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New FanDuel boss says the race for American gamers is a bubble

A race to seize a piece of the US sports betting market is unsustainable and will end in corporate bankruptcy, according to the new CEO of FanDuel.

Amy Howe, who was named director of the fantasy sports and betting company on Monday, said that “ultimately this market is going to settle with three, four, five competitors. There are too many competitors right now to maintain this level of spending. “

Since the Supreme Court lifted the federal ban on sports betting in 2018, American and foreign companies have spent large sums on marketing to win part of what could become the world’s largest regulated gambling market.

The competition to attract and retain new sports betting customers has resulted in companies investing millions of dollars in promotional bonuses, offers and advertising campaigns, particularly around major sporting events, such as the recent launch of the NFL season.

In Arizona, which last month became the latest state to legalize sports betting, seven companies have already launched gambling operations and another eight are expected to offer sports betting there by the end of the year. Since 2018, sports betting has been legalized in 23 states.

FanDuel, which is owned by Dublin-based Flutter Entertainment, spent £ 225 million on marketing in the first half of this year and said that since its acquisition by Flutter in 2018, it had benefited from more than 1 billion of marketing investment dollars.

Amy Howe joined FanDuel in February from Ticketmaster

Flutter has said that it expects FanDuel to be profitable in 2023, depending on the speed at which states regulate sports betting, and that it expects the market for its brands to exceed $ 20 billion in revenue by 2025.

Rival DraftKings, another fantasy sports company that moved into the game in 2018, spent $ 495 million on sales and marketing in 2020 out of $ 614.5 million in revenue.

In most states where sports betting has been legalized, FanDuel tends to lead the market, with DraftKings in a close second. BetMGM, the joint venture between the American casino group MGM and the UK-listed gambling company Entain, is increasingly challenging for second place in terms of market share.

Last month, DraftKings made a £ 18.4 billion offer for Entain. You have until October 19 to make a firm offer.

Howe said that FanDuel, which had about 1.5 million active users last quarter, had a “very clear scale advantage” and benefited from the assets and expertise of Flutter, which owns the betting brands. UK sportsbooks Paddy Power and SkyBet, as well as online sports betting brands. PokerStars poker business.

He added that the company was on track to achieve between $ 1.8 billion and $ 2 billion in revenue by the end of this year, “which would put us about 50 percent ahead of the field.”

Howe joined FanDuel as president in charge of “core business functions” in February from the ticketing website Ticketmaster, where she was chief operating officer. He said it took Ticketmaster from being “paper-based to digital” and positioned it for “explosive growth.”

She was named interim CEO of FanDuel in July after the unexpected departure of her former boss Matt King, who subsequently joined the sporting goods company Fanatics, according to The New York Post.

Analysts at investment bank Davy said Howe’s “previous track record in escalating digital business and her apparent leadership ability suggests that she may always have been seen as a potential future business leader.”

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