What could the FOX Bet closure and other moves signal for the betting industry?
FOX Bet is calling it quits, Penn ditches Barstool, Wynn exits 8 states, and quite a few others have announced either permanent or temporary shutdowns in recent months. To get right to the point – it’s obviously not a great look, but there are a few possible contenders trying to make an entrance. To help further soften the blow, especially for Wynn, there are positive signs of expansion in the UAE and elsewhere in the world. We’ll get to all of that a little further on though, plus a little update on the progress of the upcoming Wynn resort in Ras Al Khaimah.
One of the earliest posts I made here was to express sincere concern about the lack of options for bettors and the lack of competition across the regulated industry in general. Rumors of consolidations and various operators planning to scale back were abound, leading some people to speculate that on the regulated side we could be left with only a few giant operators who are largely uncompetitive. Given how poorly the industry is performing and the overwhelmingly abysmal user reviews, this would be a surefire recipe for stagnancy and possibly even outright disaster. We will go into more detail on the user reviews in the very near future, which range from light-heartedly entertaining to straight-up shocking. So I’ll just leave it there for now, suffice to say that the betting industry is among the most disliked by its users.
So on to FOX Bet. It’s an interesting situation and experiment, with such a massive media company launching a sportsbook. It instantly gave FOX Bet brand recognition and one of the largest media platforms to promote themselves. Yet even with these significant advantages, they were only able to secure a miniscule portion of the market. This doesn’t seem to be great news for ESPN and Penn, who are now partnering to launch an ESPN-branded sportsbook right after Penn dropped Barstool. But perhaps the primary focus on sports by ESPN will enable them to get better results than FOX Bet had. If anyone could make it happen, it would be ESPN. But if ESPN fails along with FOX Bet, then it would be an extremely strong indicator that media brands alone cannot simply carry a sportsbook to success.
The FOX Bet situation also highlights another consequence from the wave of consolidations in the industry. Parent company Flutter acquired The Stars Group after TSG and FOX had partnered to create FOX Bet in the wake of the PASPA repeal, which was when states started to legalize and regulate sports betting. Flutter already owned FanDuel however, which led to some complex legal issues and ultimately with FOX being awarded the option to acquire a large stake in FanDuel. Along with that whole mess and the fact that FanDuel has such a large share of the US market while FOX Bet had hardly any, Flutter seems to be focusing their efforts on FanDuel by dropping the competing brand.
With all of the talk of the failures of FOX Bet, it is important and rather interesting to highlight a key area where they had success – the Super 6 promotion. It’s a free-to-play contest where users select an outcome from multiple options for 6 events, and win a large cash prize if they get all 6 correct. It was very popular and a great example of how to bring in potential users. It also showed that they were not simply content to rely on their media and brand alone, and gave users a fun activity for free that effectively bridged the gap between just watching sports and betting on them directly. It was effective enough that I personally would like to see GAMBL try something similar. The problem for FOX Bet though, was that they simply couldn’t convert those users. It’s quite telling that FOX kept the branding rights and now plans to launch a new version of Super 6 even with the closure of FOX Bet.
Over at Wynn, they’re shutting down their sports betting app in 8 states and citing the high marketing costs as one of the primary reasons. Something doesn’t really add up with this though, when you consider the extremely unfavorable view that users have towards practically all of the current regulated operators. So it seems like DraftKings and FanDuel have secured control of the regulated US market for now, through massive marketing spending, which is essentially a bet that they can retain that control for long enough for it to pay off. This spending clearly wasn’t sustainable though, as they have already scaled back some. It remains to be seen if this was the right approach long-term, or if they will simply be left holding the bag while others take off with the prize.
Wynn seems to be instead looking more globally and with less of an emphasis on sports betting and gambling in general, particularly with their upcoming resort in the UAE. It’s quite an interesting situation as it shows that historically-strict views on gambling may be changing in that region, which could represent a highly lucrative market in the future. We took note of this with our post here, back when it was announced. Now we’re seeing some promising updates locally there, with the appointment of a president for the resort and multiple contractors. It’s encouraging news, since when we had first posted on it there was still significant uncertainty surrounding the plans. The resort is set to open in 2027 and seems quite likely that it will be a highly extravagant destination for travelers with some extra money to spare.
While it is disappointing to see sportsbooks getting out at a time like this, we should at least try to salvage some valuable honest insights, learn from the mistakes, adapt better to the current climate, and perhaps most importantly – chart a better path towards the future. One of the largest and most easily visible lessons is that these sportsbooks succumbed to the intense pressure to act immediately upon the post-PASPA repeal and simply tried to do too much, too early. With only a handful of states currently available and the rest of the world highly segmented, they wastefully burned through their resources chasing the same small pool of users – many who just simply took advantage of the overly large bonuses and then went right back to gray-area networks.
With many insights and lessons to gain from both the failures and successes, will the upcoming sportsbooks be willing and able to make real fundamental changes? Or are we just going to get more of what are essentially just re-skins that are banking on their brand to do the heavy lifting? FOX, Barstool, and others have already gone down that path and it didn’t really bear fruit. I mean let’s be real here – it’s not selling clothes, sneakers, or anything with high visibility like that. Bettors in general aren’t really talking about where they bet, so much as what odds they got and how quickly and reliably they get paid out. They’re quick to shop around and the widespread popularity of odds trackers and other related tools are a powerful testament to that, as they themselves have even become a rather large business in recent years.
So it should be clear by now that this is no quick sprint, it’s a marathon and there haven’t been many shortcuts at all. Proper long-term planning and sheer endurance are key. Loyalty cannot be bought after all, at least not at a price that has been able to actually scale up without breaking the bank. The former DFS sites have easily performed the best by redirecting their existing momentum from fantasy sports into direct sports betting. But it can only carry them so far, as they certainly haven’t been able to attract a significant share of bettors away from gray-area networks. And if they haven’t been able to do it, then how can we expect this new crop of contenders to be able to either…well with just one little caveat. At least not with the current limitations of fiat-based systems.
This is all setting up a near-perfect opportunity for crypto to shine, in an extremely valuable use-case no less – which at its core is almost entirely composed of global financial transactions and associated data. As I’ve mentioned before, if crypto cannot be competitive here then what major use-cases could it ever realistically hope to be a serious competitor in? It’s a highly inconvenient truth that most of the over-idealistic crypto influencers and media try to ignore or hand-wave away with flawed logic and irrelevant distractions. What was likely their strongest legitimate argument, that traditional sportsbooks would be successful in meeting demand efficiently and essentially drive margins lower than what crypto solutions could compete with, has instead resulted in a large portion already calling it quits. Meanwhile the real competition seems to be about who can drive margins higher through pushing parlays and other high-risk bets, while the only thing rising faster than that is the utter defiance of logic in somehow maintaining an expensive and carefully cultivated responsible gambling image. To quote a great man – I’m not even mad, that’s amazing. And yes he says that’s amazing instead of I’m impressed, the Mandela effect rears its oddly disconcerting head yet again.
Also with each new closure it’s becoming increasingly difficult not to think of the sheer amount of funding lost on just one of these sportsbooks, and how it could have completely funded many different solutions on the crypto side. Given that the failure rate is now demonstrably high (and rising further) for sportsbooks on the fiat side, it seems only logical for people to start taking a more serious look at crypto-based solutions. The core tech is absolutely good enough at this point, so the real question is can the UI/UX and day-to-day operation also be good enough to compete?
Given all of the recent advancements in crypto tech and then factor in the current state of the regulated gambling industry, which is partially evidenced above, I personally would say yes. And I’ve already placed my bet.