Fanatics began its journey recently in the Massachusetts sports betting market. Though there will be a climb ahead, PlayMA is predicting a market share threshold of five percent for the apparel company’s sportsbook brand.
This means Fanatics can generate approximately $300 million in annual revenue.
There will be plenty of action, to be sure, but nowhere near the billions of dollars expected each year by behemoths DraftKings and FanDuel.
Fanatics Sportsbook launched its beta testing product in Massachusetts on May 25. It was initially available only to Fanatics merchandise and apparel customers. The app is expected to go live for all bettors in May, although no specific date has been announced.
It will take several weeks for Fanatics to make a significant impact on the regular Massachusetts gambling revenue report. However, that doesn’t mean that Fanatics Sportsbook will be a failure for the sports apparel giant—neither in Massachusetts nor across the US.
Don’ t assume Fanatics Sportsbook to dethrone DraftKings or even FanDuel
As soon as Fanatics Sportsbook reaches maturity in Massachusetts, third place will be its ceiling.
It’s always difficult for a new player to surpass existing market leaders, but that’s exactly what the sportsbook attempt in Massachusetts, Ohio, and many other states.
Fanatics has a strong customer base through its apparel business to leverage in competition with DraftKings and FanDuel. Working against it is the American consumers’ reluctance to have more than one or two sportsbook options and regulatory inexperience that has already attracted unwanted attention in Ohio.
When Fanatics agreed to acquire PointsBet for $150 million, it secured a financially advantageous way to expand in the sports betting industry. Fanatics launched its first retail sportsbook in January 2023, and the PointsBet acquisition will grant Fanatics, not just Fanatics Sportsbook, access to over ten new betting markets without having to pay burdensome license fees upfront.
However, this purchase alone won’t turn Fanatics into a gambling giant, and it won’t have an immediate impact on Massachusetts gambling revenue. PointsBet did not launch in the state. Fanatics is entering a low-margin business saturated with similar products. The Fanatics-PointsBet deal is part of the consolidation experts have predicted in the betting market for years. Fanatics’ competitive customer list is a promising asset, but the number of customers they will be able to attract to their sportsbook remains unclear.
Precisely how PlayMA travelled to its discharge
All those variables, along with the examination of Fanatics’ performance in the Ohio betting market, contributed to PlayMA’s projection of a 5% market share in Massachusetts sports betting at maturity. According to PlayMA pre-launch predictions, this would mean less than $300 million bet annually on the online platform.
Fanatics doesn’t need to become the largest betting brand to be a success, though. Attracting sports bettors to its apparel business and directing a significant number of apparel customers to Fanatics Sportsbook would qualify as a reasonable success. The goal for Fanatics is to leverage the revenue boost for both business segments, whether that results in market leadership or not.
Why identical four sportsbooks attract almost all of a state’ s cope with
Across the US, four sportsbooks capture over 85-90% of the country’s sports betting business:
– FanDuel
– DraftKings
– BetMGM
– Caesars Sportsbook
DraftKings and FanDuel started as daily fantasy sports (DFS) companies. Users on these platforms were already betting on sports through the fantasy team performance. When sports betting became legal, both companies had extensive customer lists to cross-promote their betting services.
These two companies were well-positioned to dominate the new sports betting market, and in cases where they both compete, DraftKings and FanDuel have captured the top two positions.
MGM Grand and Caesars Entertainment lacked the DFS customer lists that DraftKings and FanDuel had. Instead, BetMGM and Caesars Sportsbook cross-sold to their casino loyalty customers. Although BetMGM and Caesars had customers across the US, they didn’t have the sports betting-adjacent customer lists that DraftKings and FanDuel had cultivated.
Here’ beds why manufacturer awareness is important
The customer email lists and brand recognition of the four market leaders provided crucial advantages over companies such as PointsBet, BetRivers, and FOX Bet. PointsBet was an Australian sports betting company. BetRivers is a small chain of casinos in smaller American betting markets. FOX Bet was an attempt to create a betting arm of FOX Sports. None of them had the customer lists that could translate into the brand awareness and recognition enjoyed by DraftKings and FanDuel.
Had Fanatics entered sports betting before bettors found their favorite sportsbook apps, Fanatics could have rivaled Caesars or BetMGM. With its late entry, Fanatics has the additional challenge of convincing gamblers to go through the registration process for a sportsbook they haven’t already chosen.
Damaged customers right from competing sportsbook brands
Several studies show that the majority of American sports bettors will sign up for three or fewer licensed sportsbook apps. The registration process typically involves 1-3 pages of personal information, including ID and social security number. And that’s not counting the sportsbook apps that have to verify bettors’ information and request driver’s license or utility bill submissions.
Part of a sportsbook’s ability to capture market share relies on its ability to attract customers early on. It’s no surprise that the current market leaders are the four companies with the most brand recognition in betting.
In an analysis of the Fanatics deal, gaming research and consulting firm Eilers & Krejcik argued that Fanatics and bet365 could be future threats to DraftKings’ and FanDuel’s duopoly in the betting industry. Both companies offer solid products, but neither company has a disruptive product—hence PlayMA is not as bullish.
Better odds-making or cross-promotion won’t make customers reconsider the industry. A company like Sporttrade, which has a different pricing and play model, has a better chance of pushing DraftKings and FanDuel to rethink their product than other traditional sportsbooks.
Fanatics manufacturer association by using gambling may backfire
Fanatics is a renowned sports accessories company, but its reputation in apparel won’t necessarily translate to sports betting. Apparel buyers are sports fans who are willing to spend significant amounts of money on products that demonstrate their commitment as fans.
Many sports bettors treat their wagers in a similar way. A bet on a team can be a vote of confidence in their team. Wagers can also be used as a way to show support by putting money on a new jersey.
However, sports betting is a low-margin business. The only reason that profit margins can reach as high as 12% is due to the inexperience of many sportsbook customers. Professional sports bettors consider many factors when deciding which bets to place, including odds and spreads.
Many beginners bet on teams regardless of the likelihood of the team’s victory or the amount of commission the sportsbook collects. When customers purchase team merchandise, they receive a tangible product for their money, not the potential of a future payout.
Fanatics’ well-known brand may also face challenges as responsible gambling becomes increasingly important for sportsbooks, regulators, and the industry as a whole. Being a fan of sports is normal, but being a gambling fan requires caution.
Fanatics has already faced scrutiny for offering a bonus bet to everyone who purchased certain apparel items in Ohio. Ohio accessories promotion promotion, highlighting why experience in the sports betting industry is crucial for long-term success. Fanatics has informed PlayMA that the apparel promotion will not be attempted in Massachusetts.
Striking the balance between enthusiastic fandom and highly competitive marketing is the main challenge of operating in the gambling industry. The association of sports fanaticism with Fanatics may complicate its ability to achieve that balance.
What does good results in Ma look like to achieve Fanatics?
Once Fanatics Sportsbook fully enters the Ma market, its three main goals will be to strengthen its existing apparel business, establish a solid customer base of dedicated users, and avoid regulatory actions.
Fanatics Sportsbook has an American customer base that many other sportsbooks lack. Its reported plan to offer credits at its apparel store in exchange for betting activity may attract high-frequency apparel buyers. This segment of high-frequency buyers could contribute significantly to Fanatics Sportsbook’s revenue.
However, the market leaders in the sportsbook industry have already refined their marketing processes to create advertisements that comply with the strictest regulations. These operational advantages come from hard-earned experience, and Fanatics will have to go through the learning curve that the market leaders have already overcome.
If Fanatics can secure its own group of loyal customers without drawing unwanted regulatory attention to itself or the betting industry, it has the potential for success in Massachusetts and other major sports betting markets. Fanatics’ lack of experience poses a greater risk to its long-term market dominance than its competitors.
Christopher Gerlacher is a lead writer for PlayMA. He is a versatile, experienced writer with a portfolio that ranges from personal and legal pieces to sports and sports betting. Gerlacher is a passionate Broncos fan, for better or for worse, residing in the rolling hills of Arvada, CO.
