Legal U.S. handle for March is pacing behind year-on-year results for the third time in four months, down 4% with Illinois, Colorado, Virginia and Arizona still to report. Since I had EKG’s Chris Grove on the phone anyway, I asked him about the trend, which frequently has been chalked up to bettors smarting from what has been a run of favorable sports results for the house. Analysts also have asked about whether Kalshi’s incursion might be the cause.
Grove doesn’t think it’s either.
“You saw FanDuel talk a little about how maybe they pulled back a little too much on generosity [promotional bet credits and odds boosts],” Grove said. “That is a big lever here. So, you do have this interesting environment where, across many points of the spectrum, in that second tier BetMGM and Caesars have made promises to the markets about how much EBITDA they’re going to generate. So, they’re trying to run in more of an extraction mode vs. an expansion mode. At the top, it’s not as if DraftKings and FanDuel have carte blanche to continue to spend. So, they’ve also gone a little bit more into defense as they’ve seen other people take share vs. expansion.
“Not everyone — because Fanatics isn’t behaving this way and Bet365 isn’t behaving this way and Hard Rock is a different thing entirely — but you’ve got the majority of the operators leaning in the direction of optimizing for market vs. optimizing for expansion. That by definition means you’re spending less on advertising and less on generosity. If you do that in a market that is at baseline maturity, that market is probably going to wobble.”
The March digits:
