Customer loyalty to DraftKings and FanDuel hinders the effectiveness of an omnichannel strategy.
After the Supreme Court's decision on the Professional and Amateur Sports Protection Act (PASPA) in 2018, which led to the surge in US iGaming and sports betting, it was assumed that land-based casino operators would have an advantage over their online-only competitors. However, the opposite is happening, as bettors are showing strong loyalty towards DraftKings and FanDuel.
A survey by JPMorgan involving 1,100 sports bettors and online casino players confirmed these findings, potentially questioning the effectiveness of the omnichannel gaming strategy, which aims to attract online customers to land-based casinos. This news could be a cause for concern for companies like BetMGM, Caesars Sportsbook, and the upcoming ESPN Bet partnership between ESPN and Penn Entertainment.
The survey revealed that around 80% of participants declared a moderate to high degree of loyalty to their preferred platform, while many have shifted operators in the past year. Most respondents reported using two to three apps.
Based on the survey, FanDuel and DraftKings have established themselves as dominant players in the online sports betting market, with 70% of participants expressing a liking for one or both of those platforms. Their market share is also roughly similar to this figure.
A Future for Omnichannel Strategies
Although the survey shows that DraftKings and FanDuel dominate the online sports betting market, there's still room for omnichannel efforts.
Operators such as BetMGM and Caesars Sportsbook are trying to leverage their land-based casino rewards programs with points transferable between iGaming, online sportsbook, and physical casinos. This strategy appears to be working for both operators, as some iGaming and online sportsbook users are now visiting their land-based casinos and spending money there. On the downside, recent ransomware attacks experienced by Caesars and MGM could impact customers' willingness to transition from apps to physical casinos, according to JPMorgan analyst Joseph Greff.
"The omnichannel strategy seems to have limited benefits for operators, and given that its success is largely dependent on positive in-person experiences, we see potential risks for MGM Resorts International and Caesars Entertainment, given the recent cybersecurity incidents," observed Greff.
iGaming and Sports Betting: A Comparison
Although iGaming is currently legal in just six states, brand loyalty trends are similar to those seen in sports betting, which is legal in 35 states and Washington DC.
This is positive news for DraftKings, which is battling it out with BetMGM for the leading position in iGaming market share. Despite this, BetMGM and Caesars still have an advantage as they can market land-based casino offerings to their online clients.
When it comes to promotional spending, it's higher in states new to sports betting, and DraftKings is capitalizing on this by offering promotions to maintain customer loyalty.
"In established states, lower promotional intensity leads to stronger user loyalty to the best-known brands, and we expect tailwinds resulting from product improvements to drive further loyalty for operators," Greff concluded. "Regarding the parlay market, we suspect improved same-game parlay products and better merchandising might encourage new users to invest sign-up bonuses in parlays, which currently account for over 20% of bets placed by users in newly regulated states."
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Source: www.casino.org
