Will Any Sportsbook(s) Compete With DraftKings For Massachusetts Dominance?

With the upcoming launch of retail sports betting in January and mobile betting in March 2023, the pressing question is, which sportsbook operator will emerge as the leader in Massachusetts?

DraftKings, based in Boston, has an opportunity to create a significant impact in its own state. However, the real challenge lies in how they will fare against established market leaders such as FanDuel on a national scale.

In terms of market share, FanDuel dominates the national scene, capturing 42% of sports betting users in active markets. Coming in second, DraftKings holds a 24% share in the sports betting market.

Barstool, although smaller in size compared to other sportsbooks, faces the challenge of making significant capital investments in order to attract new players in the local market. Over the past few years, major sportsbooks have faced criticism from their investors due to these costly expenditures.

Spending to Get New Customers

Operators in the US have been strategizing ways to attract new customers to their sports betting platforms at minimal cost since its launch. In recent years, they have successfully devised a process involving promotions, offers, and advertisements.

Although each of these factors negatively impacts the company’s profit, acquiring customers is the most beneficial long-term investment for sportsbooks. This is due to the low probability of bettors switching between sportsbooks once they have established a regular usage pattern, and the majority of bettors typically select their preferred sportsbook within a year of its launch in a particular state.

Setting itself up for success in the state, the operator achieves this by making significant investments and attracting a substantial customer base. The steady support from loyal customers not only covers expenses for system improvements but also enables the acquisition of new players.

At first, operators decided to invest in advertisements. However, they soon discovered that regional advertising costs were high, and emerging competitors were more inclined towards promotions and free-to-play or discounted play opportunities.

On the other hand, sportsbooks gain a competitive advantage in acquiring customers through advertising when they have a wider reach across the nation. The level of brand awareness among potential customers directly influences their likelihood of using the sportsbook in the future. Moreover, individuals who frequently travel between states or reside near state borders have the opportunity to be exposed to supplementary advertising without any extra cost. For instance, prospective customers in Massachusetts may come across advertisements from Connecticut, New Hampshire, Rhode Island, or New York during their routine travels.

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Who Has Spending Power? 

The financial superiority of FanDuel is evident in the third quarter results of this year. Despite expanding into new states, FanDuel anticipates being profitable next year. Moreover, FanDuel has set a revenue target of $3 billion for 2022 based on its performance in the third quarter.

However, DraftKings recently reported a Q3 revenue of $501.9 million, which, although not directly comparable to FanDuel’s projected revenue, indicates that DraftKings would face significant challenges in reaching a similar revenue figure by the end of the year compared to FanDuel’s expectations.

A significant aspect to note is DraftKings’ relatively smaller market share, leading to a lower initial revenue generation. The company also faces challenges in terms of profitability. In their Q3 report, DraftKings projected an additional loss of $500 million for the upcoming year, adding to their existing losses of over $3 billion in the past three years.

FanDuel is well-prepared for profitability and has ample capital to attract new customers to its platform, even in new state launches. On the other hand, DraftKings is willing to incur more losses to achieve the same goal. Although both companies may see similar outcomes from their spending, FanDuel has the advantage of being more adaptable in its decision-making due to the presence of intense competition.

Massachusetts Governor Charlie Baker has been appointed as the new President of the NCAA. Make sure to also read about this exciting development.

Will Fan Loyalty Matter? 

Although FanDuel may have a financial advantage over DraftKings in the new Massachusetts market, the residents of Massachusetts are known for their loyalty. After all, who hasn’t witnessed the enthusiasm of a Boston fan cheering for their team?

In the US, there are numerous companies established. BetMGM is situated in New Jersey, while Caesars operates from Nevada. However, neither of these companies has managed to secure a dominant market share in their respective home states. Nevertheless, this doesn’t imply that it is impossible for them to achieve this in the future.

DraftKings holds an advantage over FanDuel in terms of securing partnerships with local sports teams and enjoying more favorable reception for their advertisements in stadiums. If you reside in Massachusetts, wouldn’t you prefer to support a local company?

The marketing department of DraftKings holds the key to transforming fans’ fervent support for their local sports teams into a dedicated user base for their app. By forging partnerships with teams and crafting advertisements that tap into locals’ adoration for their teams, the company can seize this unique opportunity.