money Super Bowl LVI will be 'the single biggest sports betting event in history,' FanDuel CEO says
Super Bowl LVI, will be a “banner weekend” for sports gambling companies, according to FanDuel ($PDYPY) CEO Amy Howe.
With additional states legalizing mobile sports betting over the last year, coupled with a growing interest from the general public, FanDuel’s volume during the NFL playoffs has quadrupled year-over-year.
“This Super Bowl is going to be the single biggest sports betting event in history,” Howe said on Yahoo Finance Live (video above). “So that just gives you a sense of the magnitude of what we’re coming into. ... It just makes for a much more engaging experience right? It’s not just about the outcome of the game but you have skin in the game on who’s going to be the MVP and who’s going to score that first touchdown.”
'A breakout for the broader sports betting industry'
FanDuel is expecting seven million Super Bowl bets on its platform, according to Howe, and it won’t be the only company posting a blowout weekend.
The American Gaming Association projects 31.4 million Americans will place a wager on this year’s Super Bowl, a 35 percent increase from last year. The AGA also predicts the total money wagered will nearly double from 2021 coming in at an estimated $7.61 billion.
AGA CEO Bill Miller attributes the uptick in Super Bowl betting interest to increased regulation among states. In all, 30 states and Washington D.C. will have legal sports betting options during America's favorite sporting event, which is 10 more than last year’s event.
As more states enter the legal gambling economy, companies like FanDuel, DraftKings ($DKNG), Caesars ($CZR) and BetMGM ($MGM) are jostling for market share. Bank of America Securities Senior Gaming and Lodging Analyst Shaun Kelley believes the Super Bowl could be a key moment for those sportsbooks to gain market share in the crowded space.
“This event is really a breakout for the broader sports betting industry,” Kelley said. “And I think it’s one most of these companies will look at as an opportunity to have their brands seen globally. This is really a customer acquisition place. A place that these major sportsbook operators can see their brands getting noticed, getting out there and a chance to learn and market to those customers moving forward.”
'Aggressive activity on the customer acquisition side'
In key acquisition periods like the Super Bowl, brands typically spend significantly on marketing and promotional betting offers.
For instance, both DraftKings and FanDuel are offering 56-1 odds on the game for new entrants in New York, meaning a $5 wager properly predicting the game’s winner would earn the bettor $280.
The boosted bets help drive up the overall bets handled on the apps and also impacts how much the gambling companies can profit from their business. Recent numbers from New York State showed $1.6 billion handled while seeing most gambling companies take home less than 10 percent of their handle in actual revenue, which is common in new states, according to Kelley.
DraftKings CEO Jason Robins argued the spend is a necessary cost of doing business in the sports gambling industry, given it had long been popular prior to its legalization less than four years ago. Robins pointed out that a large portion of the market is still operating illegally too, including three of the country’s largest states: Florida, Texas, and California. Consequently, without deals and other incentives, bettors wouldn’t ever move over to the legal market.
“Most other industries, when you find product market fit, they build customer bases organically,” Robins said on Yahoo Finance Live. “This is one, because it’s been in the illegal market for so long, there’s tens of millions of people that we’re already planning to make a bet on the game. So I think that’s why you’re seeing such aggressive activity on the customer acquisition side and a flood of new customers into the league regulated industry right now.”
So while some bettors will be excited to see which color Gatorade is dumped on the winning coach, investors should be watching to see whether those kinds of prop bets are placed on a legal sports betting app or through an illegal bookie.
Because despite eye-popping projections headed into the NFL’s 56th Super Bowl, the resounding sentiment from those in the sports gambling space seems to be there’s more money coming.
“It’s hard to say what we’re going to do,” Robins said, "but I think it’s a big opportunity to keep expanding sports betting into more states and keep getting people over from the illegal market."
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