Despite several months of turmoil, DraftKings has still expanded its market share, increasing its lead over its main competitor Flutter Entertainment
DraftKings Inc. attempted to introduce a winning bet surcharge in its high-tax states, but the move backfired, and strong public opposition forced the company to withdraw this controversial measure. Previously, its main competitor, FanDuel's owner Flutter Entertainment, publicly announced it would not implement a similar surcharge. The decision to retract this decision may be crucial for DraftKings to maintain a competitive edge.
DraftKings has shown admirable adaptability
Despite the controversy, DraftKings has successfully won market share in the US sports betting sector. JMP Securities analysts estimate that by July 2024, DraftKings will hold 37.8% of the online gambling market across US states, up from 35.5% in the second quarter. This growth occurred in the typically weaker month of July, thanks to a rebound in gambling profit margins to over 10%.
These results put DraftKings in a favorable position for the football season starting at the end of August. Analysts also note that if gambling profit margins continue to rise, the operator may gain more market share. DraftKings has proven it can adapt to dynamic market conditions and should at least be able to maintain its position.
Previously, DraftKings withdrew the decision to introduce a winning bet surcharge. Many analysts believe that if this policy had been implemented, DraftKings' market share would have been damaged, as customers would turn to companies like FanDuel, which, despite rising costs, firmly opposed such charges.
Other leading companies have also been successful
The sentiment among the analyst community remains optimistic, with many now setting six-figure target prices for DraftKings and Flutter Entertainment. JMP Securities analyst Jordan Bender highlighted Flutter Entertainment's strong performance in the US market, noting its revenue grew by 8% from the first quarter to the second quarter of 2024. The operator's profit margin has consistently been high at 12.7%.
Bender stated that Flutter has opportunities for continued growth, as the operator hopes to reinvest in its player base before the main sports season and may expand into emerging markets such as Brazil, Latin America, and Eastern Europe through acquisitions. Its FanDuel brand remains one of the leading brands in the US and will continue to deliver sustained value.
Other industry participants also reported growth in the early third quarter. For example, BetMGM's market share increased from 5.3% in the second quarter to 6.7%, marking the fourth consecutive month of accelerated transaction volume growth. These results highlight the fierce competition in the US online sports betting industry, as operators hone their strategies ahead of the upcoming market season.
