Smarkets CEO: Price and product will win long race in “nutty” US betting market

Smarkets CEO Jason Trost believes the US sports betting “duopoly” occupied by DraftKings and FanDuel can be broken up in the future as the market matures. The two former DFS operators have led the way in the US since states began legalising sports betting following PASPA’s repeal in 2018, enjoying a combined market share of almost 80% in Colorado for example, based on analyst estimates released in October 2020. The pair finished first and second in the EGR US Power Rankings for 2020, although are set to face stiff competition in 2021 from Entain and MGM Resorts joint venture BetMGM, as well as challenger brands like Barstool Sportsbook, which is minority owned by Penn National Gaming. However, Trost argues the deep pockets of FanDuel parent company Flutter Entertainment and the capital raised by DraftKings since its IPO have helped to mask an unexceptional user experience, with both firms buoyed by significant spend on above-the-line marketing and acquiring new customers. “It’s no secret there’s a duopoly [FanDuel and DraftKings] going on right now,” Trost told EGR. “I have a horse in the race, but I don’t think it will look like that long term. “I don’t think they’re particularly interesting products, companies or brands. I think they’re relying on the novelty factor and the fact they are able to spend hundreds of millions of dollars. “It gets lost in all the commotion that these companies lose money hand-over-fist to acquire customers. I don’t think it’s sustainable, but we’ll see.”

Trost – a former equities trader and UBS analyst – described the US betting space as “nutty” due to the major consolidation taking place, with Caesars acquiring William Hill and MGM Resorts in for Entain. “It’ll be interesting to see what happens but, ultimately, I think price and product will win the day,” he added. Smarkets is currently live in Colorado via its app-only sportsbook brand SBK, with plans to expand into Indiana in the coming months. Trost hinted at a slow and steady approach for Smarkets stateside. He said: “We are one of the smaller companies in the industry so we’re not in it for the first-mover advantage. “By going big in Indiana and Colorado, I think we’ll be able to get enough of an exposure to the American market to build the best product before eventually going into the rest of the states,” he added.