DraftKings and FanDuel are in a league of their own with no other sports betting operators close, Barry Jonas of Truist said in a Tuesday note.
The two leaders hold a combined ~73% handle share through April in 2024, compared to 72% for all of 2023. FanDuel, at 38% share, maintains its lead over DraftKings at 36% handle share.
The report then jumps to ‘tier three’ for the next batch of operators, which included BetMGM, Caesars and Penn‘s ESPN Bet.
“Note that we skipped ‘tier two’ – we don’t think any operator in the space qualifies for that standing with white space between DKNG/FanDuel and others,” Jonas said.
Could ESPN Bet be in Tier 2?
Jonas said his team will watch ESPN Bet this fall to see if it can grab enough market share to be considered in that second tier. Penn CEO Jay Snowden has made it clear on multiple occasions that the interactive team is focused on improving its parlay product in time for NFL betting.
So far, however, growth has stagnated for Penn’s offering, with ESPN Bet holding a 6% gross handle share over the past three months, Jonas said.
That is despite ESPN reporting strong metrics the past few months. In April, ESPN Digital, its content on YouTube and its social platforms reached 184.9 million users, which is two-thirds of the US adult population.
Penn reported 3.6 million users in its ESPN Bet database since launch and 685,000 monthly active users, which means there is room to grow if the ESPN app can become fully integrated with ESPN Bet.
Long-term outlook positive for Tier 3
Those Tier 3 operators could have a competitive advantage when it comes to loyalty programs and the rewards they can offer, Jonas said. That comes with the caveat of having a platform as strong as the leaders.
With land-based gaming mostly flat, Jonas expects interactive targets to be key to stock movement. BetMGM targets $500 million in adjusted EBITDA for 2026, but has not given guidance on 2025 yet.
Caesars, meanwhile, will hit a run rate of $500 million in 2025, though when that run rate will kick in is not clear. Penn expects to be “near breakeven” in 2025 but has already had to adjusted guidance for larger than expected losses related to ESPN Bet.
Who’s next among sports betting operators?
Jonas reserved the fourth tier for smaller operators who may not have a large share of national sports betting handle but have seen success at the state level.
Bet365, for example, is “slowly” rolling out to US users, he said. The brand has a strong international presence, though, and could choose to invest in marketing to increase its share.
Rush Street Interactive, meanwhile, has had “somewhat muted success” despite being in the US betting market since the beginning.
Fanatics also made the list for its “differentiated strategy and product offering,” Jonas said.
