SBJ Betting: As NFL season opens, the only sports betting certainty is uncertainty

Has it really been four years since we first rang in the NFL season with a “SPECIAL GIANT-SIZED DOUBLE-ISSUE” of this newsletter?

It seems it has.

I’m assuming many of you were up late last night waiting for the lightning to clear -- a PTSD moment if you’ve experienced those at the local Little League complex as a coach or parent -- so I’ll give you a sec to grab another coffee before we dig in.

At this time last year, the architects of Fanatics’ closely watched, revamped sportsbook were coming off a first half in which the focus was migrating users from predecessor PointsBet to an app that promised to be more in line with U.S. bettors’ appetite for player props and parlays.

It held a 3% share of handle in trackable states through the first half of the year, trailing FanDuel, DraftKings, BetMGM, Caesars and ESPN Bet. That number ticked up to 4% and then 5% and 6% through the summer, but it remained to be seen how Fanatics would fare through the critical early months of football season, when the leaders ramped up their media spends and ESPN stepped up its on-air promotion of ESPN Bet.

Turns out, it fared quite well.

Heading into this football season, Fanatics has pulled even with longtime No. 3 BetMGM, with each holding about 8% of handle share in the first half of 2025, comfortably ahead of Caesars (5%) and ESPN Bet (3%).

Its $3.88 billion in handle over those six months more than doubled the $1.47 billion that it handled during the same period last year.

“You’ve seen the progress we’ve made in 18 months,” Fanatics Betting and Gaming CEO Matt King said in a wide-ranging interview ahead of football season, “and frankly, I think you’ll see as much progress in the next 18 months.”

King laid out a compelling case that Fanatics has risen relatively quickly because of its approach in two key areas: product and proposition.

Its product -- a sportsbook app -- is not appreciably different from its competitors. The five leading sportsbooks all now have what King and others refer to as “table stakes” functionality: an attractively laid out, broad menu of bet types that U.S. bettors demand, backed by the technology to set odds and take wagers quickly enough to satisfy most users.

King says Fanatics has benefited on the product side from a “second mover advantage,” getting where it is today without losing as much blood as its predecessors. Moving first meant rushing to launch using existing technology and then improving on it -- as he did as when he launched FanDuel’s sportsbook as its CEO from November 2017 through May 2021 -- rather than waiting to see what U.S. customers wanted and then building it, as he has at Fanatics.

It also avoided the cash burn that came with state-by-state launches, all of which played out the same way, with FanDuel and DraftKings dominating and the rest fighting to survive.

“The reality of the first-mover strategy is you end up structurally building into your P&L a significant and massive investment in marketing,” King said. “And every marketing budget has the same axiom, which is half works, half doesn’t -- and I just don’t know which is which. So, we were able to rebuild that from the ground up so that when we benchmark our unit economics -- the upfront acquisition cost [of a customer vs. their] ongoing lifetime value -- we believe we have as good or better unit economics than anybody else in the industry. And ultimately, that’s what we’re focused on.”

King also remains bullish on Fanatics “value proposition,” which starts with sign-up offers generous enough to compel FanDuel and DraftKings users to give it a try, but will succeed only if the product meets their needs and offers a different experience.

Betting on loyalty

The differentiator Fanatics is hanging its hat on is FanCash, the rewards currency that consumers can earn, and spend, through all of Fanatics channels, including merchandise, collectibles and, yes, the sportsbook. If you are in a legal-gambling state, you can earn FanCash through a jersey purchase -- 5% of the price for most users -- and then put that FanCash toward a bet, a process that King said should be seamless this season.

Another is the “Fair Play” policy that Fanatics developed, and others have copied, which voids prop bets on players who are injured during the first quarter of a game. This season, Fanatics extended that policy to cover injuries that occur before halftime.

“We think doing that over time builds advocacy for our product,” King said. “And I’d rather have an army of advocates than a deluge of advertisements.”

While at FanDuel, King often defended the brand’s heavy ad spend and generous promotional offers with the explanation that it wouldn’t cost the sportsbook much more to service 20 million customers than it would 20,000, so it made sense to spend whatever it took to win them over early and often.

Often overlooked was the importance of delivering a competitive product.

“Outside of FanDuel and DraftKings, the point a lot of people in Gen 1 sports betting missed was the retention side,” King said. “[When you ask], ‘Will they stick around when the free money stops?’ -- that almost implies you don’t have control. You have control over what the product experience is. You have control over what your proposition is.”

Looking ahead

At this stage of Fanatics’ journey, it is still very much about trial. As a result, it has been more aggressive with its promotional sign-up strategy than its competitors with its free bet offers in the last year, at least in the five states in which regulators make them public.

Calculated as a percentage of handle, Fanatics had the highest promotional spend rate of any of the leading books in four of the five states -- Pennsylvania (6%), Arizona (5%), Maryland (4%) and Ohio (4%). It also was at 4% in Kansas, where BetMGM led by a point. FanDuel and BetMGM typically ran at 3%-4% in those states, while DraftKings was at 3%. ESPN Bet was at 2%-3%. Caesars was at 1%-2%.

Having heard grousing about the promos of “privately held” competitors -- assumedly Fanatics and Bet 365 -- during earnings calls, King explained the gap largely as a product of Fanatics getting its first shot at new customers who already have accounts with other sportsbooks.

“The tales of our overpromoting,” King said, “are wildly overstated.”

He said Fanatics will approach the next state to launch, Missouri, as it has others, with a competitive sign-up offer and a reliance on cross-selling customers across its business lines.

“We believe slow and steady wins this race,” King said. “You’re never going to see us carpet bomb the world with marketing. We’ve been very happy with how our second-mover strategy has been going. You’re not going to see us go, wait, our product is finally ready, we can kind of adopt the same first-mover type strategy. We can continue to grind out a little bit of share consistently and keep disciplined unit economics and frankly keep making the product better.”

Viewed through the lens of the last seven years of sports betting legalization, the next state to open will be Missouri, scheduled to launch online wagering beginning Dec. 1.

But you could make the argument that 16 states, including California, Texas and Georgia, opened for business in March, when prediction market exchange Kalshi and online brokerage Robinhood began offering contracts on the men’s and women’s NCAA basketball tournaments, regulated federally by the Commodity Futures Trading Commission (CFTC).

Tonight, Kalshi users in those states will be able to bet on the spread, moneyline and total on the Chiefs-Chargers game. I’m calling it betting. If you’d like to debate the nomenclature, have at it. Kalshi also has dozens of player props around anytime TD, first TD and two TDs. Earlier this week, the exchange filed a self-certification that appears to permit users to combine contracts into parlays.

So, yeah, the NFL season opened last night with legal online sports betting up and running in all 16 states that haven’t legalized it yet, which together make up about 40% of the 21-and-over U.S. population.

If you were paying attention during the early days of legal sports betting, when the NFL was the last of the big leagues to give up on federal oversight and also the last of them to open the door to sportsbook sponsorships and in-game TV spots, you might expect this to bring something approaching a conniption at the offices of 345 Park.

But that was before sports betting proved to be an overwhelming winner for the leagues, driving revenue and supporting ratings.

Kalshi, Robinhood, PrizePicks and -- coming soon -- Polymarket may not be FanDuel or Draftkings, but they’re also not Bovada, offshore-based and entirely unregulated.

While there may be debate around whether prediction markets are betting, or pick ’em constructs such as PrizePicks are betting, or the next “sweepstakes” to emerge is betting, the NFL is likely to take a similar position on all of them: That if you can stake money, predict an outcome and get back more than they you put up, it’s an activity that warrants similar protections put in place in legalized betting states.

Core among those are transparency, information sharing and other integrity protections; a say on bets, picks, contracts or entries that the league might see as objectionable or easily manipulated; and consumer protections.

Those can come through state or federal regulation, commercial agreements, or a mix of those, so long as they’re put in place.

“Overall, our view on prediction markets is that they need to be done in a way that we have the same types of ... protections that exist in the state-by-state sports betting framework,” said David Highhill, VP/sports betting for the NFL. “And that’s not specific to any one platform. That’s an industry standard that we’d be looking for.”

It has been a decade since PrizePicks launched a pick ’em format that functions similarly to a parlay of player props. When FanDuel and DraftKings shifted their resources to sports betting, PrizePicks stuck with what it had -- an SGP-like product that took off in states that hadn’t legalized sportsbooks.

In states that put the kibosh on that product, PrizePicks and other pick ’em sites now offer what looks like the same SGP product but constructed as a peer-to-peer contest that they say does not constitute gambling.

Kalshi says its prediction contracts are an investment instrument.

Also not gambling.

Maybe, at some point, the courts and/or federal regulators will clarify whether waddling like a duck and quacking like a duck makes them ducks. Maybe some of the more populous states that haven’t legalized yet will do so, forcing them to either compete with the sportsbooks for customers or move on.

If neither of those happens, those who haven’t had success asking permission may take their chances on begging forgiveness.

“Our governing principal is that any regulation is better than no regulation,” said Matt King, the CEO of Fanatics’ sportsbook. “There are lots of questions and lots of people who have views of state vs federal -- but it’s not our place to opine on the federal preemption argument. The courts will decide what happens there. ... So, we’re looking at how we would provide a market-based product under the CFTC regime. And if that opportunity is available to us, we’re absolutely going to do it.

“We’ll obviously always compete with FanDuel and DraftKings. But if we’re also competing with Robinhood and Polymarket, so be it.”

The leagues will have to wrestle with how best to deal with all of them.

“We’ll continue to evaluate new categories and spaces as they come,” Highhill said. “This is clearly a space that’s evolving all the time. ... But there are core, fundamental things that we need before looking at engagement.”

Along with all the minus-signs that you’ll see in the July handle column above, you’ll notice a year-on-year plus-sign that’s worth noting. While most of the populous states were up 10% to 20% vs. last July, Kansas came in with a whopping 42% increase.

Missouri opens in December. Lots of Missourians already are betting in Kansas. The battle for their wallet share, fueled by generous promo offers, has begun.

• A new BetMGM ad campaign began Saturday featuring ever-cool actor Jon Hamm sharing the tall tale of a trio of friends who wander into a hauntingly somber bar after a hailstorm cracks their car windshield. It’s clear they’re not welcome -- until they place a four-leg parlay that gets the whole bar cheering along with them.
• The former FanDuel sportsbook inside PHX Arena is being converted into the FanDuel Lounge, a space exclusive to all Suns and Mercury season ticket members during the teams’ home games, reports SBJ’s Bret McCormick. The redesigned lounge will still feature FanDuel ambassadors helping guests access the FanDuel app, but there will no longer be betting windows in the space.
• The state legislator who sponsored sports betting legislation in North Carolina, Jason Saine, was among the panelists counseling a House committee studying gambling in Georgia last week. PGA Tour VP/Gaming Scott Warfield and AMB Sports SVP and general counsel Joe Pierce also were on the docket. Don’t let the 5-hour+ hearing length spook you. You can knock out the sports betting part in an hour.
• Fantasy and sports gaming operator Underdog is partnering with Crypto.com to “offer sports prediction markets in 16 states, mostly focused on where legal sports betting has not been adopted,” notes CNBC.
• Massachusetts State Auditor Diana DiZoglio, in an audit released Thursday “criticizing the Massachusetts Gaming Commission’s oversight practices,” recommended that gambling regulators “review sports betting companies’ ads before they reach the public,” per the Boston Globe.