{"id":220372,"date":"2022-07-09T01:00:55","date_gmt":"2022-07-09T06:00:55","guid":{"rendered":"https:\/\/www.casino.org\/news\/?p=220372"},"modified":"2022-07-09T18:21:28","modified_gmt":"2022-07-09T23:21:28","slug":"sportsbook-promo-spending-declining-fanatics-lurking","status":"publish","type":"post","link":"https:\/\/www.casino.org\/news\/sportsbook-promo-spending-declining-fanatics-lurking\/","title":{"rendered":"Seasonal Lethargy Setting in for Sportsbook Operators, Promo Spending Declining"},"content":{"rendered":"

It\u2019s July, meaning sportsbook operators are smack in the middle of the annual seasonal slowdown owing to a slow sports calendar. But it\u2019s possible June through August lethargy could provide support to downtrodden sports betting equities.<\/p>\n

\"sportsbook\"
A FanDuel sportsbook in Atlantic City. An analyst sees a slow period for the industry. But promotional spending is slowing, too. (Image: Maryland Matters<\/em>)<\/figcaption><\/figure>\n

In a recent note to clients, Roth Capital analyst Edward Engel says second half comparisons against last year\u2019s numbers for the same period will be difficult to meet or exceed. But there\u2019s a silver lining: The likelihood that operators significantly reduce promotional spending in the back half of 2022.<\/p>\n

With promo intensity slightly easing from an unsustainable 2H21, this makes it difficult to sustain recent same-state (SS) GGR growth rates as the level of free money declines. Yet looking into 2H22, we actually believe investors would accept some gross gaming revenue (GGR) slowing if it comes with lower promos,\u201d<\/strong> writes Engel.<\/p><\/blockquote>\n

Promotional spending is, arguably, the elephant in the regulated sports betting room, because operators need to spend to acquire and retain customers. But that often comes at the expense of attaining profitability<\/a>. Year-to-date share price performances confirm investors are losing their appetite for money-losing companies, regardless of industry.<\/p>\n

Fanatics Could Alter Promo Landscape<\/h2>\n

While promotional spending is declining, perhaps to the benefit of investors, those reductions could be erased. That’s if Fanatics officially enters the sports betting space before the end of this year.<\/p>\n

\u201cAny promo easing could be unraveled if a well-capitalized Fanatics enters the market after recent signals point to launching online sports betting,\u201d adds Engel.<\/p>\n

\n

Fanatics\u2019 pursuit of sports betting is well-documented. But when that will actually happen is a different matter. Last month, founder Michael Rubin<\/a> said he\u2019s selling his roughly 10% interest in Harris Blitzer Sports & Entertainment, which owns the NBA\u2019s Philadelphia 76ers and the NHL\u2019s New Jersey Devils. That move by Rubin is widely viewed as a clear sign Fanatics is planning to enter the sports wagering industry, perhaps over the near-term.<\/p>\n<\/div>\n

Additionally, the privately held sports apparel giant recently filed for sports betting-related trademarks, and remains an epicenter of takeover speculation<\/a>\u2026as a suitor. Recent reports suggest Fanatics could move on German sportsbook operator Tipico, while Engel revisits previous rumors about a takeover of Rush Street Interactive (NYSE:RSI).<\/p>\n

\u201cIf Fanatics does aspire to become a leading operator, it must gain access into license constrained markets, such as CT, MI, AZ, IL and NY; however, we don’t believe this is achievable without M&A. RSI\/DraftKings\/FanDuel are the only operators with licenses in each of those states, thus a Fanatics-Tipico-RSI tie-up could make sense since RSI outsources OSB functions anyway,\u201d said the analyst.<\/strong><\/p>\n

iGaming Economic Sensitivity<\/h2>\n

The online casino industry is still in its infancy, meaning it hasn\u2019t previously been tested by high inflation and the specter of a sluggish economy. But the land-based casino group has a history of surprising economic resilience, so it\u2019s possible that transfers to the internet space.<\/p>\n

\u201cSome investors are questioning iGaming’s sensitivity to economic headwinds related to inflation\/gas prices, but this is difficult to quantify. Even over 2008-2010, global iGaming\/OSB GGR grew 10%+, as secular tailwinds overpowered economic headwinds,\u201d concludes Engel.<\/p>\n

The analyst points out internet casino equity valuations are \u201cbottoming\u201d around 2x sales. But Fanatics\u2019 possible entry into the fray implies investors should proceed with caution.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

It\u2019s July, meaning sportsbook operators are smack in the middle of the annual seasonal slowdown owing to a slow sports calendar. But it\u2019s possible June through August lethargy could provide support to downtrodden sports betting equities. In a recent note to clients, Roth Capital analyst Edward Engel says second half comparisons against last year\u2019s numbers […]<\/p>\n","protected":false},"author":46,"featured_media":220373,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[10,1074],"tags":[],"acf":[],"yoast_head":"\nSportsbook Promo Spending Declining, Fanatics Lurking<\/title>\n<meta name=\"description\" content=\"Sportsbook promotional spending falling, but Fanatics remains a wildcard, says analyst.\" \/>\n<meta name=\"robots\" content=\"noindex, follow\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Sportsbook Promo Spending Declining, Fanatics Lurking\" \/>\n<meta property=\"og:description\" content=\"Sportsbook promotional spending falling, but Fanatics remains a wildcard, says analyst.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.casino.org\/news\/sportsbook-promo-spending-declining-fanatics-lurking\/\" \/>\n<meta property=\"og:site_name\" content=\"Casino.org\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/Casino.OrgNews\" \/>\n<meta property=\"article:published_time\" content=\"2022-07-09T06:00:55+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2022-07-09T23:21:28+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/07\/FD.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1920\" \/>\n\t<meta property=\"og:image:height\" content=\"1440\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Todd Shriber\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@etfgodfather\" \/>\n<meta name=\"twitter:site\" content=\"@Casino_Org\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Todd Shriber\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.casino.org\/news\/sportsbook-promo-spending-declining-fanatics-lurking\/\",\"url\":\"https:\/\/www.casino.org\/news\/sportsbook-promo-spending-declining-fanatics-lurking\/\",\"name\":\"Sportsbook Promo Spending Declining, Fanatics Lurking\",\"isPartOf\":{\"@id\":\"https:\/\/www.casino.org\/news\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.casino.org\/news\/sportsbook-promo-spending-declining-fanatics-lurking\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.casino.org\/news\/sportsbook-promo-spending-declining-fanatics-lurking\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/07\/FD.jpg\",\"datePublished\":\"2022-07-09T06:00:55+00:00\",\"dateModified\":\"2022-07-09T23:21:28+00:00\",\"author\":{\"@id\":\"https:\/\/www.casino.org\/news\/#\/schema\/person\/f4cecf70a5032bc4e60eb73fc86d4a85\"},\"description\":\"Sportsbook promotional spending falling, but Fanatics remains a wildcard, says analyst.\",\"breadcrumb\":{\"@id\":\"https:\/\/www.casino.org\/news\/sportsbook-promo-spending-declining-fanatics-lurking\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.casino.org\/news\/sportsbook-promo-spending-declining-fanatics-lurking\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.casino.org\/news\/sportsbook-promo-spending-declining-fanatics-lurking\/#primaryimage\",\"url\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/07\/FD.jpg\",\"contentUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/07\/FD.jpg\",\"width\":1920,\"height\":1440,\"caption\":\"A FanDuel sportsbook in Atlantic City. 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