“The whole Barstool Sports situation was a surprise”
Another eventful year has passed for our industry with a lot of the focus in 2023 remaining on developments in North America. Although the number of US states legalizing or launching betting and gaming have slowed down compared with a few years ago, it has been an exciting 12 months. Greg Ponesse, Chief Revenue Officer at Compliable, takes a look at some of the biggest developments and highlights of 2023.
Has the market grown in line with expectations in 2023?
It has been a solid year of growth for the industry with several states going live, adding to the potential of the US market. More than half of all states now allow betting or gaming in some form, with the remaining ones having a more complex approach to legalizing the sector, leading to a natural slowdown in expansion.
What we are seeing is that markets are now starting to mature, with operators adapting to the different quirks of each state, while regulators are fine-tuning rules and responding to developments. In the states where gambling is legal, revenue is growing, with Americans wagering $93.2 billion on sports betting alone in 2022, with operators generating $7.5bn, according to the AGA. I expect this number will be significantly boosted for 2023, underlining the huge potential of the region.
Who has been the biggest winner?
The big operators have been dominating the sports betting space in 2023, with DraftKings and FanDuel the obvious winners. That puts the smaller to mid-sized operators on their backfoot, with a number of them reducing their activities or completely shutting down over the last 12 to 18 months.
I believe this will be a recurring theme, especially in sports betting, with a maximum of 10 operators ultimately owning the space. It’s a tough industry to succeed in with low margins, and a big budget needed to compete with the more established brands. It will be interesting to see how the Fanatics acquisition of PointsBet plays out as that could have a significant ripple effect in the market.
They now have a sizable war chest of funds to spend on promotions and interesting strategies that are different from DraftKings and FanDuel. This gives them an opportunity to upset the leaders and make a dent in the market next year.
What was the biggest surprise of the year?
The whole Barstool Sports situation was a surprise, with Penn Entertainment selling the company back to Dave Portnoy and essentially taking a $600 million bath. To then follow up with a very similar arrangement with a more conservative ESPN is potentially a huge gamble for Penn.
ESPN has tremendous reach and access to sports so the partnership makes a lot of sense. Only time will tell whether this investment will pay dividends for Penn.
What have been the biggest disappointment?
My expectations weren’t really high when the year started but I will still say it’s disappointing to not see any movement to legalize the sector in the remaining three significant states – California, Florida and Texas.
When they open, it will provide huge potential for all stakeholders with them making up the third largest US states by population and will generate more excitement than any other launches in a long time.
Recommended