Sports betting: from medium to difficult

What do you make of Fubo Gaming operations ceasing, soon after being launched by FuboTV? Particularly after just launching in New Jersey.

I think the only reason you’re not seeing others fall away or closing up shop is because they feel they could be acquired at some point. For Fubo Gaming, I assume there wasn’t a sale opportunity, or no buyers were interested. I think Fubo realised it was not running a profitable sports betting business and didn’t have a good plan to turn things around, so had to pull out.
It was a well-intentioned launch, and when you’re already running a streaming service that has a lot of sports content, you would feel there’s a natural fit to crossover into sports betting. I think what Fubo was realising early on was that, even though they were getting some customers over from the media side into sports betting, they hadn’t built a product that kept people there.
I think they saw prospective players leave and go to a different sportsbook that maybe had a more well-seasoned product. It may have been a fun thing for Fubo to try out, but once they saw the competition and the difficulties, they switched back to something they were a little more comfortable with.
One of the specific issues with the Fubo Gaming product was latency. As a sportsbook, you’re working through a cable system, and even if there’s a 30-second delay – that’s a big deal if you’re a sports bettor. Bettors need odds right now; and they know they can get fast odds at another book, maybe 30-45 seconds faster.

Does the failure of Fubo Gaming point to a wider trend of media companies that move into the gaming space failing to take off in the US? Fox Sports launched Fox Bet, which has failed to take off so far. Or must you look at it on a case-by-case basis?

No, I don’t think it can be applied broadly, it’s more of a blanket statement. I think you’re wise to point out Fox Bet and some of the others as not kicking off and matching some bigger sportsbooks. It seems like a very frothy market over here in the US – and it has been. The market is frothy around a few events, and those are state launches and large NFL football events, like the beginning of the season in September, and then right around to the Super Bowl. Everything else is kind of a down period.
So when I look at the landscape and I see FanDuel, DraftKings and some other books in those top five positions, I can’t see where books in the top 10-25 positions will be in a couple of years. Fox Bet is a good example of one that launched with very good intentions. I mean, Fox has the NFL on its stations, right? They have a tonne of branding on those programmes for Fox Bet and still are unable to make it happen. I mean, I know they haven’t folded, but it is sort of on life support.
The big books, FanDuel and DraftKings, these guys built a very good product. People tend to try a new book like Fubo Gaming or Fox Bet, but they’ll go back to the tried and true because they’re used to the way their usual book functions.
Big operators are also able to outspend smaller books. Smaller books will spend in little spikes here and there. But it’s the big books that just continue to spend; they’ve got huge brand name recognition, big stars promoting their sportsbook apps on television commercials and everything.
Me as an affiliate, I feel the trickle down from television commercials. Caesars was spending like crazy eight months ago on big branding campaigns on television billboards; in Vegas, everywhere. Our volume for them at XLMedia was off the charts. And the reason our volume for them was off the charts was because people were looking for that promo they had put out there on the commercial, whatever it was. You know, bet this and get that, or bet this and get something else or whatever it might be. They were even doing other things to outspend folks, such as having a deal with Uber Eats. With Uber Eats they said: “Hey, you sign up for our sportsbook and we‘ll give you $250 in free meals.” I mean, it’s already expensive to acquire a user. Then when you’re spending another couple $100 on top of that to give away stuff to these new users, it’s really hard for the small guy to compete with that.

Why do you think the likes of FanDuel and DraftKings, coming from a background in fantasy sports, have managed to create such a powerful sports betting product, while those in sports media haven’t?

FanDuel and DraftKings were the first to do something here in the States that is just wildly popular, which is fantasy sports. It makes every player think they’re a general manager of an NFL football team and that just gained huge popularity for both companies. They were naturally perfect matches for someone who’s also going to download a sportsbook app, bet legally and spend a lot of money in it, right?
So the likes of FanDuel and DraftKings were able to cross customers over from fantasy to sportsbook very well. Both already had entrenched brands. Both operators had millions of players ready to transfer over. All these other guys are having to punch above their weight. They didn’t start out big like FanDuel and DraftKings.
However, there’s one company in particular launching sports betting that I think stands a chance, Fanatics, which will launch next year. It’ll stand a chance because people that use it are buying sports apparel. So Fanatics will know not only who a customer’s favourite team is, but where they live too. These are the two most important things. If you could put an ad in front of someone in a legal state, for their team, promoting them to bet on it, they will. Especially as it’s with an app and a brand that the customer already knows and trusts. I think Fanatics has a very good shot of making it work.
All the other guys coming in – the media companies – who deal in sports a bit as part of their wider media product, will be reaching out to an audience base who don’t necessarily follow sports or use the media company for sports in any way. What’s more, as a new product, it could be inferior to ones already on the market – being just a small portion of a media company's wide reach.
The thing Fanatics has done really well is develop a great app that makes it easy for customers to buy apparel. It would be foolish to think they can’t build a great app for sports betting too, or integrate it into their wider app. I don’t know how it’s going to work for them, but I think they have a leg up on other folks.
I think media companies assumed it was too easy, thinking the money was just going to come. FanDuel and DraftKings aren’t just going to let it come to you, they’re going to try and outspend you, convert more customers from fantasy to sports betting, give better promotions and that’s hard for smaller guys to try and compete with. The big operators have such a head start.

What do you make of other potential global media giants entering the fray? Disney, ESPN, Amazon... How would this affect the market if these companies entered sports betting?

I certainly see Disney moving in with ESPN; I think this is inevitable. Obviously, there’s huge brand recognition there. Should I liken it to Fox Sports, which is also a media brand, but didn’t get the adoption? I don’t know. I think it depends on how ESPN enters the market, how they acquire users and which existing platforms they can access to try and cross players over, without forking out huge acquisition fees. Then there’s the question of if ESPN can build an app and make it something people are going to stick to. You can get players in, but if they don’t like the application, they’re soon going to leave and spend money with another sportsbook. So for ESPN, it may not be so much attracting customers, but keeping them may be the issue the company faces.
Regarding Amazon, were they to take the sports betting route they’d have a fantastic chance. They’re already into the NFL with Thursday Night Football and show some Premier League ties. They already have a slick app in place, so, should they wish to I’m sure they’d be good. If a massive company wanted to come in and seize what is a multi-billion-dollar opportunity and went after it, they will become a formidable force no question. They have deep pockets, a lot of money to spend, so they stand a huge chance. If one of them entered the market that should really scare FanDuel and DraftKings.

What do you want to see, as an affiliate?

As an affiliate, I would love to get more of these big boys in and make the sports betting market really sing. I also want to see healthy, well-minded adults in all 50 states be able to choose if they want to take up sports betting. So hopefully, if some of the bigger, more ubiquitous names get involved, maybe this would start to sway public opinion on gaming, making it more widely available across states. If people are going to gamble, they’re going to gamble. Let’s make it legal, let’s get it out in the open, tax it and really start to embrace it. Even if the US managed to legalise Texas, California and Florida, that would be huge in terms of industry growth in the country.
I live in California, so I’m unable to legally download a sports betting app as of now and place a bet. For the midterms we have Proposition 26 and Proposition 27 which both unfortunately failed. Proposition 26 is the tribal offering, to have sports betting at card rooms and land-based areas. Proposition 27 was more near and dear to my heart, as it would see the big operators come into the state and we would have legalised online sports betting. But the problem with this is that it takes away from tribal revenue and may affect jobs. It would affect the revenues of tribal gaming locations.

“As an affiliate, I would love to get more of these big boys in and make the sports betting market really sing. I also want to see healthy, well-minded adults in all 50 states be able to choose if they want to take up sports betting”