A year or two from now, the landscape might be almost unrecognizable in many respects, with some new operators failing and others being swallowed by larger fish — or sharks.
But four current New Jersey operators told the New York City Sports Betting Investor Summit audience Monday that they welcome the challenges ahead.
“It’s war out there,” PointsBet executive Seth Young said of a New Jersey landscape of more than a dozen legal sports betting apps and the real possibility of more along the way. “There’s going to be a lot of carcasses out there on the road when all is said and done.”
Said DraftKings Chief Business Officer Ezra Kucharz: “What competition does is spur us on to make better products. If there were 10 more operators? Fantastic. Bring it on.”
Rush Street’s VP of Business Development Rob Picard and TheScore President Benjie Levy also expressed enthusiasm for the task ahead.
“I would say that there is a risk in the New Jersey market in particular, where things can get overheated and users may start to bounce around on five different accounts,” said Levy, whose company’s app was a favorite way for bettors to keep track of their picks even before it reached a deal with Monmouth Park to join the sports betting arms race.
Levy said that adding sports betting is just another level of convenience for those existing customers, some of whom “come to us 100 to 150 times in the course of a month.”
“In just two months in business, we already are starting to see where this could be headed,” Levy added. “It’s exciting.”
When the topic of Pennsylvania’s famously high tax rate came up, the discussion took an interesting twist: Would sports betting industry success in spite of the state’s large cut be a mixed blessing since it could encourage copycats in other states?
Young wondered about that himself, saying, “It sucks, let’s be candid. There’s just something about paying a $10 million licensing fee for the privilege of paying a 36% tax rate. It’s interesting. It’s a tough one. If they are successful [in keeping the partnerships now in place], other states may follow.”
Picard is no fan of the Pennsylvania blueprint, either. “A number of other states have looked at it, but I’m not seeing that number in any other state — which is encouraging,” he said.
While other companies bemoaned the costs before eventually signing on, Picard said the decision for Rush Street was “a no-brainer.”
“We had to make that state work, as one of our flagship states,” said Picard. “But yes, I wish the tax rate was lower.”
Other Summit tidbits
Kucharz said that while DraftKings has millions of daily fantasy sports customers nationally, “north of 35% of signups to our sportsbook in New Jersey are new to us — which is great news.”
An earlier panel discussed how American sports bettors are turning to be more “brand-loyal” to their first betting apps than Europeans. “What we have seen is that when they make that deposit, they stay,” Kucharz said.
DraftKings’ surge in online casino revenue in September, Kucharz said, came with “zero marketing” for a product that has been attracting both new sports bettors and holdover DFS players via the “cross-sell.”
PointsBet’s Young said that because the company owns all its technology and doesn’t “outsource,” that both allows for more flexibility and avoids the inevitable challenges that come when mergers force unrelated systems to be joined.
Young said that his company’s early success in New Jersey came in part because after the state legalized sports betting in June 2018, some operators “frankly, were asleep at the wheel.”
The Australian company planned its “Good Karma” committee to offer refunds for the worst of beats, and PointsBet took advantage when the New Orleans Saints lost to the Los Angeles Rams in last year’s NFC championship in large part because officials missed a late-game blatant pass interference infraction by a Rams defender.
“We refunded all bets on the Saints that day,” Young said. “It didn’t necessarily cost that much, but it got picked up in the media as, ‘A bookie fixed something that the NFL couldn’t.’ It went viral, and that was our coming-out party.”
Questions about placing limits on professional sports bettors, or “sharps,” make some operators squirm. But Young embraced the query, since his company has made its bones in part on being known for taking such action.
“We find a way to turn sharp bettors to our brand,” Young said. “For us, we are very comfortable with our pricing, and we take a long view.”
Picard of Rush Street said the “first wave” of mobile New Jersey sportsbook openings — his company operates Play SugarHouse in NJ — may be over, but “a very different second wave” surely is on its way.
“From my perspective, the clear winners are already in the market,” Picard said.