DraftKings gains ground

DraftKings makes market share gains in May, overround analysis looks at what the bookies are doing in the off-season, plus recession rumblings +More

Jun 27, 2023

Good morning. The latest edition of The Data Month looks at the market shares of the leading contenders in May and suggests DraftKings is taking share from those below it in the rankings.

Plus, we have exclusive analysis compiled by Propus Partners, the first in a series of editions looking in depth at the US market. With three of the big four US major leagues now out of season, the team takes a look at what major US sportsbooks are doing to attract and retain customers before the NFL season resumes in September.
Finally, this edition takes a look at potential factors to consider in any recessionary environment in the US.

I'm movin' on up now.

DraftKings’ gains

The latest OSB data for May suggests DraftKings is taking share from those below it in the rankings.

Stealing a march: A comparison between market shares for online sports betting in May compared with the last 12 months figures indicates DraftKings has made gains at the expense of operators below it in the rankings.

DraftKings controlled 32% of the market in May vs. a 27.7% share in the LTM period.
At the same time, rival FanDuel’s dominance at the head of the market stayed stable at 45.1% in May vs. 45.5% for the LTM.
However, further down the rankings operators have lost share in May vs. the LTM.
BetMGM is down to 9.9% vs. 11.1%, Caesars is down to 5% vs. 6% and Barstool is down to 1.9% vs. 2.6%.
The market has seen some departures in the last year as well as tactical retreats, hence the others segment market share has also fallen from 7.1% to 5.5%.

👑 DraftKings is stealing market share

No. 1 in heaven: Recent data from Massachusetts and New York also suggests DraftKings is starting to eat into FanDuel’s market leadership.

In Massachusetts, DraftKings claimed top spot in May with 51% of GGR vs. 33% for FanDuel.
In New York, meanwhile, data covering the first two weeks of June showed DraftKings has stolen top spot for the first time.

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Price points

There is a surprising amount of uniformity on pricing – and therefore margin/vig taken – on non-core competitions in the US sporting calendar, according to Propus Partners.

Face in the crowd: Market leader FanDuel does not have stand out pricing or aggressively low margins on most events, according to data analysis from Propus Partners.

Margin comparison

For USFL and WNBA, Propus found considerable uniformity in pricing with most offering -110 vs. -110 (1.909 vs. 1.909) lines or equivalent across all key markets.
Likewise with ATP & WTA Tour tennis, the team found very little variance in price or overrounds.
For these lines, FanDuel has the joint-lowest margins, similar to most other books.
Slightly surprisingly, according to the analysts, FanDuel is at the higher overround end of the range (i.e., lower competitiveness) for soccer 1x2 markets.
Propus said that specifically they would have expected a tighter range in overrounds for MLS markets.
BetRivers is at the more competitive end of pricing as a general rule from this sample.

🥊 FanDuel vs. the rest on overrounds

Markets per event

Sample size: The chart below shows the total number of markets available for each event within the sample of competitions. Note, each bookmaker groups markets in different ways, so Propus has used a standardised approach for fair comparison.

Despite more markets not always being better, Propus suggests it is still an interesting measure of what is being offered to customers.
Those bookmakers driven by platforms with significant non-US exposure – FanDuel, DraftKings, BetMGM, Barstool – stand out in terms of markets offered on soccer competitions.
FanDuel specifically has a considerably deeper market set than competitors for tennis, suggest the analysts.
There is a surprising absence of pre-match market depth for WNBA and USFL given the popularity of WNBA and the familiarity of USFL, Propus notes.

🕷️ Where FanDuel sits in terms of number of markets

FanDuel vs. the market

Selectively aggressive: Propus argues that the above data shows FanDuel (blue line) does not have a particularly aggressive pricing policy, from this sample anyway, and while market sets are strong, so are those of key competitors. It leads then to ask what else, from a product perspective, has led to the market-leading position?

Internal systems and trading teams allow for specific positions to be taken on key selections, when desired, therefore giving a perception of aggressive pricing, the team says.
Meanwhile, they point out the UX and UI is clean, simple, intuitive and consistent across mobile and desktop.
The team also argues that reliability of the FanDuel product is higher than some competitors.
During the data capture, the analysts say they saw irregular product offerings or black spots in FanDuel's competitors products.

Note: Data was taken across seven different competitions from six leading US sportsbooks from the week commencing June 12. All data was taken pre-match. Analysis in future editions will take deeper dives into price position by selection (i.e., how margin is weighted) and current bet builder/SGP product positions.

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Recession watch

The resumption of student loan repayments could provide another headwind for the consumer.

Bloody students: Student loan repayments in the US could add ~$6bn of further pressure on consumer spending, adding further uncertainty to the gaming sector backdrop and posing particular risk for digital operators, according to Wells Fargo.

The analysts point out that those most affected by the repayment resumption will be the younger demographics.
“The core sports-betting customer likely skews younger, around 36 years of age, vs. the core land-based regional casino customer, which is typically between the ages of 50-65 and less likely to carry a significant student debt burden,” they add.
Moreover, Las Vegas Strip operators could also be more at risk given the recent fall in the average age of visitors.
Data from the Las Vegas Visitors and Convention Authority shows that the average age of visitors is now just under 41-years-old vs. over-43 pre-pandemic in 2019.

Penn push: Highlighted as being particularly vulnerable is Penn Entertainment, which has made much of its attempts to attract a younger demographic to its properties. Helped along by the Barstool acquisition, Penn has seen a steady increase in revenue from younger cohorts, up to over 18% vs. under 13% in 2019.

“Penn also has exposure to student loan repayments via sports betting (i.e., Barstool Sports/theScore), which also caters to younger college-aged/post-grad customers,” the Wells Fargo team adds.
Moreover, Wells Fargo also estimates Penn customers to be at the lower end of the income range vs. its peers.

🎓 Income disparity: customers on the Strip earn more

Data points

UK large licensees: Looking at the most recent data from the UK Gambling Commission, the team at Regulus points out there are shifts taking place in market share dynamics rather than a sagging overall market.

According to the stats, the largest operators saw revenue for Q123 rise 5% YoY to £1.29bn, up 6% QoQ.
Betting revenue was up 12% YoY and 24% QoQ.

Tail on the donkey: The team argues that comparing this data with the recent earnings commentary from the listed players, it is fair to suggest that Entain and William Hill/888 “lost material share”.

“Given Super Group’s European traction in Q1, and especially the continued growth of LiveScore, the long tail in betting is also likely to have taken share, making it a more material component of betting than has typically been the case in the UK,” Regulus adds.

The growth in gaming was more lackluster at ~0.3% QoQ and down 4.8% YoY, a market situation that Regulus ascribes to dampened levels of recycling from betting, the effect of extra RG measures and, again, the long tail taking meaningful market share.

The performance from the major licensees is “therefore not likely to be representative of overall market growth, in our view, but it does demonstrate that unevenly applied social responsibility changes can have significant impacts on market share”.

Domination game: Last week, E+M reported how FanDuel, DraftKings and BetMGM continued to dominate in OSB in New Jersey, Pennsylvania and Michigan in May, with joint market shares of between 81% and 90%.

Such is the big three’s dominance in these states that challengers are avoiding them in favor of attempting to stake out ground elsewhere.
Analysts at EKG have noted how bet365 is focusing on Colorado, Virginia and, in particular, Ohio for its belated US push. In the latter state it has garnered ~7% GGR market share since launch.

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Calendar

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