FanDuel Group converting existing sports gamblers to high-yield online casino vertical

From DFS To Sports To Casino, Cross-Sell Drives Growth For FanDuel Group

FanDuel Group saw Q4 2019 casino revenues treble year-over-year, with Betfair Casino reaping the rewards of sportsbook cross-sell.

Revenue for the quarter came in at more than $26 million, good for a 19% share of the New Jersey online casino market. That’s up from a 12% share in Q4 2018.

“Our online casino materially benefited from sports betting cross-sell,” FanDuel parent company Flutter said in a results announcement Thursday.

“Growth accelerated once we embedded casino content in the sports betting app in July and by December, 54% of casino revenues were coming from sportsbook customers.”

Flutter saw similar “very encouraging” trends in Pennsylvania where it launched a FanDuel-branded online casino in January 2020.

DFS driving sports betting growth

Cross-sell was an important driver of revenue across the FanDuel business, with 42% of sportsbook customers acquired via daily fantasy sports.

“This has resulted in a very attractive average customer acquisition cost of less than $250 since the sportsbook was launched,” the operator said.

FanDuel Sportsbook posted revenue of $419 million for the year, up 45% from 2018. It added 285,000 new sports betting customers in 2019 to bring its total US database to more than 350,000.

A shared wallet eases the conversion of sports gamblers into the casino vertical, which historically has the higher lifetime value (LTV).

FanDuel growth doesn’t come cheaply

The rapid expansion came with a cost, though — specifically a FY19 loss of $50 million.

Much of that loss was driven by a huge increase in boots on the ground, as the group’s US headcount grew to roughly 1,000 employees.

“Our online market share during 2019 of 44% in the states we are live is testament to the quality of our products, brand and team,” said Flutter CEO Peter Jackson. “We remain as confident as ever in the size of the prize in the US and in our strategic approach which positions us well for the future.”

Flutter’s plans for 2020

The company aims to launch in at least three more states in 2020, including Colorado, Tennessee, and Iowa.

“We are now increasingly confident that the total US addressable market for our products could exceed $10bn,” Flutter said. “We also plan to progress our work on our proprietary technology stack, utilising Group assets to ensure we have sufficient scale and flexibility to deal with individual state requirements.”

The London-listed firm is meanwhile facing a lawsuit from FanDuel’s founders over its sale to Flutter (then Paddy Power Betfair) in 2018.

Who in US sports betting can rival FanDuel?

The results for Flutter’s forthcoming merger partner, The Stars Group (TSG), also included an update on its Fox Bet subsidiary. It has seen a 9% compound weekly growth rate in active customers since launch, giving it around 65,000 active users in Q4.

Fox Bet also reported 1.3 million downloads of the Fox Sports Super 6 app in 2019, with 500,000 customers making at least one prediction a week during the fourth quarter.

Still, a slide from TSG showed the scale of the challenge ahead for Fox Bet.

According to a survey of potential bettors, Fox Bet has the third best brand awareness (20%) among interested non-bettors. That is dwarfed by the “big two” DFS brands, FanDuel and DraftKings, each with around 65% awareness.

The Fox Bet business posted a loss of $40 million in the US for 2019, as previously flagged on Legal Sports Report.

- Brad has been covering the online gambling industry in Europe and the US for more than four years, most recently as the news editor at EGR Global.
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