The recent Citizens Bank April Online Gaming Insights report begins with what is, quite frankly, a bunch of nuanced market stuff that is totally over our heads. But the gist is this — despite the recent uncertainty born from a struggling economic landscape, Citizens analysts still feel there is a viable path forward to a favorable gaming environment.
More specifically, a challenging backdrop highlighted by with the March shuttering of Silicon Valley Bank may ultimately produce lower benchmark rates that could jumpstart capital markets.
That rosy outlook isn’t all speculative either. The Gaming Index rose 6.5% last month, and, in turn, gaming industry valuations have made favorable gains since December 2022.
That aside, here’s a key excerpt from the report worth dialing in on:
In the immediate term, cash preservation and line of sight to profitability remain key, but there is reason to believe better days are not far ahead.
Indeed, both online sportsbook and online casino operators have placed an increased emphasis on profitability, which for some key operators has meant dialed-back promotions and less aggressive new player bonuses. Namely, DraftKings, which has long operated in the red, has made significant gains toward profitability, with a potential path to clearing it sometime in late 2023.
Let’s dive into some other key takeaways from the report.
The Big Three Continue Dominance of Gaming Market Share
FanDuel, DraftKings, and BetMGM continue to lead the way in terms of market share — and it’s not particularly close. FanDuel leads the way at 33 percent, followed by DraftKings (24 percent) and BetMGM (19 percent). In other words, 77 percent of online sportsbook and iGaming market share are controlled by these three operators.
In terms of online casino sites, FanDuel (up to 1.7 percent) and DraftKings Casino (up to 2.3 percent) have further tightened their grip year over year, while BetMGM (down 0.2 percent) took a small step backward.
All three operators enjoy a big-name brand that has been powered by strong advertising efforts across multiple mediums.
While Caesars Casino trails the market share race in fourth place by a wide margin, the brand made some positive movement (1 percent) with its casino offering.
The Legal Online Casino Opportunity Remains Massive
One thing is abundantly clear — the legal online casino opportunity is simply massive.
Consider this: 26 states currently allow legal online sports betting, covering 47% of the population. Casino and poker offerings are live in just seven states, serving 13 percent of the population.
In terms of the total addressable market, casino lags considerably behind sports betting, but the opportunity and upside aren’t just about untapped markets. The average sportsbook user was worth about $91 per adult, while casino players were worth $206. This helps to explain why a DraftKings Casino bonus can offer a massive $2,035 bonus to new players.
Despite no new market launches in 2022, casino revenue in previously-launched states experienced significant year-over-year growth, jumping from $426 million in January 2022 to $515 million this past January. That’s good for a 21 percent YoY increase.
Waiting Is The Hardest Part
While iGaming operators are foaming at their collective mouths to go live in new markets, the process has been slow-moving. Very slow-moving.
Not only were there no new state launches last year, there’s not a great deal of optimism about the 2023 outlook. Talks have gone nowhere in Texas, with a great deal of pushback thwarting efforts to get things off the ground there. Most immediately, states like Maryland (which launched OSB in Nov. 2022), Indiana, and Illinois will continue to explore paths to launch.