The short answer is “not likely.” However, the online gambling industry in the U.S. is still in its infancy compared to other countries, and a quick change in legislation could completely alter the business’s landscape.
Until Q3 2023, FanDuel was the largest sportsbook in the United States, holding over 30% of the market. FanDuel was the go-to sportsbook for most sports gamblers nationwide. In Q3 2023, this changed, albeit slightly. A strong quarter pushed DraftKings into first place, holding a 31% market share at the end of the year. FanDuel dropped down to a nearly even 30%.
While that was fantastic for DraftKings, which could now boast about being the country’s largest and most popular sportsbook, it wasn’t great for the gambling industry. The market share announcements demonstrated that just two companies held over 60% of the US gambling market. Dozens, possibly hundreds, of other companies held barely anything in comparison.
Monopolies are never great, even if neither FanDuel nor DraftKings meets the technical definition of a monopoly. Having two companies dictate how the entire market works is never ideal. So, I set out to find whether any operator will likely rival FanDuel or DraftKings. Unfortunately, my findings were unpleasant for those seeking somewhere new to gamble.
Can a Gambling Company Overtake FanDuel or DraftKings?
No. I do not believe that FanDuel or DraftKings can be unseated as the ‘kings’ of the gambling industry in the United States. There are several reasons why.
Firstly, unlike other countries that legalize online gambling, the United States does not have overarching rules. Instead, online gambling is legalized at the state level, and a sportsbook must get licensed there to operate in a particular state. It is a lengthy, expensive process, and each state has rules on what a company can and can’t do. While a smaller sportsbook would probably be fine going through the licensing process in several states, obtaining licenses in multiple areas is prohibitively expensive and cumbersome.
Sportsbooks would need to have a whopping budget behind them to get licensed everywhere. FanDuel and DraftKings do, but most other companies do not. So, you’ll often find that the first sportsbooks to get licensed in new states will be one of these two companies, and once they’ve managed to gain a foothold, it is tough to unseat them.
Secondly, having a winning sportsbook isn’t necessarily about having the best betting odds. Chances are that the more successful a sportsbook is, the worse their odds are. It is all in the marketing. FanDuel and DraftKings can afford to pay astonishing cash to market their business, including buying ads and making sponsorship deals with sports teams. Most new entrants to the market cannot do this unless backed by a relatively wealthy owner. That means they will have a tough time getting their brand in front of potential gamblers, making it a real uphill struggle to gain traction in a highly competitive market.
That said, FanDuel and DraftKings are losing traction in specific markets. Any new player in the industry is unlikely to focus entirely on the U.S., as this would cause them to go bankrupt immediately. Instead, they’ll focus on markets where they can get a slight foothold. This may involve new players focusing on state markets or specific sports and doing that incredibly well.
For instance, we might see a sportsbook that focuses on Maryland, a new online gambling market, or a sportsbook that only deals with NBA March Madness bets. This is the only way I can see FanDuel or DraftKings being toppled in certain areas, but even then, there is still an uphill battle for the newcomer—one that many companies won’t have anywhere near the budget to attempt.
The problem for all new platforms joining the market is that FanDuel and DraftKings have been around for a while. They have grown as the online sports betting market in the United States has grown, and they didn’t need to throw all their cash into everything at once. New companies don’t have this luxury. If they want to stand a chance of toppling FanDuel or DraftKings in the foreseeable future, then they need to go all-in on plenty of markets right away, and we can see that being incredibly expensive.
Sportsbooks Will Try to Topple FanDuel and DraftKings
Ok. However, some companies have a reasonable shot of overtaking FanDuel and DraftKings, although it would be an incredibly slow process. One company in particular is a well-known sports brand with all the tools necessary to give it a good go.
In Q3, 2023, a new sportsbook was gearing up to launch. Shortly before the launch, a poll indicated that 54% of people in the US were willing to try using this new platform, which was a promising sign. However, the key figure was that 46% of people in that poll believed this sportsbook would eventually dominate the betting market in the U.S. Although I don’t know whether those respondents knew just how big FanDuel and DraftKings are, I’ll put that aside.
The poll indicates that if an established sports brand enters the market, it will almost certainly give the two market leaders a run for their money. Some brands are better poised than most for this. They have significant financial backing, which is essential for success in the sportsbook industry due to the cost of marketing and licensing. They also have a foothold in every sports market in the US thanks to their brand recognition and strong association with sports.
These brands have multiple opportunities to draw people to their platforms. We have seen something similar in the UK, where significant sports broadcasters have leveraged their platforms to promote affiliated sportsbooks during major events. A similar approach in the U.S. could lead to a reasonable amount of success. What I cannot see, however, is any new sportsbook entirely toppling DraftKings and FanDuel. They’ll rival them and take a sizeable amount of business away, but I doubt any new entrant will claim the top market share. The other two brands are far too established.
The Future of the Online Gambling Industry in the United States
As I said, no company will adequately challenge the giants of the industry, at least not to the point where they will be toppled. Some sportsbooks will make a reasonable effort, but I can’t see them ending up anywhere other than third place, which is still respectable. What I can see, however, is the market becoming more competitive. Newer companies will enter the business, taking small portions of the market away from DraftKings and FanDuel — enough to keep these new businesses afloat but insufficient to give the two major players any serious cause for concern.
Of course, things can change at a moment’s notice. The online gambling industry in the U.S. is still in its infancy compared to other countries, and a quick change in legislation could completely alter the business’s landscape.
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Joseph Fallon is a Senior Content Writer at the World Sports Network.
