
The lure of lavish promotional bonuses to entice new clients has long been a staple in the US iGaming and online sports wagering industries. However, that tide seems to be shifting as the industry moves towards an emphasis on profitability over market share.
In established markets like Michigan and Pennsylvania, where both iGaming and sports wagering are allowed, promotional spending, in comparison to net gaming revenue (NGR), is trailing below the long-term average over the past three to twelve months.
A palpable decline in promotional intensity signifies a maturation of these markets in tandem with a more profit-oriented approach in the US online sportsbook sphere. Consequently, a balance is being sought in the strategic allocation of marketing and promotional spending. With investors leaning towards profitability and frowning upon operators’ aggressive market share acquisition at the cost of financial loss, the luxury of extravagant promotional spending is waning.
Taking Michigan and Pennsylvania as case studies, FanDuel, a subsidiary of Flutter Entertainment, has been more conservative in promotional spending that contradicts its past trend. Similarly, DraftKings has also significantly curtailed its promotional expenditure in these states.
DraftKings’ promotional spending fell to 35%, a significant decrease from the 44.2% it had been spending over the last year and a stark drop from their long-term average of 67.4%. Interestingly, this reduction hasn’t inhibited DraftKing’s ability to procure market share, having recently surpassed FanDuel for the top position in US online gambling market share.
Speaking of promotional expenditure, BetRivers, operated by Rush Street Interactive, is the only operator to have increased promotional spending against NGR in the past year. Meanwhile, BetMGM’s promotional spending relative to NGR in Michigan and Pennsylvania topped the industry over the past three months, nevertheless, it still fell below the operator’s long-term average.
Promotional spending has always been a double-edged sword; it’s essential for acquiring and retaining customers but often detracts from profitability. Notwithstanding that dichotomy, a clear shift in the industry underlines a transition towards a more profit-centric approach.
As the online sportsbook industry moves into its next chapter, it’s interesting to contemplate whether reduced promotional spending can be sustained, especially during the upcoming football season. Similarly, industry enthusiasts are keen to see if new entrants like Fanatics and ESPN Bet will trigger a renewed promotional war.
On our Canadian front, we’ve been closely observing these trends and appreciate the potential implications for players. This leads us to reflect on how online casinos balance promotions with their gaming offerings. For anyone interested in exploring the subject further, our top casino picks for this month is the perfect place to start, where we’ve meticulously reviewed and listed the best that the online casino industry in Canada has to offer.