Strategy Archives

January 6, 2023

How much do sportsbooks spend on marketing and will it lead them to profit?

Russell Karp of DataArt explores how leading US sportsbooks spend their marketing dollars, examines their strategy and results and looks for a path to profitability.

Fall and winter are intensely hot seasons for sports betting with NFL, NBA, college football and basketball, NHL and MLB post-season action. So it’s no surprise that the last three months of the year became the most expensive in terms of advertising.

BIA Advisory Services forecasted that up to $1.8bn would be spent in 2022 to promote gambling products online, with a sizeable chunk going towards sports betting. In the first week of the year alone, ad spending by the four biggest sportsbooks rocketed to a lofty $24m.

But how do these heavy marketing investments impact the sports betting business? And are sportsbooks getting a return on their investment?

Where does the money go?

To acquire as many users as possible, as early as possible, sportsbooks invest heavily in marketing. A larger share of voice, paired with attra..

January 6, 2023

Bet365 revenue ticks up, but marketing costs lead to 88% profit decline

Bet365’s revenue ticked slightly up in 2021-22 as gaming growth offset a sports betting decline, but increased customer acquisition costs in new markets led to an almost 90% drop in profit.

Bet365 reported that revenue from sports and gaming for the year ended 27 March 2022 was up by 2.9% year-on-year to £2.85bn.

The increase was mostly due to the success of its gaming operations. Sports gaming revenue was down by 2% from 2020-21, while gaming revenue was up by 25%.

This would suggest sports betting revenue for 2021-22 of around £2.30bn, while gaming revenue would fall around £546m.

Bet365 revenue was up by 2.9% year-on-year to £2.85bn.

The operator said that the decline in sports betting revenue was margin-based, as the total amount that was wagered increased and the number of active customers was up by 48%.

Regulus Partners noted that Bet365’s margins in 2020-21 were “unusually high”, and that in 2021-22 they came back to more typical levels. It said that on an underlying bas..

January 3, 2023

PointsBet in talks to sell Australia arm to News Corp venture

PointsBet is in discussions to sell its Australian arm to NTD Limited, the News Corp-led business behind Australia’s Betr brand.

PointsBet revealed last week – following a report in The Australian – that it was in discussions to sell its Australian business to NTD Pty Limited.

NTD is a venture set up this year involving media conglomerate News Corp, investment fund Tekkorp Capital and long-time industry executive Matt Tripp and operates the Australia-facing Betr brand. Another operator named Betr launched in the US this year, but the two are unrelated.

PointsBet said “any potential transaction will be assessed in the context of PointsBet’s global strategy and opportunities”.

Murdoch family-owned News Corp are among the parties involved in Ntd Pty Limited

“Discussions between PointsBet and NTD are incomplete and preliminary in nature,” it said. “There is no certainty that these discussions will result in any binding transaction.

“PointsBet will keep the market updated in accordan..

December 21, 2022

Industry insiders say New York Times series paints unfair picture

State lawmakers and stakeholders in the gaming industry have taken aim at the New York Times for its critical reporting on the expansion of US sports betting just as the industry met in Las Vegas to discuss best practices related to responsible and problem gaming. By Buck Wargo.

In late November, the New York Times, in a year-long investigation, outlined how the industry lobbied state officials with gifts and contributed millions in campaign donations to spur expansion after the repeal of PASPA in 2018.

The series depicted how ads on television and websites for making bets had become unavoidable and outlined the consequences to public health, taxpayers and the sports world.

The Times wrote that lawmakers gave out tax exemptions, which ultimately subsidised operators’ luring of patrons with free bets and other promotions, and found promises of tax revenue haven’t materialised.

When it comes to responsible gaming, the New York Times said the industry has been “creative in devising wa..

November 29, 2022

Luckbox owner to acquire Asia-facing B2B platform

Luckbox owner Real Luck Group has signed a letter of intent to acquire an unnamed igaming platform targeting the Asia-Pacific region.

Real Luck Group will acquire 100% of the shares in the Asia-facing business, which it says will give it access to more than 6,000 games from 50 game providers.

Real Luck Group chief executive Thomas Rosander said that the business had long aimed to add a B2B element to its portfolio, but that through this deal it is set to accomplish this sooner than it had expected.

“Adding B2B to our proprietary platform has always been a significant part of the Luckbox strategy, and this important acquisition means we will complete this objective almost a year in advance of our projections,” he said. “It also extends our opportunities into APAC, a significant region that we currently do not have a presence in and perhaps the largest esports market globally.

Real Luck Group CEO Thomas Rosander

“This transaction ultimately builds our business’ upside by providing ..

November 23, 2022

Lahcene Merzoug on PressEnter’s management buyout

Fresh from announcing a management buyout, PressEnter CEO Lahcene Merzoug talks to iGB about the new leadership's strategy and future plans.

So, the cat is out the bag; PressEnter Group will be under new (or should we say old?) management.

There are many questions that remain: Will the new chairman stay the course or head to uncharted waters? What form will the shape of the business’ future growth take? And what’s the plan with the company’s brands?

The business formerly known as Betpoint has reinvented itself before, though only the new owners know what the plan is now. Current CEO and future executive chair Lahcene Merzoug explains in his own words.

What was the rationale behind the management buyout, and what important factors led the executive team to decide to go down this route?

The management team has grown the business into what it is today, so we could clearly see the potential in the company and its operations. When the opportunity to buy PressEnter Group arose, ..

November 22, 2022

PressEnter announces management buyout

The senior team at PressEnter Group, the igaming operator formerly known as BetPoint, is to take charge of the business through a management buyout.

Terms for the buyout have been agreed with PressEnter’s existing investors.

Chief executive Lahcene Merzoug and a team of senior executives will then take control, with Merzoug named the operator’s executive chairman once the deal completes.

Management said PressEnter, who operate online casino brands such as 21.com, JustSpin, NeonVegas Casino, NitroCasino, UltraCasino and RapidCasino, in addition to the XLBet sportsbook, offers “significant growth potential”.

New chapter for PressEnter

“The management team sees this as a new chapter for the business and will be reviewing existing strategies and processes to maximise new opportunities, grow the business and focus on the company’s core strengths,” PressEnter said.

Lahcene Merzoug will become executive chair of PressEnter following the buyout

“The management team has worked hard fo..

November 18, 2022

What will it take to create a US challenger that’s actually viable?

iGB op-ed: Following MaximBet’s exit from the US sports betting market, Daniel O’Boyle asks what it will take for a lower-tier US brand to succeed.

This week’s column comes to you as I prepare to board a flight for a week off in the Hampton Roads region of Virginia, so what better to focus on than the idea of retreating from costly US battles?

Maximbet became the latest US operation to shut down, hot on the heels of the Fubo Sportsbook. If it wasn’t clear already, it’s fair to say now that it’s tough for second-tier and below operators to make much money, and other exits are likely coming soon.

In August, I wrote that the podium of top US sports betting operators had effectively been set, with no path for challengers to compete with the likes of FanDuel, DraftKings and BetMGM.

The chances of anyone coming close to FanDuel’s market share disappeared a long time ago

Recent events have only reinforced that there simply isn’t a path into the top tier for the also-rans. So the question..

November 17, 2022

MaximBet ceases operations amid “challenging” macroeconomic conditions

Online gambling operator MaximBet has ceased all operations with immediate effect citing “challenging macroeconomic conditions” and an “increasingly cost prohibitive marketplace”.

MaximBet announced the decision in a message to customers, saying they will have until 15 December to withdraw any funds in their accounts. After this date, any remaining balances will be refunded via cheque sent to the address on the account.

Players are no longer able to deposit more funds or place net bets, but MaximBet said that it would settle any existing bets in line with its MaximBet House Rules until 15 December. At this point, MaximBet said bets will be cashed out at “current fair value market pricing” and player balances will be returned via cheque.

MaximBet was founded in April of 2021 through a collaboration between sports betting operator Carousel Group and media brand Maxim, supported by a $50m investment from the xSigma subsidiary of Chinese engineering business ZK International.

At the ti..

November 15, 2022

SportNation and RedZone to cease trading in UK

Esports Entertainment Group (EEG)-owned brands SportNation and RedZone will cease trading in the UK from 30 November 2022.

SportNation and RedZone both said the sites were “closing for a variety of reasons including the economics of operating a small igaming business in the UK market”.

Users will be able to place bets and use their accounts will normal functionality until 30 November – after which they will be able to login to withdraw funds from 7 December, when the final closure is due to take effect.

Following this, there will be another seven-day period where the operator will process requests to withdraw funds of any amount over £1. From 14 December, SportNation and RedZone stated that “should any customer balances remain, we will continue to comply with requests for refunds of such balances to the extent required by law and in accordance with our terms and conditions”.

The operator has said that it intends to keep possession of customer data for five years following the clos..

November 9, 2022

Flutter CEO: Gambling Act white paper likely pushed back to 2023

Flutter chief executive Peter Jackson said that he thinks that the Gambling Act white paper is most likely to be delayed until next year, as he suspects new ministers will wish to “make their mark” on the document.

Speaking at Flutter’s Q3 earnings call, Jackson said he could not predict the the Gambling Act white paper timeline with any confidence, given that its release had repeatedly been pushed back by personnel changes in government and at the Gambling Commission. However, he said he would think its release was more likely to be in 2023 than this year.

“I don’t know if I can really comment on timing because I’ve tried to comment for the last two years and keep getting it wrong, so I might have lost some credibility there,” he said. “But I suspect it’ll end up coming out after Christmas as there isn’t much time now before Christmas.

“The new ministers I think will want to make their mark on it.”

Gambling Act review delays

The white paper is the next phase in the Gambling Act r..

November 9, 2022

Flutter revenue up 31% in Q3 as US becomes largest market

Flutter Entertainment forecast a 31% year-on-year increase in revenue for the third quarter of its 2022 financial year, primarily due to growth within its US and international businesses.

In a trading update, Flutter said that revenue for the three months to the end of September is expected to amount to £1.89bn (€2.17bn/$2.18bn), which would be a significant increase from £1.44bn in the corresponding period last year.

On a constant currency basis, revenue is forecast to increase by 82%.

Flutter said it expects this to be driven by growth within the US, where its revenue is forecast to rise 114% year-on-year, or 82% on a constant currency basis, to $598m, making it Flutter’s largest market.

This, the group said, was down to a 106% rise in sports revenue – comprising sportsbook, exchange, daily fantasy sports, advance deposit wagering and B2B product verticals – driven by customer acquisition across existing states as the new NFL season began.

US igaming revenue is also expected t..

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Tag: Strategy