December 2, 2022

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Front Office Sports Pro

Happy Friday!

This is the Pro Monthly Update. We’re bringing you the top 10 deals from November, key earnings releases, and One Big Thing about sports betting trends at Qatar’s FIFA World Cup.

If you have questions, comments, or suggestions, contact me on Twitter @Ronenain.

Pro November 2022 Update

Credit: Yukihito Taguchi-USA TODAY Sports

Reports This Month

  • The Athlete-Investor Is More Relevant Than Ever in 2022
  • What Sports Can Learn from FTX’s Downfall

One Big Thing

The FIFA World Cup is fully underway in Qatar, and thanks to countless goals and surprise upsets, it’s fair to say this edition is living up to the tournament’s epic reputation.

Some of the excitement has been generated from the increasing presence of legal gambling.

  • According to betting intelligence firm H2 Gambling Capital, an average $400 million has been staked worldwide on each group match played in Qatar. It predicts wagers of over $1 billion per knockout game and up to $2.5 billion for the final.
  • Barclays claims $35 billion will be wagered on the 2022 FIFA World Cup — an increase of 65% from the previous edition.

With the knockout round upon us, Qatar 2022 has already uncovered new challenges and lessons for the diverse stakeholders in sports betting. 

We talked with Harry von Behr, U.S. Managing Director at Spotlight Sports Group, for insight into the most relevant betting trends through the World Cup.

The American Effect

In contrast to the 2018 edition — where sports betting was legal in only three U.S. states, and the USMNT squad didn’t even qualify — American soccer fans can bet legally in 32 states, and the excitement is clear:

  • The American Gaming Association claim 20.5 million American adults (8% of the population) plan to place at least one wager on the World Cup.
  • World Cup wagers could reach a total of $1.8 billion in the U.S. — making it the biggest soccer betting event in U.S. history.

That figure pales in comparison to the $8 billion wagered on the Super Bowl and $3 billion on NCAA basketball’s March Madness, but the World Cup is nevertheless rising as a lead magnet, customer acquisition, and fan engagement event for American sportsbooks.

But even with new entrants in the space and the uptick in organic interest in the U.S. betting market, some obstacles still exist to maximizing growth.

Suboptimal Betting Time 

The times at which the matches take place impact regions differently. The time difference between Qatar and the U.S. — up to 11 hours ahead of the Pacific time zone — presented a disadvantage for American bookies, cutting viewership numbers and volume of bets placed before and during the matches.

But as the saying goes, one man’s trash is another man’s treasure. 

While games are being played in the morning and early noon in America, they’re primetime for European and Asian markets.

To generate similar demand at suboptimal game times, American sportsbooks would have to spend more on advertising, resulting in higher marketing and customer acquisition budgets, raised costs, and lower profitability margins.

Yet, time and location aren’t the only things that disadvantage American bookies.

Seasonality 

Like summer sunblock sales or umbrella demand for the rainy season, the demand for sports wagers goes through cycles. In the U.S., football bets rise gradually from August through February and wagers on college basketball peak during March Madness.

“Betting providers with lower offseason demand tend to tap other sports or competitions.

Most sports leagues take a break during the summer, so a traditional June-July World Cup would be a great filler for that downtime — but not this year,” said von Behr. 

This edition is happening in the winter to avoid the extreme temperatures that Qatar reaches during the summer, disrupting American sports betting seasonality.

In Europe, soccer is the most popular sport for wagering, and since most leagues took a break from the action, the World Cup stands alone as the best alternative for European bettors. 

In the U.S., the NFL and NBA — two of the most popular sports to wager in the U.S. — are still playing and taking significant market share within the type of sports American bettors currently make.

Qatar’s tournament seasonality might provide a temporary uptick in betting volume, but the potential for continuity and momentum will not be as strong as what we’ll see during the 2026 World Cup edition in North America.

Preferences and Familiarity

Americans tend to bet on USMNT games, and the further the USMNT squad makes it into the tournament, the bigger the handles and revenue potential for American sportsbooks.

Regular bettors also have preferred sports. According to a report from the Colorado Sports Betting Proceeds, soccer is only the sixth-most popular sport to bet on in the U.S. — even behind tennis. 

In September 2022, Colorado Sports Betting saw wagers in soccer amount to $16 million — a minimal amount compared to the $145 million from professional football, $52 million from NCAA football, and $21 million from basketball.

“Essentially, even if the World Cup is widely popular, the American sports bettor is not a particular soccer bettor,” explained von Behr.

A larger number of alternatives to wager for the American bettor will reallocate capital that could’ve been placed on bets for the World Cup, reducing overall bet volume growth for American sportsbooks.

The Opportunity

Due to the popularity and massive viewership numbers of the World Cup, there are countless opportunities to engage with millions of fans, find preferences, and understand the factors that shape different betting behaviors.

The match between the USA and England drew 15.4 million viewers. It was the most-watched men’s soccer match on English-language American television.

With the right approach to overcome the diverse obstacles, sportsbooks can use this national spike in interest to draw more people into their business and push the growth of sports gambling.

Deal Tracker

Deal Tracker

Here are 10 of the most notable deals from November:

  • SaaS Platform SponsorUnited raised a $35 million Series A round led by Spectrum Equity.
  • Yoom, a comprehensive camera system that captures and broadcasts live, high-quality volumetric video recording in 3D, raised $15 million from a list of sports, entertainment, and business executives.
  • D2C startup The Sleep Company raised $21.3 million in a round led by Premji Invest.
  • Haifa-based sports tech startup Pico Get Personal, which is an AI-powered tool to help brands and rights holders better know their digital fans, was acquired by Infront.
  • Sports sponsorship analytics startup Trajektory raised $4 million in funding from TechOperators, Bridge Ventures, gANGELS, and Mudita Capital Partners.
  • Golf Guru raised $290,000 in pre-seed funding to continue developing its mental-coaching app for golfers.
  • Arcturus, a volumetric video editing and streaming platform, raised an $11 million Series A round from Cloudtree Ventures, Autodesk, and Epic Games. 
  • Low-code immersive gaming platform Yahaha raised a $40 million Series A round co-led by Temasek and Alibaba and joined by 37 Interactive Entertainment and Bertelsmann Asia Investments.
  • WellTheory, a nutrition and lifestyle coaching provider for those with autoimmune diseases, raised $7.2 million in seed funding led by Accel, Lux Capital, Box Group, Coalition Operators, and others.
  • Fitness chain Urban Gym Group acquired Fitness Cent​er IJburg in Amsterdam and will rebrand it into TrainMore Black Label.

View the full Deal Tracker.

Earnings Summary

Earnings Summary

Selected earnings calls and results from the past month:

DKNG: DraftKings reported $502 million in revenue in Q3 2022, a 136% increase compared to the same period last year. 

DKS: Dick’s Sporting Goods reported a record third quarter with $2.96 billion in net sales, outpacing analysts’ estimates of $2.7 billion. 

EA: Electronic Arts generated $1.9 billion in revenue in Q2, compared to $1.8 billion for the same period a year prior. 

FUBO: FuboTV saw revenues grow 43% year-over-year to reach $224.8 million.

FWONK: Liberty Media reported revenue increases across Formula One Group, Braves Group, and Liberty SiriusXM Group.

PLNT: Planet Fitness reported third-quarter revenue of $244.4 million — a 58.4% increase from last year.

SRAD: Sportradar generated $175.2 million in revenue in Q3 2022, a 31% increase year-over-year. 

TTWO: Take-Two Interactive generated $1.4 billion in revenue in fiscal Q2 2023, a 62% increase year-over-year.

Closing

Closing

In finance, the Santa Claus rally refers to an increase in the stock market in the last trading days of the year, an optimistic way to close the year strong.

Prices of stocks are influenced by a million factors, from new inventions to the breakout of wars that threaten free markets and the world’s peace. 

Factors are not directly moving prices — people are. How people react to diverse factors dictates if a stock will go up or down.

Famous Wall Street investor from the beginning of the 20th century, Bernard M. Baruch, wrote in his book, “The stock market is people trying to predict the future. And this intensely human quality makes the stock market so dramatic an arena in which men and women pit their conflicting judgments, their hopes and fears, strengths and weaknesses, greeds and ideals.”

This was written over 100 years ago, but things haven’t changed much since then.

As an investor, taking a moment to continuously self-examine your judgments, thoughts, and emotions around any investment could make the difference between winning or losing money.

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Written by Ronen Ainbinder
Edited by Brian Krikorian

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