DraftKings and FanDuel Dominate Online Sports Betting Sector With 73% Market Share

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In the realm of online sports betting, DraftKings and FanDuel indisputably hold the reigns, ruling over an impressive 70% or more of the market. Although these titans of the industry face competition, the second-tier contenders are near to non-existent, or so asserts Barry Jonas, an analyst at Truist Securities.

This industry dominion by DraftKings, a public company listed on the NASDAQ stock market, and FanDuel, a subsidiary of Flutter Entertainment which is listed on the New York Stock Exchange, meets the classic definition of a duopoly, with little to no competition in sight. As Jonas expounds in a detailed report him to his clients, the disparity between these lead operators and their adversaries is so vast, it’s accurate to say there is no second tier.

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In a nutshell, other competitors lack the stature to qualify for ‘tier two’; the gap between DraftKings/FanDuel and their competitors being too wide to fathom, according to Jonas. He sheds light on the statistics that as of April, the joint forces of FanDuel and DraftKings monopolized 73% of online sports betting in the US. In the race for the leftover 27%, contenders such as BetMGM, Caesars Sportsbook, ESPN Bet, and Fanatics are left to squabble.

In the dawn of the online sports betting expansion, BetMGM posed a worthy threat to DraftKings, and FanDuel, whereas Caesars Sportsbook seemed like a potential leader of the next rival pack. By tying their offerings to rewards programs used in terrestrial casinos, these operators saw some success in attracting iGaming clients and sports bettors. Executives from both companies have witnessed customers accumulating points digitally and redeeming them for food, entertainment, and rooms at their physical casinos.

Despite not having such perks, DraftKings and FanDuel hold an undisputed reputation as the most recognizable and valuable gaming brands, all thanks to superior technology. Numerous reports confirm that a significant portion of bettors remain loyal to an online sportsbook mainly due to its user-friendly interface and advanced technology, an area in which DraftKings and FanDuel have heavily invested.

This investment has indeed borne fruit. A recent April survey by Truist revealed that a whopping 45% of those surveyed prefer either DraftKings or FanDuel for iGaming. This preference is crucial since 62% of the respondents demonstrated they would rather bet on sports and indulge in online casino games through the same operator.

Jonas, while discussing the potential emergence of a second tier behind DraftKings and FanDuel, pointed out Penn Entertainment’s ESPN Bet as a possible contender. However, he admitted that growth for ESPN Bet has been somewhat less than speedy, indicating the 2024 football season might prove make-or-break for ESPN Bet’s future.

Steps to enhance ESPN Bet are ongoing, such as the recruitment of former Walt Disney executive Aaron LaBerge as the Chief Technology Officer (CTO). Fanatics, another company highlighted by Jonas for its unique product offerings and strategies, has also made significant moves, most notably the appointment of former Gucci executive Selena Kalvaria as its Chief Marketing Officer (CMO).

Jonas dwelled on the potential of Caesars solidifying its position in tier three and operators like Bet365, Fanatics, and Rush Street Interactive eventually moving up the ladder in due time.