Despite unprecedented challenges to live sport, the gambling industry in the US is celebrating after a number of new states voted to legalise sports betting earlier this month, and the two household name betting firms, DraftKings and FanDuel, both reported solid financial figures.

DraftKings said its sales beat expectations of 42 per cent growth for the third quarter, and FanDuel owner Flutter said its US revenues rocketed more than 80 per cent during the same period. Both firms saw their share prices jump by over four per cent on the news.

After a difficult second quarter, with matches called off around the world as the coronavirus pandemic took hold, July, August, and September have been bumper months for sports fans. And in a surprise twist, due to the NBA and NHL playoffs being delayed, the third quarter saw the possibility of betting on live action from all major US sports simultaneously – baseball, basketball, hockey and American football. The Kentucky Derby, PGA and US Open gold championships, and the start of the French Open tennis tournament also played their part is the record figures.

Since US Supreme Court ruled that individual states could legalise sports betting in 2018, the US has seen a boom in the industry with DraftKings and FanDuel the clear leaders operating in 12 states and 11 states respectively. However, competition is fierce, with a variety of large and smaller players vying for supremacy as sports betting heads mainstream. And with casino operators Penn National Gaming (PENN) and MGM also looking to make a splash with their Barstool Sports and BetMGM apps, the leading operators are already spending hundreds of millions of dollars on marketing each quarter to entice new players.

Some worry that the sportsbook operators are making the same mistakes as dot-com era ecommerce firms like Pets.com and Boo.com, which spent millions of dollars on marketing without any real plans to find profitability. However, in contrast to the pet supplies or clothing markets in 2000, sports betting has significant room for growth over the coming decades in the US as more states vote to legalise the practice, and firms are already reporting strong signup numbers.

Indeed, if the US market matures to reflect the markets in countries with established sports betting industries, such as the UK, then the industry could be worth billions per year. In the UK, an estimated 2.1 million people make some kind of sports wager every year, often on major events like the Grand National or FA Cup final, with the industry worth upwards of £650 million. If such numbers are extrapolated to a country the size of the US, the likes of FanDuel and DraftKings are competing for a market that could soon be worth over £3 billion.

However, it remains uncertain how Americans across the fifty states will take to sports betting. For example, in Tennessee, which officially launched its sports betting programme on 1 November, there are no brick-and-mortar gambling venues and no history of casinos or retail gambling on which analysts can base their estimates. The state has decided to directly license four sportsbooks to operate within its borders, DraftKings, FanDuel, BetMGM, and the local Action 24/7. Each operator has already spent vast sums to attract new players, but it remains to be seen whether there is a real appetite for sports betting within the state.

As states continues to open up, the US could become the world’s biggest sports betting market, but it remains too early to say how the industry will unfold and whether the early leaders today can maintain their advantage in the years to come.

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