Amy Howe, FanDuel's CEO, Anticipates Profits Despite Growing Industry Rivalry
Amy Howe, CEO of FanDuel, the biggest U.S. online sportsbook operator, confirmed that the company will be turning a profit by the end of this year while recognizing the growing competitive landscape. FanDuel has already made profits in the first half of the year, and Howe projects the company will reach profitability based on EBITDA for the whole of 2023, making it the first online sportsbook company in the U.S. to achieve this milestone.
In an interview with CNBC's Contessa Brewer at the CNBC Global Evolve virtual summit, Howe stated that the company is prepared to face new entrants to the domestic sports betting industry, such as Fanatics and Penn Entertainment's (NASDAQ: PENN) ESPN Bet.
Howe stressed the importance of a top-notch product experience when it comes to successful sports betting, saying, "At the end of the day, if your product doesn't work, it doesn't matter how great your brand is; you need to have a really phenomenal experience."
Together, FanDuel and DraftKings (NASDAQ: DKNG) hold more than 70% of the U.S. online sports betting market.
The Importance of Scale
Howe also mentioned that the U.S. sports betting industry is still at its initial stages, and scale is necessary. "One of the things that we're seeing, which is not dissimilar to many e-commerce industries, is that you've got to have scale," she told Brewer.
Scale results in efficiencies, and FanDuel and DraftKings are skilled at maximizing those advantages, reflecting the optimism of analysts toward both companies. Out of the 36 states and Washington, D.C. that currently permit regulated sports betting, FanDuel offers both online and retail sportsbooks or a combination in 21 jurisdictions.
Furthermore, data demonstrates that FanDuel and DraftKings excel in customer retention, cultivating impressive client loyalty. On the other hand, their rivals are finding it challenging to compete in this area.
High Barriers to Entry
Despite the young age of the U.S. sports wagering industry, the barriers to entry remain substantial. Howe explained to CNBC, "In an industry like online sports betting, the barriers to entry are high. You have to be licensed; you have to navigate a very complex regulatory environment. There are significant costs to spend in creating a great product and technology platform. And on top of that, you're also spending a lot of money to responsibly bring consumers to your platform."
In a period of just over five and a half years, the domestic sports betting industry has witnessed multiple casualties, as various operators either retreated from the business or sold their related operations, often choosing not to throw more money into the mix just for the sake of additional market share.
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Source: www.casino.org
