Sports betting cashes in as casinos fold
Las Vegas is looking for a lifeline, online sports betting is coming to the rescue.
Published
September 4, 2024
Casinos have gone stale.
But, given their business model, it’s only natural. Regardless of the industry’s willingness to admit it, problem gambling is a certified addictive disorder.
And when it comes to taking advantage of vices, the more pervasive you can make your product, the better. That’s why lobbyists have worked to get cigarette cartons behind large obstructive walls in corner shops. It works - ‘power walls’ are linked to an 11% reduction in smoking (1).
So when the gambling industry managed to finagle its way into the home through devices, it scored a real victory. Forget hopping into your car to satisfy a casino craving. All you need to do is grab the phone in your pocket.
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Over the last year, as the pandemic did with just about anything digital, that shift to online gambling was put into overdrive. And with the US gradually legalising sports betting, gaming is growing increasingly ubiquitous.
ESPN’s latest count has 22 states offering sports betting, with nine more having approved its go-ahead, and 17 still moving towards legalisation.
The American market’s gradual opening is a massive opportunity for the gambling giants currently witnessing their casino revenues tumble. Las Vegas Sands (LVS), the Mecca of casino operators, has seen its share price fall lower than when it first IPO’d in 2004. Ouch.
Though there’s hope LVS is finally realising the industry’s not what it used to be. Last month, it announced a digital gaming investment team to look into online technology platforms.
The casino operator also sold its entire Las Vegas portfolio back in March for $6.3bn. When the biggest casino operator on the planet moves out of its namesake hometown, you know there’s a storm a-brewing.
But it’s not that there’s no room left for physical casinos. If anything, they may be the perfect venue to transform new online gamblers into repeat customers.
That’s particularly important for Flutter Entertainment. In the US, as six new states legalised sports betting, Flutter’s first-half revenue soared by 159% to £652m. Naturally, the market is expanding in Flutter’s favour, and it’s ready to capture the pent-up demand.
FanDuel (Flutter’s US subsidiary) is its pièce de résistance. It’s already captured over 45% of the country’s online sportsbook market. To date, it’s invested more than $1bn into marketing. So it doesn’t shy away from burning through cash for the sake of brand awareness.
Albeit a costly strategy, it’s FanDuel’s best bet at being the first port of call for the gamblers waiting with bated breath as states continue to legalise.
Although sports betting has proved its merits as a moneymaker, casino games are still major cash cows. While the size of a sports bet tends to be greater than the cost to play a game on the casino floor, the volume of casino transactions is much more frequent. So even if they’re much smaller values (perhaps even a few pence if you’re hitting the slots) they can snowball over time.
That’s why Flutter’s been wise to diversify away from exclusively sports, making sure it’s got a toe dipped in the online casino space. It snapped up PokerStars, the online poker cardroom, a few years ago to get a hold of gamblers transitioning from physical to digital.
An omnichannel approach would be ideal for Flutter to continue its reign in online sports betting and gaming while transforming its product into a tangible experience.
As lockdowns ease, an investment in physical gaming venues could be just what Flutter needs. Casinos could up the ante for Flutter’s ability to conjure up more excitement and thrill from the betting experience.
There’s space for digital and physical in the world of gambling, it’s no zero-sum game.
Source:
1. ScienceDaily
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