Good morning. In this month’s edition of The Data Month we take a look at developments in the US OSB market.

• ‘Culling of the herd’: How the sector has absorbed the shares of the minnows that have exited the US market.

• Change at the top: is DraftKings on the verge of displacing FanDuel at the head of the market? The evidence from New Jersey says ‘yes’. 

• The data from New York for the first three weeks of the new football season is, however, more mixed.

When two tribes go to war.

Grab and go

The exits seen in the past year accounted for ~$226m in LTM GGR.

Minor threat: The exits of WynnBET, FOX Bet, MaximBet, PlayUp, Play Maverick and Fubo Gaming left an estimated 2.5% share of LTM sports betting or ~$226m of GGR, according to estimates from the gaming and leisure team at Citizens Bank.

• Pointing out that the US market continues to be one of “haves and have nots”, the team suggested the long tail of the market is shrinking, with “sub-scale operators often ceasing operations rather than finding a new owner”.

• In other words, the much-predicted consolidation of the market hasn’t happened via M&A.

• Instead, the would-be targets have ceased operations rather than finding a new parent.

• Moreover, more closures are likely. As the Citizens team pointed out, there are another 52 operators within the space that between them only account for 1.8% share.

Share and share alike: Still, there are other puts and takes occurring within the OSB space right now, as evidenced by figures from Deutsche Bank. The redistribution of this relatively small percentage of share of wallet has occurred at the same time as there has been further consolidation at the very top of the market. 

• According to Deutsche Bank figures, the shares in Q3 of the top two hit ~74% – exactly the same percentage shared between FanDuel and DraftKings in the last 12 months.

• At the same time, BetMGM has been losing ground slightly, down to 9.3% in Q2 vs. 10.5% in the LTM.

• Meanwhile, the others section – in a move that looks contradictory to the Citizens team’s point above, but actually isn’t – hit 8.6% in Q3 vs. 6.9% in the LTM.

👀 OSB market share in Q3 vs. LTM

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Shifting sands

Ships that pass in the night: Yet, the steady state in terms of absolute market share between the top two masks a significant change over the course of the summer in the distribution between FanDuel, the erstwhile market leader, and DraftKings.

• The Q3 data from Deutsche Bank – derived from the data representing ~96% of the total market – shows FanDuel down to 37.3% market share, a drop of over 7ppts on its last 12 months market share of 44.8%.

• At the same time DraftKings’ Q3 market share was half a percentage point lower than its rival at 36.8%, up from the LTM figure of 29.6%. 

🎯 DraftKings catching up on its rival in Q3

Summertime blues: If DraftKings can be said to have been catching FanDuel over the course of Q3, it is clear that in August it overtook it – while FanDuel somewhat slumped to 34.4% for the month, DraftKings took further ground with 40.6% share. 

Switching polarities: Significantly playing into this shift is New Jersey where in August DraftKings dramatically took over top spot, claiming $57m of GGR vs. FanDuel’s estimated $24.6m, according to analysis from Wells Fargo.

• This breaks a long run of market leadership going back to the very start of the New Jersey market.

• Year on year, DraftKings was up 377% while everyone else in the market posted YoY declines, with FanDuel off by 22%.

• But in percentage terms, others fared worse, with BetMGM down 33% YoY and Caesars dropping 42% YoY.

Taking to LinkedIn this week, EKG’s Chris Krafcik pointed out the GGR generated was well above DraftKings’ long-term monthly average. At the same time, as can be seen below, the $24.6m of GGR for FanDuel was in line with its monthly take.

• Krafcik suggested it was “not time to update our models” and pointed out that the same bounce had not been seen in any other market.

• “This spike could be VIPs / whales, futures, above-average hold, promo spending increases, or a combination of those + other variables,” he added.

🔥 DraftKings takes more than double FanDuel’s GGR in August

Mitigations: There are some factors that need to be considered before any conclusions are reached about whether this is a long-lasting switch. Namely, this is August, the shoulder season for US sports-betting activity, and not the period when bettors are at their most active.

• But, given the heightened competition in the market right now, the percentage changes are suggestive of movement in terms of players’ share of wallet.

• The boosted Q3 others market share shows that while some minnows are busy leaving, others are just as busily entering the space or expanding their presence.

• Fanatics and bet365, in particular, pose new challenges for those at the top. This is before ESPN Bet hits the market in November.

• But what was previously supposed to be a danger mainly for DraftKings, BetMGM and Caesars now also appears to be an issue for FanDuel, which until very recently was considered invulnerable at the top.

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New York stories

If you can make it here: All of this is pre- the most important part of the year for the OSB operators. For an up-to-date picture – albeit very partial and very early – on the state of play between the two market leaders we can look at New York.

• As was stated yesterday, the data for the first two full weeks of the NFL season as well as the partial week up to September 3 shows the market was buoyant.

• Handle was up an average 30% YoY across the first three weeks of September while GGR was more mixed with week 2 up 74% but the other two weeks in minus territory.

💰 New York handle off to a flier in September

The picture is also mixed when looked at by operator. FanDuel led in week 1 and 2 with $122m and $196m respectively vs. $116m and $139m for DraftKings. But in week 3 the positions were reversed quite markedly, with FanDuel on $139m and DraftKings up at $180m for the week.

👀 Handle shares among the top four in New York

Standing on the corner, watching the world go by: The picture is also mixed when it comes to GGR and even more difficult to draw any conclusions because, with DraftKings registering a minus GGR figure for week 1, we only really have two weeks worth of data to look at.

• Still, as can be seen, FanDuel and DraftKings have switched positions from one week to the next.

• Drawing too many conclusions from such limited data would be foolhardy. But it is still notable that at present the battle for supremacy is one where everyone else in the market, from BetMGM downwards, are merely spectators.

• Whether that changes with the advent of Fanatics Sportsbook, ESPN Bet and potentially others is up for debate.

🍎 New York GGR share, first 2 full weeks of NFL

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Calendar

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