Sports betting companies are torn between spending on customer acquisition at key moments and pushing toward profitability.
With the NFL season on the horizon, sportsbooks are expecting a surge in activity — but after spending heavily on advertising and promotions to lure users, some are moderating spending, per the Wall Street Journal.
- Companies will spend an estimated $1.8 billion on online gambling ads this year, up from $1 billion last year.
- BetMGM owners MGM Resorts and Entain plan to put a combined $450 million in the company this year, bringing the total investment up to $1.1 billion since BetMGM’s 2018 launch.
- Caesars has spent nearly $500 million less on marketing than anticipated this year.
Most U.S.-focused sports betting companies have never posted a profit. FanDuel did so for the first time in its most recent quarter.
The industry landscape shifted on Wednesday with Penn Entertainment announcing it will exercise an option to purchase all of media company Barstool Sports at a $450 million valuation. Penn acquired a 36% stake in Barstool for $163 million in January 2020, which included the option to purchase the remainder at a later date.
The California Question
Ohio is expected to allow sports betting starting in January 2023, while Kansas is nearing regulatory approval. Mobile sports betting in Maryland is making its way through the regulatory process but may not arrive until next year.
That’s quicker than Florida, where legal proceedings could hold up sports betting until 2024.
The biggest variable is California, where voters will be able to vote on two competing proposals in the midterm elections on Nov. 8.
