The topic of consolidation has been fresh on many industry insiders’ minds given the news last week that FuboTV would shutter its mobile sports betting brand, Fubo Sportsbook, immediately.
The boutique player in the wagering industry became the second operator, after Churchill Downs’ TwinSpires, to exit the mobile sports betting scene this year, sparking conversations surrounding contraction.
The fact Fubo Sportsbook was licensed in only a trio of states — Arizona, Iowa and New Jersey — means its decision isn’t indicative of the market at large.
Brendan Bussmann, managing partner for gaming consulting firm B Global, sees FuboTV’s decision as more of an outlier than the norm going forward.
“I think there’s always going to be an ebb and flow as it relates to the market,” Bussmann told U.S. Betting Report. “And you’ve seen that with land-based facilities over the course of time. You’re going to continue to see that as it relates to mobile, both with sports betting and iGaming.
“And in the end, there will probably be less than a handful of dominant players. But there will always be that mix of mid-and-smaller tier operators that have their niche and are finding that along the way.”
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Mobile Betting a Growing Industry Across America
With more than 30 states and the District of Columbia providing some form of legal mobile sports betting, it’s safe to say the industry isn’t going anywhere in the coming years.
Brandt Iden, who is a former Michigan legislator and current head of government affairs for Sportradar, told U.S. Betting Report consolidation in the industry can be expected, but such moves are natural in any industry.
“We always knew that there was going to be consolidation coming in the industry. As young as the industry is, we’ve got a tremendous amount of growth, But like all industries that grow, there are growing pains, and naturally, I think you’re going to see certain actors get involved, and then decide that it doesn’t make sense for their business model.”
Iden added that for every sports betting brand like Fubo Sportsbook and TwinSpires choosing to exit the mobile sports betting game, another enters the fray.
“In the other states where [TwinSpires] looked and said, ‘You know, sports betting doesn’t make sense for what we’re trying to do. We want to stick to our own lane and do what we do best,’” Iden said. “And I think that’s simply what’s happened here. And we will continue to see consolidation throughout the industry as the industry grows, as happens in all industries. And so, we will see actors come and go in the marketplace over time.”
Consolidation vs. Survival of the Fittest in Sports Betting
Not all are convinced consolidation is necessarily what’s happening currently in the wagering industry, however.
Daniel McIntosh, who serves as a senior lecturer at Arizona State University’s W.P Carey School of Business, believes the decision FuboTV and TwinSpires made has more to do with the power dynamics at play, between the major operators in the space and those on the periphery.
“Consolidation suggests the idea that combining organizations together leaves both parties better off. I don’t know if I see that happening within the sports gaming space,” McIntosh told U.S. Betting Report. “I think we are more likely to see what we’ve traditionally called a ‘shakeout.’
“By that I mean there will emerge a few dominant players that secure strong market share and other organizations will decide they are better off allocating resources in other areas where they have a stronger competitive position. We also may see these gaming companies start to think about how they can work synergistically with other companies in other spaces like the traditional media companies to drive revenues for both groups.”
An example of the “shakeout” McIntosh referenced could be the pact between ESPN and DraftKings, which allowed the Boston-based operator to become the official Daily Fantasy Sports partner and co-exclusive betting partner (along with Caesars Sportsbook) for the Worldwide Leader in Sports.
Such a partnership between a media mainstay and a sports betting stalwart speaks to the lightning speed with which both industries are evolving, McIntosh said, with one looking to build off the other.
“We are in a very disruptive time in sports with resource allocation seeing dramatic upheaval through things like NIL (name, image and likeness), conference realignment, and new media deals in the college space and similar changes happening in the NFL with global expansion and new media partners coming on board,” McIntosh said. “With those changes, we are seeing equally drastic changes in the monetization of sports content and gaming will play a big role in that shift.
“It won’t be too long before someone like ESPN partners with a DraftKings and for the conceptualization of media and media consumption to change with gaming playing a central role. The intersection of land-based casinos with mobile offerings with emerging ideas like the metaverse will lead to new ideas and ecosystems that we really can’t fully grasp right now.”
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Operators, Regulators Keeping Their Knees Flexed
One constant in the sports betting space so far has been the need to stay flexible to change on a dime, between partnerships, acquisitions and closures.
That leads state regulators, such as Todd Allen, who serves as the director of wagering for the Kansas Racing and Gaming Commission, to draw up contingencies when approving licenses for operators.
Allen was among the cornerstones in getting wagering launched in the Sunflower State last month, with the KRGC and Kansas Lottery doing the legwork in approving the half-dozen operators that went live in September.
He said regulators in states like Kansas, which has four state-owned casinos that partner with the betting brands, lean on the facilities to ensure everyone is in it for the long haul.
“One of your main concerns as a regulator is making sure that, if a supplier (like Fubo Sportsbook) goes out of business, making sure that all the patrons that have outstanding wagers are going to be taken care of,” Allen said. “Whether it be futures bets or whatever the case may be.
“Ultimately, they’ve contracted in our state with [one of the four state-owned casinos], so that, if for some reason, the other company went bankrupt or whatnot, they would still be able to take care of the patrons on that end, because it was a contract between them and the casino.”
What’s to Come With Fubo Sportsbook’s Licenses?
U.S. Betting Report has reached out to Fubo Sportsbook’s Arizona partner, the Ak-Chin Indian Community, multiple times but has yet to get a response. A representative from the Arizona Department of Gaming declined to comment on the plan for reallocating the tribe’s mobile sports betting license.
Iden believes regulators in states like Arizona, Iowa and New Jersey will do everything in their power to ensure Fubo Sportsbook’s licenses don’t go to waste.
Whether that means reallocating licenses held by entities like the Ak-Chin Indian Community to another operator or giving them away to another tribe without a license remains to be seen, however.
“I think you’ll start to see regulators do everything they can to sort of fill that void and get another operator in that space,” Iden said. “I want to point to Michigan and Arizona because under that model, with TwinSpires as an example, and with the Fubo Sportsbook example in Arizona, what you have are relationships with tribes.
“…In that particular case, what I think you’ll find is that in what you’ve certainly seen in Michigan, that tribe gets very active about trying to fill that void and bring another operator into that space. Obviously, they can always decide to do it themselves if they want, but I think they realize, and especially in Michigan, because TwinSpires was partnered with a Northern Michigan tribe, they saw the benefits of using a high profile name that they could get out of market and honestly just create a commercial relationship where they get paid, and someone else goes out there and does it from an operator perspective.
“They’re trying to quickly fill that void. And so, I think regulators are working on it, and from a commercial perspective, in those cases, the tribes want to backfill that and get somebody in there as well.”
McIntosh believes regulators at the ADG may be hard-pressed to find another suitor for the Ak-Chin license, given the large number of wagering licenses available in the state (20), and the market share the industry’s largest operators have gobbled up since last September.
“Twenty is a big number in terms of the number of options for a consumer. Only four operators in Arizona have a market share above 2% with DraftKings, FanDuel, BetMGM and Caesars,” McIntosh said. “There are lots of competitors trying to make it in Arizona. I could see new entrants being put off to where we don’t get a feeding frenzy style market as you’ve suggested.”
Industry insiders, such as Bussmann, still see the mobile sports betting space as one that is quite attractive to operators, both new and established, meaning FuboTV’s closure likely won’t rain too much on the operators’ parade.
He does see the evolution of the industry as being similar to what you’d see in others of its size, leading to a stratification between the “haves” and “have-nots,” but where all parties get enough market share to make do.
For now, Bussmann believes Fubo Sportsbook’s demise is the first chapter of the modern sports betting novel, with more development to come.
“Obviously, part of this is that this is the first time you’ve seen an operator just completely shut down, as opposed to do a merger and acquisition in a traditional sense,” Bussmann said. “So, there is probably more to come over the course of time. And it’s part of the ebb and flow of the business. But it’s still a very robust space and there’s plenty of opportunity for growth.”