New York’s first five weeks of online sports betting has generated $138.48 million in revenue on $1.985 billion in handle.
The big three digital gaming operators BetMGM, FanDuel and DraftKings—remained the market share leaders among sports betting and iGaming in Michigan and New Jersey in January. The Meadowlands led sports betting market share at 64 percent.
Many bettors were likely newcomers, especially in New York, where mobile sports betting just began. But the newcomers are the most important, the ones sportsbooks need to retain to grow their business against stiffening competition, according to GamingAmericas.com.
“While sportsbook operators are spending large sums on licensing, promotion, marketing, and competitive odds to prompt fast growth as they enter these new markets in the U.S., they must keep a focus on retention of all those hard-won customers,” said Mikael Hansson, founder of Enteractive, a company which provides loyalty and engagement services for the online gambling industry, contacting players on behalf of sports betting brands with more personal one-to-one phone calls.
“The eventual winners will be those brands that engage with their customers and build relationships for the future,” Hansson said. Every brand in this sector must keep a clear focus on all aspects of their offering, ensuring that all the hard work in getting to market is not quickly lost to the competition.”
Some numbers for you to digest:
- Gambling companies now spend three times as much on ads as cereal companies do.
- Gambling-related ads are about 1 percent of the total TV ad market
That said, well-capitalized bookmakers that can bankroll big media campaigns and offer promotions for new bettors have an advantage. DraftKings, FanDuel, MGM Resorts International and Caesars Entertainment were responsible for 93 percent of TV ad spending in 2021, according to Nielsen.
The problem with the kind of spending these well-heeled companies dish out makes it hard for bookmakers to turn a profit. DraftKings is expected to lose $2.45 a share this year even as its revenue booms, according to FactSet. But expect to take two or three years to profit, according to Barron’s.
Sportsbooks and iGaming sites spent more than $725 million last year on television ads, more than double the $292 million posted in 2020. Gaming operators are spending more on TV ads than cereal companies, according to Barron’s.
NBC, which broadcast the Super Bowl, supposedly charged $7 million per 30 seconds to late-arriving advertisers. Its ad space sold out across the NBC, Peacock, and Telemundo platforms. Caesars Entertainment, DraftKings and FanDuel expected to run ads during the game.
It could well mean that the $725 million gaming companies spent on TV ads will be eclipsed this year and by a lot. That is especially true with the addition of New York state. Arizona, Connecticut, Louisiana, and Maryland, among others, recently joined the lineup of states.
That’s a full-year figure and doesn’t account for an entire 12 months of sports betting in a slew of states that recently approved the activity. For example, mobile sports wagering recently went live in New York—home to the largest media market in the US—indicating the 2022 advertising figure is likely to be significantly higher than last year’s total.
In some states, gaming companies ramping up betting-related ads is catching the eyes of regulators. For example, some policymakers in New Jersey describe the level of sports betting ads on the airwaves as overwhelming.
Experts in New Jersey worry that the high number of ads could cause problem gaming harm, from betting by minors to relapses with addicts.
“They’re fair concerns, and certainly something that the industry is well aware of, paying close attention to,” said Casey Clark, senior vice president of strategic communications at the American Gaming Association, in an interview with Barron’s.
The television ads, however, are also attracting the attention of regulators and lawmakers concerned that too many ads can cause harm.
“It’s inundating television, it’s crazy,” said New Jersey Assemblyman Ralph Caputo, who is chairman of the state’s Committee on Tourism, Gaming, and the Arts. Caputo thinks the time has come to limit ads, a former casino executive.
Some researchers in the field are also growing concerned about the seeming ubiquity of the ads. If gambling is becoming as American as breakfast cereal on TV, it might start reaching consumers of that product too.
Lia Nower, Director of the Center for Gambling Studies at Rutgers University, said that research indicates children notice the messages. “Very young children can remember the gambling terms from these ads, can sort of replicate the excitement in the ads and indicate as soon as they can, they want to begin placing bets,” Nower says.
“We do see a number of folks who have been gamble-free for a long time – for up to eight years, in some cases – and the introduction of the products into the space, where you’re getting bombarded with advertising for free for free bets, has caused quite a few of them to relapse and sort of break their sobriety from gambling,” said Daniel Umfleet, the CEO of Kindbridge Behavioral Health
For its part, the NFL has a limit of six sportsbook advertisements per broadcast. The league’s official sportsbook partners are BetMGM Caesars, DraftKings, FanDuel, FOX Bet, PointsBet, and WynnBET.
The NFL says it’s taken strong measures to counter any corruption or threats to the game’s integrity. That includes the monitoring of betting lines, player education efforts, and the hiring of law enforcement officers as security consultants.
Sports betting has broad support from government and the public alike. Within weeks of the January 8 introduction of gambling apps in New York, the companies had signed up 1.5 million accounts from 1.1 million almost 90 percent of them new to regulated sports betting. For people who don’t lose their shirts, it’s fun and fast-paced, just like the games they watch.
If the league is considered as just an avenue for gambling, the fan base will fall off, said Declan Hill, author of The Fix: Soccer and Organized Crime. “We’re going to have a dramatic and exponential rise in the number of gambling addicts,” Hill said.
Keith Whyte, executive director of the National Council on Problem Gambling, says about 2 percent of the U.S. population suffers from gambling problems. It amounts to more than six million people.
