Breakingviews - US sports-betting duo’s growth wager is paying off

NEW YORK, Jan 23 (Reuters Breakingviews) - The wide world of sports betting is narrowing. DraftKings (DKNG.O), opens new tab and FanDuel have about 80% of the U.S. market, which could reach $39 billion in size by 2030, the latter company’s owner Flutter Entertainment (FLTRF.L), opens new tab reckons. High entry costs and slick products stack the house in the duopoly’s favor. Absent a regulatory crackdown, it looks like years of red ink will finally pay off.

Both companies’ roots lie in speculative chance. FanDuel and DraftKings were founded in 2009 and 2011 respectively as daily fantasy sports websites. They operated on the fringes of sports-betting proper, because a U.S. federal statute prohibited running sportsbooks outside of Nevada. The pair’s implicit gamble was that rival gaming hub New Jersey would challenge the law of the land. Lady luck was on their side: in 2018, the Supreme Court ruled, opens new tab that each state could regulate wagering on its own terms.

The decision opened the flood gates. So far, 38 states and Washington DC have legalized, opens new tab sports punting in some form. Nearly one-fifth of American adults have put money down on football, basketball and other games, according to a 2022 Pew Research Center survey, and the total amount wagered, opens new tab ballooned from $13 billion in 2019 to $135 billion last year, per Sportsbook Review, landing operators almost $13 billion of gross revenue. Two of the most populous states, Texas and California, are still mulling whether to allow betting.

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