Why Have US Sports Bettors Been So Sticky Thus Far?

Posted on March 10, 2021
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Written By on March 10, 2021

BetMGM co-owner Entain became the latest firm to talk up the loyalty of US sportsbook customers last week.

Speaking after the firm’s Q4 results, Entain CEO Jette Nygaard-Andersen said BetMGM was proving “very good at retaining customers”.

“It’s really about constantly engaging our customers and surprising them with new and exciting products,” Nygaard-Andersen said. “Yes, we spend to bring customers in in the first year, but they actually stay with us for quite a long time. So it’s okay to invest to bring them on board.”

Of course Nygaard-Andersen credited the BetMGM product and marketing team for the retention numbers. But it’s actually been a common theme throughout earnings season for multiple operators.

Strong customer economics

DraftKings said it was essentially spending as much money as possible to acquire customers because the lifetime value (LTV) was so high. And FanDuel said similar. Flutter CEO Peter Jackson noted US customers were proving 80% more valuable than their European counterparts.

So why are US sportsbook customers so sticky?

For one, signing up for an account is relatively onerous. Operators require details like social security numbers where they may not in other global markets.

Secondly, a lot of have states still have only a handful of options with relatively commoditized products. So why switch?

“There’s not actually that much competition,” said Eilers & Krejcik analyst Alun Bowden “You also see much lower churn generally from first adopters. They like betting. They’re not going to just stop.”

US customers loyal to their brands

Boom Sports CEO Stephen Murphy also pointed out that US consumers are a little different to Europeans.

“In general, Americans are loyal to the brands they love,” Murphy said. “Companies like FanDuel, DraftKings, and Barstool have spent the greater part of the past decade building relationships with their customers and earning that loyalty (and in some cases, love).”

What does that mean for the sports betting market? Firstly, deep pockets are essential. It’s a smart long-term bet to spend now to acquire as many players as possible.

Secondly, first-mover advantage is a real thing.

“Late entrants can still win meaningful market share,” Murphy said. “But operators need to begin to establish that relationship sooner rather than later.”

They will also need to offer something unique that a customer can’t get elsewhere, which is why innovation will be key going forward.

What else was in Entain results?

As for BetMGM, the brand grew its online NGR by 140% to $178m for 2020. That was ahead of Q3 guidance of $150-$160 million

Both parent companies lost around $84 million in the year. That number will “increase significantly in 2021,” Entain said.

Other key takeaways:

  • BetMGM expects to to achieve a 15-20% market share across US sports betting and iGaming.
  • Nygaard-Andersen said BetMGM was “in a good position to challenge for the number two operator,”
  • The brand has a 35% share of online betting in Tennessee and 34% in Colorado.
  • Yahoo is its largest affiliate channel, although Entain declined to share any metrics from that partnership.
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Brad Allen

Brad has been covering the online gambling industry in Europe and the US for more than four years, most recently as the news editor at EGR Global.

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