FanDuel has established itself as the king of online sportsbooks in Michigan and across the US. But if more states legalize online casinos in the future, that could be like winning NIT Tournament as opposed to the NCAA Tournament.
FanDuel’s parent company, Flutter, touted the success of its sportsbook during its Q2 investor call last week. Behind the success of the sportsbook, Flutter reported profitability in the first half of 2023.
Is it a great accomplishment? Absolutely. But if Michigan is a test case for future online casino states, Flutter has more work to do.
FanDuel owns nearly a third of Michigan’s sports betting market
Flutter reported FanDuel holding 47% of the US online sportsbook market share in Q2 of 2023.
Here in Michigan, FanDuel is responsible for just under 30% of the overall sports betting market share.
Over the first half of 2023, FanDuel Sportsbook MI has recorded 34.3% of the online market share with $708.2 million in wagers.
That $708.2 million in wagers has led to $99 million in revenue. Certainly not a small number. However, it’s a small cry from the $305.4 million that BetMGM Michigan has generated in online casino revenue through the first six months of 2023.
But online casino puts BetMGM Michigan well ahead overall
It’s no shame to be No. 1 in sports betting, as FanDuel clearly is, but the big prize in Michigan is being No. 1 in online casinos.
BetMGM has mastered that to a point where it’s sports betting doesn’t have to worry about where it fits in.
Despite being third in sports betting handle in the state, BetMGM’s overall online gambling revenue far surpasses its two competitors.
|Online Sportsbook Revenue
|Online Casino Revenue
|Total Online Revenue
This data shows that FanDuel has a long way to go to catch up to BetMGM to being the top online gambling brand in this state. In fact, FanDuel’s closer to DraftKings in the battle for second than it is contending with BetMGM.
Why online casinos have a high ceiling in the future
FanDuel’s success in sports betting also holds a lower ceiling than what BetMGM has been able to accomplish with online casinos.
Nearly half of the country already has legalized online sports betting. The same can’t be said for online casinos, which are limited to just six states.
Legislators have hit more of a road block trying to come to agreements on the best approach to bring online casinos to their state in a regulated matter. However, like the sports betting boom we’ve seen in recent years, it’s only a matter of time before online casinos see similar growth in legalization.
The revenue online casinos are generating for the respective states where it is legal (nearly $1 billion in Michigan) is too much to ignore. There are more hoops to jump through getting online casinos regulated, but the big business for all involved will win out.
As more states get regulated, that’s a lot more revenue for the operators. As iGaming grows, being the top online sportsbook will carry less and less weight when compared to being the top online casino.
Here in Michigan, we still can’t say we’ve hit a peak for online casino revenue either. Numbers continue to grow steadily year-over-year. Online sportsbooks have plateaued in the state, with online handle projecting to be lower in 2023 than 2022.
Why FanDuel Sportsbook MI is succeeding
FanDuel has not only garnered the most in wagers from Michigan online sports bettors, but they have generated far greater revenue.
Over its $355.5 million in revenue over Michigan’s lifetime of legalized online sports betting, that has come through just under $3.1 billion in wagers. FanDuel’s online lifetime hold in the state is 11.5%, far greater than the state’s average of 8.6%.
That hold has only been growing as well. For 2023, FanDuel’s online hold sits at 14%.
What’s the reasoning behind it? Parlays, parlays and more parlays.
The Michigan Gaming Control Board doesn’t breakdown what customers are wagering on with each monthly revenue report. However, we have seen Illinois report in the past that FanDuel’s monthly revenue as had as high as 70% come from parlay wagering.
Also, FanDuel Sportsbook MI’s $708.2 million in wagers this year is 34.3% of the market share for handle in the state. But, its $99 million in revenue is 51.9% of the state’s online sportsbook revenue market share in 2023.
FanDuel was the first to introduce the Same-Game Parlay in Michigan and also allows bettors to stack SGP’s on top of one another. It’s like a Mega-SGP.
Just like people scooping up Mega Millions tickets when the jackpots near $1 billion, bettors are willing to burn a handful of dollars regularly to set up a “lottery ticket” parlay in the hopes of winning big.
FanDuel has been the home for a large part of that audience and has marketed itself well to keep them coming back. Gambling literacy is at a low level for younger customers, which is what leads to these types of bets.
As long as those bettors remain dedicated to near-hopeless wagers, FanDuel will thrive in the online sports betting market.
But, that won’t be enough to make it No. 1 overall in online gambling as online casinos start to appear in more states.