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FanDuel’s new CEO is what poker players might call a bit of a table-talker.
In her first public remarks since being appointed head of the sports fantasy and betting site yesterday, Amy Howe warned the online gambling space is an overcrowded bubble waiting to pop, with just a handful of competitors fated to split the pot.
Winner Takes All
Twenty-three states have legalized sports wagering since the Supreme Court ended a federal ban in 2018, and eight more are expected to follow suit by the end of the year. FanDuel, owned by Dublin-based Flutter Entertainment, is among several giant firms vying to dominate the market. But the price tag for attracting and retaining new customers is high — FanDuel’s customer-acquisition cost is reportedly near $300 — making the race unsustainable in the long run, the new company honcho warned.
“[Ultimately] this market is going to settle out with three, four, five competitors. There are too many competitors right now to sustain this level of spend,” Howe — who joined the site in February after serving as Ticketmaster’s COO — told the Financial Times Monday.
She laid out where FanDuel stands in the field and how it plans to make the final table:
- The betting firm, which boasts around 1.5 million active users, has already spent roughly $306 million on marketing in the first half 2021 alone. Flutter’s total investment in marketing FanDuel since 2018 totals more than $1 billion.
- FanDuel is expected to earn between $1.8 and $2 billion in revenue by the end of the year, though profitability still likely won’t be achieved until 2023, the FT reported.
Raising the Stakes: Chief competitor DraftKings, typically second behind FanDuel in most legal gambling markets, is attempting to even the odds by bidding roughly $25 billion to acquire UK gambling firm Entain. It’s an all-in raise after Entain turned down MGM’s roughly $10.8 billion offer in January. DraftKings has until October 19 to make a firm offer.