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Friday, December 4, 2020

Sports Betting's Investment Trajectory (and How it Hasn't Looked Like Racing's)

 Sports Betting's Investment Trajectory (and How it Hasn't Looked Like Racing's):
https://pullthepocket.blogspot.com/2020/12/sports-bettings-investment-trajectory.html

 Legal Sports Report detailed the $3 billion betting month in October, highlighting state by state growth. As more distribution is added - just like a retail chain building new storefronts - handle follows.

Of particular note in the article was the state of Colorado, which began in earnest in October. In its first month of operation, $211M was taken in, with a hold of about 8%. The resulting revenue was eye opening for one big reported reason: the Promo spend.

Colorado is allowed to deduct promotional and marketing spending from revenue, and that promotional spend totaled $7.2M or 41% of total revenue.

So, they added new distribution, and they allowed the businesses who bring the end product to the user to spend (at their discretion) almost half of total revenue to capturing new customers.

As we wrote about recently, this has not and is not the experience with ADW companies, or  the sport of racing itself. In it, the distributors are often asked to pay more to purses, as their margins shrink, and they have been since day one. I won't even mention how with sports betting, increased "stores" as points of sale are welcomed, whereas in horse racing they pretty much aren't.

Sports betting has done quite a bit right since being approved. They've priced the product well, (mostly) avoiding the pitfalls of -130 lines or other such nonsense; they've opened "stores" and governments have allowed the market to thrive through free enterprise; the sports betting entities themselves are sinking as much as half of their revenues back in the business, to attract customers.




Imo, the above article at the Pull The Pocket Blog, is noteworthy because it shows how sports betting is gaining market share by investing in the customer; whereas racing is not.

Have a great Friday everyone,

--Jeff Platt, for HANA.