Domestic bookmakers have taken several critical hits since sports betting exploded in 2021. While the overall reach for legal online sports betting has grown, gaming profits have dwindled far behind the spending required to court new players.
Super Bowl Earnings Disappoint Sportsbooks
This becomes especially evident as Super Bowl Weekend, the most important and profitable sports event of the year, left sportsbooks with nothing to show for it. Gross sportsbook earnings for all of New York’s operators came out to approximately $113 million.
However, that figure didn’t amount to much for sportsbooks whose player engagement exceeded the budget set aside for bonuses.
On Friday, DraftKings published its earnings report for New York’s mobile sports betting launch. Between January 8th and February 13th, the sportsbook giant took a $50 million loss.
As a result, stock value for sportsbooks has plummeted across the board. This weekend alone, DraftKings’ stock fell by more than 15%. Over the past three months, the company has lost more than half of its market value.
DraftKings Struggles Amid Stock Decline
DraftKings CEO Jason Robins did his best to put out the fires with a call to shareholders on Friday. During the call Robins held strong to optimism, affirming that the company is simply playing the long game.
Responding to the losses, he said the following:
“DraftKings … is targeting a two-to-three-year path to profitability for the state,”
In part, it makes sense. The nationwide interest in sportsbooks has become so great that the market has been flooded. Every gaming entity you can imagine seems to have a sportsbook nowadays.
Eventually, brands that can’t keep up with the heavy spending will dissolve and fall away. It’s a reward restricted to those who can weather the storm.
It would be difficult to imagine the fall of the DraftKings empire. The sportsbook giant accounts for nearly a quarter of all mobile wagering in New York and more than half of the US domestic betting industry.
Still, sports betting and fantasy football are the only streams of income for companies like DraftKings and FanDuel. While they may hold an advantage in terms of name recognition, they completely lack the padding provided by other gaming revenues.
Obstacles Up Ahead For Sportsbooks
Caesars Sportsbook, for example, is bankrolled by the company’s casino and entertainment ventures. Caesars may not have a lot of territory now. But if the group can manage to keep up with its competitors, it may soon claim its fame.
Even so, the sportsbook has yet to publish a financial report for its New York operations. For all we know, Caesars could be in an even worse position than DraftKings.
The battle of the sportsbooks has now turned into a fully-fledged money war. And the bookie with the biggest budget will be the business to come out on top.
In the meantime, don’t take this competitive spending period as a reason to rack up bonuses—not without due diligence. Rollovers are used to keep your money in the bank for as long as possible.
And, at times, you could end up losing more than you gain if rollovers are not met by the expiry date.
Source: New York Post