Operators Rush To Gain Early Edge As Online Sports Gambling Goes Live

Experts say the early days can be crucial for sportsbooks hoping to gain market advantage
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Within minutes of the launch of legal online sports gambling in New York Saturday morning, each of the four operators cleared to begin taking wagers announced their first action.

At DraftKings, the first ticket was a $15 six-team NFL parlay that would pay $1,430.45 if it lands. At Caesars, someone risked $25 on a five-leg European soccer parlay that could net them $233.16. BetRivers booked a $500 wager on the Denver Broncos getting +10.5 against the Kansas City Chiefs. And among the first action at FanDuel, somebody wagered $25 on a two-team parlay involving the New Jersey Devils and New York Knicks.

Legalized gambling’s latest Gold Rush has commenced.

The four operators already taking action in New York and the five others that hope to be up and running before Super Bowl LVI are beginning the battle for what could be one of the richest strikes in legalized gaming history. The first weeks and months of the competition could be crucial, as operators scramble to snare as many New York players as they can and foster brand loyalty that could enable market domination in the long run.

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Taking losses

If the books have to lose money while they spend copiously on marketing and offer splashy promotions and deep discounts despite the state’s 51% tax rate, so be it. In business school marketing classes, professors speak of a first-mover advantage, something each of the operators vying for the New York market will press hard for in these early days of online gaming.

New York gamblers figure to reap the benefits in these early months.

“I would imagine the offers are going to be even more valuable for the player because the competition will be even stiffer in that market,” said gambling analyst Sam Panayotovich of NESN. “FanDuel and the other books who are live really need to acquire customers over the top right now, because they’re all losing money on the back end with taxes. They are desperate to get people signed up.”

What operators lose now they hope to make up in the long run, banking on the volume generated from a state with a long history of sports gambling and the fourth-largest population in the United States. The companies’ desire to get a firm foothold in the Big Apple also could have corollary benefits to the state, as they pour in advertising dollars to local media companies.

“I don’t have to watch a Mets game any longer and see ads targeting New Yorkers to go to New Jersey to bet. I wanted to rip the TV off the wall,” said New York state Sen. Joe Addabbo, a leading proponent of online gambling in the state. “Now, I don’t have to do that any more, because now the ads will be for New York operators. That’s an added benefit for the state and its businesses.”

The first-mover edge

While the four operators that opened shop Saturday will look to press their early advantage, Addabbo is confident the other five licensed operators — BetMGM, PointsBet, WynnBET, Bally Bet and Resorts World — will launch by the Super Bowl and have plenty of time to gain influence, making it an even more competitive market.

“Given the experience and professionalism of those companies, I don’t think they’ll be too far behind,” Addabbo said. “They know what’s at stake. They know it’s New York, with great potential, and I think they’ll soon follow and be up and running.”

Perhaps the best example of a first-mover advantage in legalized gambling came in Virginia, where FanDuel leveraged a three-day head start last January into a dominant position in the market. FanDuel had a nearly two-to-one edge in handle over the next-closest competitor, DraftKings, in the first half of 2021. Similarly in Illinois, BetRivers used its political leverage to gain an early advantage over DraftKings and FanDuel, although those have since passed it.

Getting in early and establishing brand awareness and loyalty can be key. The hysteria to lock loyalty in early even prompted some of the operators to, basically, offer customers guaranteed winning bets. DraftKings, for example, offered the opportunity to wager as much as $25 (at +100 odds) that the Knicks and Boston Celtics would score more than one total point in their game Saturday night. FanDuel offered the chance to make an even-money bet that the Chiefs and Broncos would score at least three total points on Saturday.

“These books are sort of giving money away just to put the fish hook in your mouth to make you sign up for the app,” Panayotovich said.

On rare occasions, it’s better to be the fish than the one casting the line.

Photo: Kevin R. Wexler/USA TODAY

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