In the battle for sports bookmakers, astronomical spending – from those frequent broadcast ads to lucrative sign-up deals – is part of a supposed gamble, based on estimates showing that sportsbooks will pay out several thousand dollars over the lifetime of their average customer. will do. It is a major proposition, but not all shareholders and top executives have the guts to bear the loss of years. For some sportsbook operators, a new directive is emerging: The house has to start coming forward.
It’s not that Americans don’t gamble; After the Supreme Court ruled that states other than Nevada were free to establish their own sports gambling laws, they have put in nearly $150 billion in regulated bets over more than four years.
Yet of the publicly traded companies in this fast-growing industry — which includes most major enterprises — only FanDuel has posted a quarterly profit. After spending $1 billion on advertising and promotion last year, the company controls 47 percent of the market share, per research firm Eulers & Krazyk. DraftKings and BetMGM control the other 35 percent between them. Many of the other nearly 60 operators are under pressure to become more cost-conscious. Sportsbooks are expected to spend heavily on top-level marketing, but this fall, gamblers can expect to see skimpy promotions and fewer sportsbook ads on national TV.
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“You’ve seen the industry step back and say, ‘Wow, fighting for market share has gotten pretty ugly in terms of losses,'” said David VanEgmund, a former executive at FanDuel and Barstool Sportsbook.
Caesar, once one of the industry’s highest spenders, is spearheading a marketing comeback aimed at preventing huge losses. Less than a year after announcing a billion-dollar, two-year plan to promote its mobile app, Caesars has canceled more than a quarter billion dollars in planned marketing.
McKinsey analyst Dan Singer says the focus from acquiring customers to making money is a natural development for emerging markets. Signing up for a sportsbook is somewhat cumbersome, and many American bettors only join two or three. Singer said, “When a market opens up, you have to get out there and start taking over, because being the first book that someone downloads, you get almost twice the action than being the second or third.” Is.”
After that initial run to customers, ads can become more targeted, although the spending never stops. In Europe, where sports gambling has been legal for decades, operators consistently spend 15 to 20 percent of their revenue on marketing, Singer said. According to Nielsen, despite legalization in additional states and a growing customer base, national TV advertising for week 1 of the NFL season was flat this year versus 2021, when sports betting operators spent a total of $26 million on ads.
US sportsbooks are shifting their marketing focus from acquisition to retention, VanEgmund said, after seeing Caesar “come in a bunch of people, then lose them in other places and now there’s really nothing to do with it.” “
Caesar wasn’t just blowing wind waves; The company was also running the promotional market. The eye-popping promotion is an easy way for new bookmakers to choose from products that may seem more or less interchangeable — and last fall Kaiser stepped up the race, offering customers up to a $5,000 “risk-free” first bet. Of.
When legal sports gambling debuted in New York earlier this year, Kaiser’s offered an even more generous promotion: deposit matches of up to $3,000, plus a $300 bonus. The company claims it has quickly garnered 40 percent market share in the state with the highest bets (at least before California’s vote in November on whether to legalize sports gambling). But Kaiser needed to rein in its hype within weeks, and its market share in New York has plummeted to about 21 percent, per Eylers and Krejk.
One of the main temptations that sportsbooks use to lure potential customers is monetary inducement. But recently, instead of offering so many lucrative “risk-free” bets, some sportsbooks have favored low-paying fixed promos, such as a reward for betting $5 in $100 free bets. In. “It’s basically bribing the customer,” said “Captain” Jack Andrews, a professional sports gambler who runs the advice website Unbetted. “This lowers the cost of customer acquisition, and they can turn a customer upside down for years and get over $100.”
Instead of competing for the most generous gift giving or blanketing the airwaves, sportsbooks are focusing on low-cost engagement. Pointsbet offers new customers a second chance bet of $100 for five consecutive days. “You have five straight opportunities to get to know the product,” said Rick Martira, the company’s executive vice president of marketing and strategy.
Entering the football season, BetMGM’s vice president of digital media and brands, Raymond Doyle, said that the company will use predictive modeling to help “get the right mix of customers and avoid recruiting bonus hunters” – savvy players. Those who avail pocket friendly promos get risk free money.
In addition to buying exposure through advertisements or promotions, sportsbook marketers are increasingly opting to pay media companies to send them to customers.
Action Network helped popularize this model in the United States. Although the media company bills itself as providing gambling advice that helps bookmakers win money, the company also earns referral fees from sportsbooks. In 2018, then-CEO Noah Zubsky told Slate that the company’s goal was to earn referral fees, as well as cut customers’ lifetime gaming losses. “It’s like happy f—birthday,” Szubski said. “It’s a billion dollar business.” In May 2021, Danish betting company Better Collective acquired Action Network for $240 million.
Prior to this football season, Action Network signed deals to provide online betting content for media companies such as the Philadelphia Inquirer, the New York Post and the Boston Herald. Newspaper group Gannett has its own referral deal with a sportsbook.
To see the results in action, Jonathan Lerner, an industry veteran who now works at EV Analytics, searched for “Jewont Williams Rushing Yards Prop”, referring to a run back in the opening part of the “Monday Night Football” matchup. suggested to do.
Seven out of eight websites on the first page of the search results are linked to betting offers.
Still, for the average sports fan, it is a less aggressive form of promotion – even if it means that sports betting marketing has spread beyond television to search engines, news reports, podcasts and radio shows. Books is still trying to attract new customers; Only the nature of the bait has changed.
Last year, Kaiser’s ubiquitous national TV commercials — featuring actors JB Smoove and Halle Berry alongside Archie Manning and sons Peyton, Ellie and Cooper — helped the sportsbook increase its brand awareness from 1 percent to its 20s, According to Spence Kramer, CEO of Ten6, which produced the campaign. This NFL season, Caesar ads will only appear on ESPN and NFL Network.
“We’ve proven that we can make a significant difference to the business,” Kaiser CEO Tom Rigg told investors last month. Calling the strategic shift a “dramatic pivot”. “Now we want to prove that we can make a profit.”