Fox Bet flops as FanDuel and DraftKings dominate sports betting
The graveyard of upstart online sportsbooks is filling up as the digital gambling market consolidates around the biggest players with the deepest pocketbooks and brand recognition.
Why it matters: Gambling operators are engaged in a digital gold rush to grab market share as more states legalize online sports wagering.
Driving the news: Fox Corp. and Flutter Entertainment announced Monday that they're closing Fox Bet after it barely made a dent in the U.S. gambling landscape since launching four years ago.
Catch up fast: Fox launched the sports betting platform in 2019 with The Stars Group, which was acquired by Dublin-based Flutter in 2020.
- Flutter is also the majority owner of FanDuel, which has a 44% market share in U.S. gaming, the highest of any online sports gambling platform, according to a note by Eilers & Krejcik Gaming analyst Chris Krafcik.
- Fox Bet, by contrast, was a "bit-part player" with "well below" 1%.
Flashback: Flutter CEO Peter Jackson said on a March earnings call that he expected "between half and two-thirds" of its $75 million in non-FanDuel losses to go away if Fox Bet were shut down.
The big picture: The demise of Fox Bet follows the recent closure of several other small sportsbooks that never gained much traction, including MaximBet, FuboTV and TwinSpires.
- Meanwhile, Australian sportsbook PointsBet suddenly offloaded its U.S. operations to well-capitalized upstart Fanatics last month.
State of play: Having established themselves as fantasy sports players years before the legalization of sports betting, FanDuel and DraftKings have a massive head start in securing gambling customers, while BetMGM and Caesars Sportsbook have strong brand recognition from their associations.
- Bank of America analyst Shaun C. Kelley on Tuesday raised his second-quarter revenue projection for DraftKings by a range of $50 million to $100 million.
- BetMGM — which is jointly owned by Entain and MGM Resorts International — last week reported that it reached "the key milestone" of positive EBITDA in the second quarter. Bank of America's Kelley had projected a $40 million EBITDA loss.
Online sports betting is now legal or poised to go legal in 29 states, according to the Action Network.
- Another eight states allow sports betting in person but not online.
Worth noting: Fox had big plans for Fox Bet when it introduced the app in 2019, but those plans hit a snag over a lengthy legal dispute with Flutter in 2021 over the price that Fox would have to pay to buy a stake in FanDuel.
- Last year, an arbitrator said that Fox has the right to buy an 18.6% stake in FanDuel from Flutter, but not at the price it was hoping for, Sara and Axios Pro's Kerry Flynn reported.
- The legal drama delayed Fox's ability to roll out the app in the U.S.
Be smart: "These days, the smarter smaller players aren't attempting to go head-to-head with FanDuel and DraftKings," Krafcik, managing director of sports betting and emerging verticals, tells Axios in an email.
- "Rather, they're attempting to carve out niches for themselves via a combination of product and marketing," he said, noting the success of platforms like Betr "with its influencer-led marketing and microbetting-focused product."
What's next: Fanatics is expected to use its acquisition of PointsBet as a springboard into the market, hoping to buck the trend of upstart sports betting operations going belly up.
- CEO Michael Rubin has said Fanatics will use its extensive customer database to promote its new sports betting platform.
The bottom line: Even the marketing power of Fox is not necessarily enough to lure customers away from the entrenched leaders in the sports betting industry.