FanDuel officially captured 51% of the US online sports betting market in the second quarter of this year. It is a competitive milestone that cements the company’s market leadership, making it larger than all of its competitors combined.
FanDuel’s sports betting revenue has grown nearly 470% since 2018, when the Supreme Court struck down the Professional and Amateur Sports Protection Act (PAPSA), effectively legalizing sports gambling on a state-by-state basis.
“We’ve been able to win customers more effectively than any other sports betting operator,” said FanDuel CEO Amy Howe.
That may be so, but FanDuel’s customer acquisition growth has come at a cost to parent company Flutter, which completed its purchase of the sports betting company in 2020. Flutter’s global operating profit is $389 million, but its US business is operating of a $188 million loss after years of funneling money into FanDuel amid a land grab for new U.S. customers, according to an August earnings report. With FanDuel’s newfound market dominance, the company needs to figure out how to fuel its bottom line by increasing the lifetime value of users, Howe says.
FanDuel’s decision is either a stroke of audacity or stupidity. In August, the company launched FanDuel TV, a cable channel and streaming app. The channel was created from a rebrand of TVG, the horse racing cable channel it acquired for $50 million in 2009, which had broadcast little else until now. FanDuel’s rationale for this foray is the opportunity to capitalize on the convergence of betting and media as fans increasingly seek sports coverage that includes betting tips.
The company noticed that customers showed a strong propensity to watch sports after commissioning Nielsen research, which found that people who bet on sports watch up to 31% more sports content than those who don’t. FanDuel TV will produce sports content that resonates with its audience while using that content to drive viewers to bet more, creating a virtuous cycle. “Bettors drive more consumption of sports content, and more sports content leads to more [betting] consumption. It’s getting stronger,” said FanDuel Chief Commercial Officer Mike Raffensperger.
Editorial programming, such as talk shows with former NFL Network host Kay Adams and NBA Twitter mainstay Shams Charania, will intersperse betting tips with sports news of the day. For example, when a FanDuel TV analyst provides betting tips for upcoming NFL games, he will do so by referring to FanDuel’s current odds with on-screen graphics that mimic the app. “When you have betting content on TV and it’s branded in an environment that’s geared towards your gaming platform, people are more likely to bet with you,” Raffensperger says.
Sparking audience interest in new sports, such as international basketball and TVG’s legacy horse racing content, is the other half of FanDuel TV’s strategy. This will encourage viewers to place additional bets that they would not have otherwise placed. It’s the gambling equivalent of buying a piece of candy while you’re in line at the checkout—a successful sale that’s equal parts branding and merchandising.
Without the billions needed to secure the rights to broadcast NFL ($5.9 billion per year) or NBA ($2.6 billion per year) games, FanDuel is instead acquiring “tertiary sports,” including 3,000 hours of international basketball from Sportradar. The platform is not yet trying to become a premium sports destination, but rather providing its audience with new betting options. Offering users a diverse array of sports to bet on will be critical to distinguishing FanDuel from competitors like DraftKings and BetMGM and help drive customer loyalty, Howe says.
Meanwhile, the sheer size of FanDuel’s existing horse racing business — $2.5 billion a year, according to one executive — is impossible to ignore even as the company looks to expand its program.
It might seem ambitious, even presumptuous, to expect casual sports fans to embrace horse racing, a sport almost unheard of outside of the Kentucky Derby. But FanDuel hopes that viewers who watch sports personalities like Adams and Charania will stick around for the horse races that follow and become fans by osmosis. However, it’s one thing to watch talking heads at 2pm on a Wednesday and another to watch and bet on horse racing.
Attracting these viewers, however, is valuable to advertisers. FanDuel, already wooing them with branded offers on its betting app, may now contend with the company’s newfound status as a full-fledged media company, Raffensperger says. He and Howe declined to provide estimates of the potential ad revenue, but if it turns out to be significant, it would be a strategic masterstroke, turning an annuity out of a consumer marketing tool.
Regardless of how the ad business plays out, Raffensperger is clear about what takes precedence in judging FanDuel TV’s success: consumer loyalty. “If you go and start consuming our FanDuel TV content, do you become a more loyal customer? Are you expanding your gaming business with us? [That is] at the heart of what we measure.’
Ultimately, FanDuel TV is a means to an end: increased betting volume.
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