The competition amongst online sportsbooks to earn your patronage is fierce. With the industry in the U.S. still in an adolescent stage as legalization spreads across the country, there’s no shortage of sportsbooks willing to shell out a lot of money in hopes of becoming more visible and gaining the next wave of customers.
However, the amount of money being spent on marketing appears to be unsustainable. And according to industry executives, that will lead to some sportsbooks swallowing others.
FanDuel CEO Amy Howe and Rush Street Interactive CEO Richard Schwartz both said Wednesday at the SBC Summit North America that they expect industry consolidation.
Via iGaming NEXT’s Ryan Butler:
There won't be 12+ sports betting operators able to sustain the current level of marketing spend and investment, FanDuel CEO Amy Howe said during an industry conference today, meaning further gaming consolidation is inevitable, even considering current depressed valuations
— Ryan Butler (@ButlerBets) July 13, 2022
Rush Street Interactive CEO Richard Schwartz: As companies pull back on marketing, product performance will be the differentiating factor; The $RSI CEO expects further industry consolidation, he said during today's SBC Conference
— Ryan Butler (@ButlerBets) July 13, 2022
This type of consolidation has already taken place, most notably with Caesars’ acquisition of William Hill last year. But with any industry, fewer options in the market isn’t necessarily good for consumers. Eventually, marketing spend will come down as companies have less competition and can look to turn a profit. And that potentially means fewer bonus and deposit match opportunities for bettors, not to mention fewer alternative betting odds once more mergers take place.
Product performance, as Schwartz mentioned above, is what will set these companies apart and allow some to thrive more than others. Howe echoed that sentiment, saying product will win out once marketing spend comes down.
But if the competition that exists today is the push needed to improve those products, what happens when that no longer exists? It seems like the answer is something we’ll inevitably find out.
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