16% higher Friday, got here not only from sports betting, but in addition from online versions of casino games.
It has been a winning plan that others within the fast-growing industry have followed. But an area that already boasts names like FanDuel, Caesars, MGM and Fanatics is about to get more crowded on Nov. 14, when The Walt Disney Company plans to launch ESPN BET in 17 states.
Overall revenue from online sports betting is projected to achieve $7.6 billion by the tip of 2023 within the U.S., largely driven by its introduction in additional states over the past yr, based on data from research firm Statista. Revenue is predicted to grow yearly by 17.3% to achieve a projected market volume of $14.4 billion by 2027.
The marketplace for sports betting began to take shape after a 2018 Supreme Court ruling cleared the way in which for states to find out their very own laws on the matter. Today, online sports betting is legal in greater than half of the U.S.
Meanwhile, despite being legal in only six states, revenue in the web gaming market is projected to achieve $19.1 billion in 2023, based on Statista data. The games are online wagering on traditional casino games, resembling blackjack, poker, or slot machines. Revenue for online gaming is projected to grow 12.9% yearly and hit $31.1 billion by 2027.
DraftKings has emerged from the pool as a transparent leader within the sports betting and online gaming space. Wall Street has enjoyed what it has seen from the corporate, as shares have spiked nearly 200% this yr.
Last month, DraftKings overtook rival sportsbook FanDuel for the primary time in market share to grow to be the leader within the U.S. across online sports betting and casino gaming, based on market research firm Eilers & Krejcik Gaming.
DraftKings accounted for about 31% of online sports betting and casino gaming revenue within the third quarter through Aug. 23, while FanDuel’s market share fell to 30%, based on Eilers & Krejcik.
“We’re winning,” DraftKings CEO Jason Robins said in a conference call with analysts Friday.
He added that the corporate plans to maneuver into recent markets in the approaching months with launches in Maine and North Carolina, pending regulatory approval. Currently, the corporate has launched mobile sports betting in 22 states and iGaming in five states.
As more states legalize sports betting and online gaming, corporations only have more potential dollars to win. But that does not imply multiple competitors can thrive within the space long-term.
“The market is not sufficiently big to support greater than perhaps two or at most three platforms,” said TD Cowen analyst Lance Vitanza.
Vitanza said Wall Street has been pressuring sportsbook corporations to grow their bottom lines. The businesses have been relying too heavily on marketing and promotional activity to grow their customer bases as they duke it out for market share dominance, he said.
“They’re all hoping that in the event that they can capture enough market share, they’ll get to some extent where everyone else will stop and so they can grow to be less promotional,” Vitanza said.
Robins told investors Friday that DraftKings is ready for the increased competition and plans to scale back promotions in 2024.
Chris Krejcik, executive director at Eilers & Krejcik, said it stays to be seen whether DraftKings can hold onto its lead.
“FanDuel stays close behind, in spite of everything, and the competitive landscape — through the approaching introduction of ESPN Bet and the ramping up of Fanatics — is about to get lots tougher,” he said.