Following DraftKings and FanDuel, No Distinction Among Online Sports Betting Sites
In the field of web-based sports gambling, DraftKings (NASDAQ: DKNG) and FanDuel are undisputedly the dominant leaders with 70% or more market share. Although these two giants don't lack competition, some analysts maintain that no real second-tier rival exists within the industry.
DraftKings and FanDuel, which is part of Flutter Entertainment (NYSE: FLUT), fulfill the criteria of a duopoly. Yet as Truist Securities' Barry Jonas pointed out in a report to clients, the chasm between these two companies and their competitors is so vast that no second-tier competitor is viable.
Truist skipped mentioning "tier two": "We don't think any operator in the space qualifies for that standing with white space between DKNG/FanDuel and others," wrote the analyst.
In April, FanDuel and DraftKings, together, accounted for 73% of the online sports betting market in the United States, leaving just 27% for other players like BetMGM, Caesars Sportsbook, ESPN Bet, and Fanatics to contend for.
DraftKings and FanDuel's Technology Leads Betting Loyalty
At the outset of the increase in online sports betting Upturn, it seemed as if BetMGM and Caesars Sportsbook might challenge DraftKings and FanDuel. The former operator attracted clients to its iGaming products by tying those to rewards programs frequently utilized in land-based casinos. The leadership of both companies revealed they've noticed customers amassing points online and exchanging them for meals, entertainment, and accommodations at physical gaming destinations.
While DraftKings and FanDuel don't have the same benefits, they're arguably two of the most recognized and valuable gaming brands primarily due to their superior technology investments. Several reports and surveys confirm that a significant portion of bettors' loyalty to an online sportsbook relies on user-friendliness and sophisticated technology. This is where DraftKings and FanDuel have invested heavily.
This has proven to be a savvy choice. In a survey released in April, Truist disclosed that 45% of respondents favored DraftKings or FanDuel for iGaming, and it's vital because 62% of those polled expressed a preference for wagering on sports and playing real-money online casino games via the same operator.
Is a Viable Second Tier of Operators Possible Behind DraftKings and FanDuel?
Jonas discussed the possibility of a viable second tier emerging behind DraftKings and FanDuel, tagging Penn Entertainment's (NASDAQ: PENN) ESPN Bet as a potential candidate. However, the analyst conceded that ESPN Bet's expansion has moved at a sluggish pace. This potentially means that the 2024 football season could be pivotal for ESPN Bet's growth trajectory.
To boost the fortunes of ESPN Bet, Penn is taking measures like hiring a former Disney (NYSE: DIS) executive, Aaron LaBerge, to serve as the CTO. Fanatics, which Jonas indicates has a "differentiated strategy and product offering," is also adopting proactive strategies. It recently tapped Selena Kalvaria, a previous Gucci exec, as its CMO.
The analyst also recognized that Caesars could consolidate its standing in tier three, while Bet365, Fanatics, and Rush Street Interactive (NYSE: RSI) may eventually climb the ranks.
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