To say 2023 was a busy year in sports betting would be quite the understatement.
There were significant state launches, including Massachusetts and Ohio. There are two new brands, ESPN Bet and Fanatics, that seem prepared to fight for a podium position in US sports betting with a third, bet365, still waiting to fully pounce on the market.
We are taking an extended trip back to 2015, as well with daily fantasy sports companies once again under the spotlight for potentially offering illegal sports betting. Meanwhile, some sportsbooks are finding sustainable profitability, which could lead to more bolt-on acquisitions and the closures of smaller operators.
Here is what the LSR staff had to say about 2023:
Biggest sports betting story of 2023?
The return of DFS operator legality questions and their rise as real competition for sportsbooks was voted the top story of the year, receiving the most LSR staff votes. Penn Entertainment trading Barstool for Disney received also received multiple votes. Hard Rock Bet relaunching in Florida amid multiple court cases and the impact of parlays on profit each received a vote.
Eric Ramsey: Any of these could pretty well summarize 2023, but so much of the overarching story revolves around parlays and props right now. The ability of the leaders to develop around these formats in a way that satisfies both bettors and investors is one of the primary forces shaping the entire US industry as a whole. All at once, parlays are captivating casual customers, widening operators’ path to profitability, and acting as the foundation for a new generation of prop-specific, legally vexing gambling products.
Sam McQuillan: A FanDuel lobbyist makes subtle comments about illegal sportsbooks masquerading as DFS and then we have a domino effect of states cracking down on pick’em. These are not just small states either. Meanwhile DraftKings builds a product that appears targeted to compete with Underdog and PrizePicks.
Matthew Waters: It was a long waiting game to see who Disney would choose, only for it to be a company that already had a partner. For Penn, it was a critical move to shed the Barstool brand that simply was not working for one that already looks like it will in ESPN Bet.
Mike Mazzeo: In a surprise to many, after SCOTUS denied an extension to the temporary stay, Hard Rock elected to flip the switch. With California and Texas both still likely years away, Florida has the potential to surpass New York as the No. 1 sports betting market in the country. And yet, the court battle with West Flagler remains heading into 2024.
Which sportsbook surprised the most?
Bet365, DraftKings and Penn Entertainment all received multiple votes for most surprising sportsbook, while FanDuel received one.
Eric Ramsey: FanDuel’s performance has been so consistently strong for so many months that we sometimes forget to stop and be impressed until we have a milestone like the end of a calendar year to reflect. FanDuel absolutely dominates a crowded field, grossing hundreds of millions of dollars every month and fending off an occasional stray attack from DraftKings to maintain its massive market share that is approaching 40% nationwide.
James Gazzale: bet365 is surprising, in a good way, with how it has approached the US market. It suggests to me bet365 understands its UK business is vastly different than the US and rather than spending wildly to boost its brand, bet365 is taking a strategic approach to making inroads in the US.
Mike Mazzeo: [Barstool Sports owner] Dave Portnoy can blame regulators all he wants. The reality is Barstool and Penn had visions of being a major player in the space, and all it ended up being was a major disappointment, with a 4-5% market share. ESPN Bet should do better. Granted, it is a low bar.
Sam McQuillan: DraftKings stock performed terribly in 2022 (down 58.5%.) But fast-forward a year later and it is a whole different story (up 213.9% through Dec. 20.) Credit to them: they scaled costs and improved EBITDA margins by making good on slashing marketing spend and squeezing much more out of customers via same-game parlays.
Who will be No. 3 at the end of 2024?
Most of staff expects bet365 to take up the third spot behind DraftKings and FanDuel. BetMGM also received multiple votes and ESPN Bet and Fanatics each received one.
Eric Ramsey: This will be a heck of a battle to watch. Even if you are bearish on ESPN Bet and Fanatics, you would probably concede that a 5-10% national share is within the universe of reasonable outcomes for both. And with BetMGM and Caesars both struggling for double digits in the current battle for third place, something approaching a 10% share could be enough to change the order on the podium for 2024. Either of these newcomers could do it, but I think ESPN Bet represents the most likely challenger.
Mike Mazzeo: More than one sportsbook executive has mentioned bet365 as the biggest second-mover threat. Given its success overseas, and early promo investment in Ohio, that makes sense. Whether it continues to invest in customer acquisition, we will see.
Pat Evans: I am tempted to say ESPN Bet, but the product just is not quite there. I am also hesitant to say BetMGM, but the fight for third increasingly feels like it will be a rotating battle for nos. three through five or six.
Sam McQuillan: Fanatics may be a bold pick, but BetMGM and Caesars are slipping in multiple categories and nothing they have done assures me they could not be caught by a better product. Enter Fanatics and its colossal bankroll: its tech should get even better next year thanks to its PointsBet acquisition, and I expect it to ramp up cross-sell efforts with its retail business and CEO Michael Rubin‘s network.
Most interesting person in 2023 sports betting?
Adam Candee: Matthew Schuler, Ohio Casino Control Commission Executive Director. Ohio singlehandedly ended the term “free bets” in the United States with its strict enforcement of state rules. Schuler’s operation showed how influential state-level regulators can be when they choose to take a stand, and the trend followed in the DFS pick’em battles.
Pat Evans: As someone who covers legislation closely, Missouri Sen. Denny Hoskins. He essentially single-handedly keeping a state from legalizing sports betting for two-plus years, and there’s no end in sight and the industry is well-aware.
Matthew Waters: I have to give credit to Penn Entertainment CEO Jay Snowden for ripping the Barstool bandage off. Snowden always sounded incredibly bullish on Barstool’s potential and it simply never happened. Snowden realized the partnership did not work for multiple reasons and instead transitioned to one of the strongest brand names in sports.
Sam McQuillan: Whatever you think about him, Jason Robins executed on most of his ambitions as DraftKings CEO in 2023. This time last year most were bashing him and what looked to be a sinking ship. A year later, he is the face of one of the biggest success stories of 2023. Perhaps his biggest achievement: it is increasingly looking like DraftKings or FanDuel at the top, not FanDuel and then DraftKings close behind.
Bold 2024 sports betting prediction?
Adam Candee: ESPN Bet does not crack the top five in US market share. The product and marketing strategy appear average so far. In fact, we are still watching the same lone TV ad from launch day on ESPN airwaves. Are Penn and Disney planning to rely solely on reach to build an empire? Without more, the initial hype might fade and leave the venture stale.
Eric Ramsey: Rush Street will pull out of most US markets. Additional contraction seems inevitable among smaller operators in the coming years, but reality will set in for some of the bigger ones too. Rush Street, which serves 14 states with its BetRivers brand, could even struggle to make it through the year as a national sports betting operation. Its focus has always been online casino, and that map might not be expanding quickly enough to justify the costs of maintaining an underperforming sportsbook as a theoretical funnel in faraway places like Arizona and Colorado.
James Gazzale: Horse betting will get worse before it gets better in 2024. Outside the Kentucky Derby and Belmont Stakes (since it is in Saratoga next year,) I think all the marquee events on the horse racing calendar suffer significant drops in handle. Tracks will be forced to make difficult decision, even closing down in some cases. Only after that will the industry take a look in the mirror and start improving the betting product.
Mike Mazzeo: A major match-fixing and/or journalism sports betting scandal occurs. I hope I am wrong. It just feels inevitable.
Pat Evans: While I leaned toward Minnesota legalizing the past two years, I am starting to think it will not get done this year and no sports betting legislation passes in 2024. But one market does legalize iGaming: Maryland.
