The NFL season begins on Thursday night, marking not only the return of America’s favorite sport, but also the start of the most important annual stretch ever for gambling companies looking for sports bookmakers.
“Football is always the most competitive season,” FanDuel (FLTR.L) CEO Amy Howe told Yahoo Finance in August. “It is not. Clearly, the 1st acquisition moment for all sports betting operators.”
According to Macquarie Research, approximately $1 billion is placed in bets each week during the NFL season, accounting for about 35% of gambling companies’ annual revenue in the fourth quarter of the year. Wall Street analysts are watching this fall closely to see which sportsbook prevails in handling the lion’s share of bets in the new gambling sector.
FanDuel currently leads the space with a 51% market share in the states where it is operational. However, entering the new football season centers on the question of how FanDuel will retain its customers while competitors such as DraftKings (DKNG), Caesar Entertainment (CZR), BetMGM (MGM) and Penn Entertainment (PENN) seek to woo new users. Let’s try. ,
An emphasis will also be placed on original content, with FanDuel launching its 24/7 sports network and Penn finalizing the purchase of Barstool Sports. While analysts will be watching closely to see who brings in the most customers, they will also be interested in how much it spent to acquire those customers as almost all sportsbooks posted positive quarterly profits since launch. Not posted.
“We expect healthy year-over-year growth for each company and the highest quarterly concentration therein” [fourth] quarter,” Macquarie analyst Chad Bayon told Yahoo Finance. “Given the lower loss in 2Q, we anticipate that with additional revenue and lower operating costs in 4Q, most companies will generate their best quarter of the year during 4Q “
In other words, Street analysts expect gambling companies to spend less on customer acquisition during this year’s NFL season, but increase revenue given the maturity of many gambling markets.
The American Gaming Association (AGA) agreed, estimating that 46.6 million Americans will bet on the NFL this year, up about 3% from last year. About half of those bets are expected to be placed in the legal market, which is 18% larger than in 2021, the AGA told Yahoo Finance.
Sports betting is currently legal and operational in 31 states and Washington DC. The mobile market, which is the largest driver of revenue for companies such as FanDuel and DraftKings, is operational in 21 states and Washington DC.
“We still expect to see a massive uptick in the start of the NFL season in recent states,” Bayonne wrote in a recent note to customers.
,Free money will run out
Several gambling executives attribute their company’s lower losses to lower marketing spend in the recent quarter.
MGM CEO Bill Hornbuckle said on his company’s earnings call that MGM is “getting smarter and smarter” and will continue to “pull down” marketing spend.
DraftKings CEO Jason Robbins told Yahoo Finance that New York’s 51% tax is one reason the company “has pulled back significantly.”
Jordan Bender, a senior equity research analyst at JMP Securities covering the gambling sector, has included fading marketing spend in his projections for the coming quarters. In a recent note to subscribers, Bender wrote “free money fade” in reference to the extraordinary promotions many sportsbooks show to new users before Week 1.
“Given the new states, we would expect promotion [as a % of gross gaming revenue] “September turned higher, but will continue through the season at last year’s levels, given the trend of not pursuing unprofitable customers from newly launched states and operators,” Bender said in the note.
Josh is a reporter and producer for Yahoo Finance.
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