Ahead of G2E next week, Dotan Lazar, CEO at LSports, reflects on five years of legalized sports betting in the US before outlining the two major challenges that sportsbooks face when looking to gain a competitive advantage.
In May, marking the fifth anniversary of the Supreme Court’s decision to legalize sports betting in the USA, the industry found itself in a challenging yet promising position. On one hand, there’s immense growth potential backed by staggering numbers: Since the court ruling, Americans have wagered over $220bn on sports through legal outlets, with sportsbooks keeping $17bn as winnings.
Research from Activate Consulting further supports this trend of growth, forecasting that the total sports betting amount wagered will reach a record $189bn in 2024.
On the other hand, the US market has become highly concentrated, with two giants – FanDuel and DraftKings — controlling over 70% of the market share. Despite their prominence, both operators faced a challenging path to profitability. FanDuel reported its first profitable quarter in the second half of 2022, while DraftKings expects its first profitable quarter by the end of 2023.
These insights reveal the two major challenges the US market faces: the astronomical costs of acquiring new players create a reality where even the largest operators struggle to generate revenue, and the consolidated market forces other bookies to find differentiation and unique offerings to remain competitive and avoid fading into obscurity.
Let’s get personal
When addressing these challenges, the way forward becomes clear. Sportsbooks must boost retention rates, as the financial impact of losing players can be devastating. They must do so by embracing innovation and leveraging unique engagement-inducing tools to tackle the differentiation challenge.
Creating a personalized player experience using these tools is crucial. To achieve that, it’s essential to consider the unique profiles and preferences of American sports bettors. Five years after the initial steps in the legalization process, certain trends and tendencies have become evident.
American sports bettors favor online betting and seek instant gratification through live betting. Research conducted by DriveResearch in July 2023 reveals that 75% of bettors in the US prefer online gambling over in-person betting, with 31% stating that in-play betting is their favorite type (rather than traditional pre-match markets).
Among millennials, the driving force in the industry, these figures rise to 80% and 38.3%, respectively, ensuring that sports betting is on an upward trajectory.
American bettors desire a personalized experience and have a strong appetite for real-time data and betting tips related to their favorite sporting events. When asked about the most important factors when deciding which bets to place, the top answers included team/player performance stats (63.2%), historical head-to-head matchups (47.1%), injury reports and team news (35.35%), tips from experts (48.4%), and advice from family and friends (47.5%). These preferences underscore the analytical nature of American sports fans and bettors who favor betting markets that demand research, such as player props.
Embracing innovation to achieve differentiation
Many technologically oriented companies actively seek ways to address the pressing challenges of enhancing retention and creating differentiation for sportsbooks. At LSports, we approach this by developing betting stimulation tools centered around personalization.
Leading the way is SEC, a revolutionary sports betting chat that utilizes technology similar to ChatGPT and will be showcased at the G2E summit in Las Vegas.
It’s accompanied by ‘Points in-play,’ an interactive social betting platform that offers users contests and activations during real-time sporting events. As the battle for user retention intensifies, expect more innovations to come out soon.