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For the first time, bettors could bet on the four big team sports in the third quarter: baseball, basketball, hockey and football. That never happens – and companies have clearly taken advantage of this coronavirus-fueled quirk in the sporting calendar.
The months of July, August and September have been a boon for sports fans – and for gamers. Many leagues have postponed their seasons to spring and early summer due to the coronavirus pandemic, but restarted them at the end of summer.
So, bettors could play baseball, basketball, hockey, and football (both pro and college) simultaneously in the third quarter – a one-off schedule anomaly, as the NBA and NHL playoffs are typically completed in June.
Additionally, other major sporting events – such as the Kentucky Derby, the PGA and US Open Golf Championships, and the start of the Roland Garros tennis tournament – have also gone from their usual end-of-season times. spring or early summer in the third trimester.
“This has been an unprecedented quarter and hopefully once in a lifetime. But it sets us up well for the fourth quarter and next year,” DraftKings CEO Jason Robins said in an interview with CNN Business Friday morning.
DraftKings does business in 12 states, while FanDuel is in 11.
FanDuel CEO Matt King told CNN Business that he hopes the company will soon be operating in Michigan and Virginia, which legalized sports betting earlier this year.
King added that FanDuel was also generating solid revenues even during the pandemic from online poker and other casino games.
“We’re extremely happy with the way we’re doing,” King said. “The comeback of the sport has meant that there has been an acceleration of growth as opposed to a return to growth.”
Spend a lot to gain new customers
But the intense competition comes at a cost to both FanDuel and DraftKings, even though it’s one of the investors who seem content to ignore at the moment.
DraftKings recorded a quarterly net loss of nearly $ 348 million and FanDuel expects to lose money for the remainder of 2020 as well. The main reason? Both companies follow the old business mantra of spending money to make money.
DraftKings, for example, spent $ 203 million in sales and marketing in the quarter, compared to total revenue of just $ 133 million.
“It’s a golden age of online gambling. Client enrollments and revenue growth are pretty strong, ”said Jason Ader, CEO of SpringOwl Asset Management, an investment firm that owns a stake in Flutter. “But exceeding your marketing spend doesn’t work forever. It’s a red flag.”
Ader said he was a little concerned that sports betting companies are making the same mistake that e-commerce companies and other dot-coms made during the height of the dot-com bubble 20 years ago. . In other words, it’s the Silicon Valley model of spending and building first, worrying about profits later.
Still, the two companies may have to step up their advertising and promotion efforts even further in the coming months. While FanDuel and DraftKings could be the Coke and Pepsi of the gaming world now, several other top companies are looking to steal market share.
However, DraftKings CEO Robins isn’t worried about the glut of new rivals.
“There is new competition coming from the big companies, but which will hopefully help to develop the overall market more quickly,” Robins said.
The King of FanDuel agreed, saying if more states legalized gambling there would be enough business for everyone.
“There will be continued expansion in sports betting,” King said. “A year ago we had sports betting in three states.”
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