Image by Aidan Howe from Pixabay
If we are going to speak about Sports Betting, it’s necessary to go back to the 19th Century, when horse racing was ‘THE THING’, later came the foundation of Professional Baseball and the birth of wagering of games. Even in those years, there were no laws that mention sports betting until the Interstate Wire Act of 1961, in order to stop the act., Years later, came the Professional and Amateur Sports Protection Act of 1992, usually called: PASPA, the act that banned sports betting across the United States, except for the states that had legal sports betting operations established already.
Over the last few years, there have been some massive changes in the sports betting world, with many states across the US legalizing operations of sports betting apps. It began with New Jersey in 2018, with the likes of Arkansas, Colorado, and most recently, New York following suit.
For many, sports betting was already an option, however, it had to take place at physical locations like down at the racetrack. But with the launch of online sports betting apps, has opened up the market to many new bettors.
There have since been record revenues reported, with New York seeing the largest amount wagered in a single month at over $1.6 billion in January 2022 when it launched. There have also been record increases in tax revenues collected by state and local jurisdictions, with Pennsylvania having generated $240,853,837 as of April 2022, thanks to their 36% tax rate.
But what about the sports betting businesses? How have they fared through all this? Well, as you can imagine, with the amount being wagered and the tax being raised, there is a lot of money to be made in sports betting since its expansion to the online world.
Here are just a few of those businesses that have been doing rather well:
William Hill / Caesars
William Hill is an operator that came over from the UK and began launching its sportsbook locations in places like Nevada, where the activity of gambling has been legal for a much longer time than in other states. Its arrival in the US sports betting market was perfectly timed, as it had already established itself by the time the states began to legalize activity around online gambling.
This good timing allowed William Hill to use all its experience and knowledge from its UK operations, to give it the best footing possible stateside. It did so well in fact, that in April 2021, Caesars Entertainment bought it out in a deal worth £2.7 billion ($3.7 billion). But they were not interested in the brand and its 80-plus-year history, just the expertise.
So, months down the line, William Hill was sold again, with Caesars keeping what it needed, and selling the remainder of the company, which included 1,400 shops in the UK, for £2.2 billion to 888 Holdings. This just goes to show how valuable it was to Caesars initially, that it was willing to spend a net half a billion dollars over a few months period to get off to a strong start in these emerging new markets of online gambling.
DraftKings
Originally a fantasy sports site, DraftKings decided it was going to expand its operations into the sports betting market. It already had a collection of experts on board who had been involved in sports analytics for many years, so it had a strong basis for getting started in sports betting. However, despite an impressive company valuation of $24 billion, it has been making losses.
The company generated $643 million in 2020, which was an improvement from the $431 million it made in 2019 by 49%. But after adjustments for EBITA, it calculated it had made a loss of $396 million. But since launching its sportsbook operations, things have begun to improve, and in February, DraftKings told its investors that it expects to reach a profitable status by one financial measure by Q4 of 2023.
So, whilst it may not seem to be flourishing as much as others, entering the sports betting market could have potentially saved the company. Turned its fortunes around following a few years of recording losses, although that does include the impact that COVID-19 had, by halting its operations with many sports events having their seasons postponed or canceled.
FanDuel
Another company that is a big name in the fantasy sports world is FanDuel. But now, its online sportsbook is taking over by storm. The company has successfully launched its FanDuel Sportsbook in Arkansas, Colorado, and New York, as well as many other states as it looks to become the number one bookie in the sports betting world. It claims to be the best legal sportsbook on the market with an excellent desktop site experience plus an intuitive and responsive mobile sports betting app, with access to extensive betting markets and options.
And it may well be the best, with one of the largest customer bases of all operating sportsbooks in the US, and $2 billion in revenue recorded for 2021. In fact, it was so popular that FanDuel was bought out by Flutter Entertainment, previously Paddy Power Betfair who are two of the most popular sportsbooks from the UK.
Flutter already had a 58% stake in FanDuel, but following financial performances and dominance in the market, they increased their stake to 95% (worth $11.2 billion) by purchasing Fastball Holding’s stake in the company in 2020 for $4.2 billion.
BetMGM
BetMGM is another sportsbook like Caesars because it has been in the gambling world for a very long time, operating several casinos and resorts around the world. It tries to distinguish itself from other sports betting businesses by promoting the use of its rewards app. Where you can collect points when placing bets, and these rewards stack up, allowing you to earn free stays at specific MGM resorts and dine in their restaurants for free too.
Having an existing customer base proved extremely helpful for the BetMGM sportsbook. It meant less money was required to be spent on marketing, as they already had the details of many customers, plus they could advertise in their own resorts for free.
As such, they have been doing incredibly well. Their net revenue for 2021 was recorded to be $850 million, which is five times what it was in the previous year. And it looks to be expecting further growth with predicted net revenues for BetMGM in 2022 expected to be in excess of $1.3 billion, over 50% more than 2021.
Closing thoughts
As you can see, there are a few sports betting businesses that are doing extremely well across the US. Some are helping their companies recover from historic losses, others have seen new owners coming in wanting to milk the cash cows they have raised. We are seeing record figures regularly being broken, and there will no doubt be more success stories as well on the horizon as more states look to legalize sports betting both in person, and online.
