BetMGM Seen as Most Credible Threat to FanDuel’s Dominance

Posted on: November 17, 2022, 03:02h. 

Last updated on: November 17, 2022, 03:23h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Flutter Entertainment’s (OTC: PDYPY) Wednesday investor day went a long way toward confirming FanDuel’s dominant perch in the US online gaming market and the operator’s attractive growth prospects.

BetMGM
Actor Jamie Foxx in a BetMGM ad. A research firm says BetMGM is the most credible threat to FanDuel. (Image: BetMGM)

Finding credible threats to the FanDuel crown isn’t impossible, but the list isn’t expansive. Currently, the company is the largest online sportsbook operator in the US, commanding market share of 42%. That’s more than nearest rivals BetMGM and DraftKings combined.

In the most recent edition of its weekly “EKG Line” report, research firm Eilers & Krejcik Gaming (EKG), noted BetMGM is the most likely threat to FanDuel’s dominance. Assuming the latter does cede market share, it’s likely to be split among multiple rivals — not a major chunk going to just one competitor.

BetMGM is the most likely contender to eat into FanDuel’s US OSB market share dominance in the medium term,” said EKG. “BetMGM emerged as the number one contender, as it shares many on-paper advantages with FanDuel — including strong institutional expertise from Europe and major financial firepower.”

BetMGM is the second-largest online sportsbook company in the US and is the leader in terms of internet casino market share.

BetMGM Caveats

While BetMGM already has the lead in iGaming and the resources to add online sports betting market share, there are some factors that could hinder the operator’s efforts to pilfer share from FanDuel.

As EKG notes, BetMGM is a 50/50 joint venture between MGM Resorts International (NYSE: MGM) and Entain Plc (OTC: GMVHY), which could slow the decision-making process at BetMGM.

In early 2021, MGM offered to acquire Entain – largely to attain full ownership of the online gaming business — but the target rejected the bid, calling it inadequate. Rumors still circulate that the casino operator could revisit a takeover proposal. The price is likely to be much higher today because later in 2021, Entain rejected an acquisition proposal of more than $22 billion from DraftKings.

“We think FanDuel is more likely to lose increments of share to BetMGM and other challenger brands rather than to one big rival,” added EKG.

Other Contenders to FanDuel’s Dominance

More than four years after the Supreme Court ruling on the Professional and Amateur Sports Protection Act (PASPA), the domestic sports betting industry is expanding and rapidly growing. The contenders are also being separated from the pretenders, as some smaller operators are departing the business due to unfavorable economics.

All of that is to say, the list of gaming companies that have the potential to knock FanDuel down a couple of pegs is somewhat short. EKG notes that in addition to BetMGM, the group includes DraftKings and potential “wild cards” such as Fanatics and Hard Rock.

“We think those brands together have the potential to take between 5-10% GGR share off of FanDuel in the next few years — though that would mean FanDuel would still hold a very commanding ~30% top-line share of the US OSB market,” concluded the research firm.