About i360’s Consumer Pulse: The Consumer Pulse asks 1,000, of the 2.5 million US adult panelists, over 150 questions daily. Questions center around key topics such as economy, lifestyle, real estate, automotive, shopping, employment, political opinions, and more.
US College Basketball’s March Madness Tournament is here, and offices around the US are filling out brackets and (hopefully) picking a winner. After the 2018 Supreme Court Decision resurrected sports betting and the rise of companies such as FanDuel and Draft Kings gave legitimacy to online sportsbooks, the online gambling market has been a hot and growing topic. Interest has even trickled down to colleges across the country. As teams are competing for the championship, several online betting companies are vying for partnerships with colleges nationally. Some athletic departments, like the Michigan State Spartans and University of Colorado’s Buffaloes, recently began official betting partnerships. Many other universities seem likely to follow suit. As states legalize online sports betting, the market continues to grow. But whose dollars are they chasing and which demographics show growth potential?
The following graph shows the number of Consumer Pulse respondents who currently participate in sports betting. Since respondents are from the US, fluctuations likely correspond to high stakes NFL games (notice the changes in December and for the February 15th Super Bowl). It should come as no surprise then that an estimated 50 million Americans placed a wager on Super Bowl LVII, with many of them choosing to do their betting through a mobile device.
Do you currently participate in sports betting?
As with most new technology there is an age bias in usership. Approximately 25% of Gen-Z and nearly 30% of Millennials currently participate in online sports betting according to Consumer Pulse. It is likely that millennials are driving company’s like DraftKings and FanDuel’s earnings as they both participate more frequently than other groups and generally have higher income than Gen-Z users. Participation falls off after age 44 – consistent with patterns of technological adoption and represents an important area of growth in the future.
Do you currently participate in sports betting? Age Demographics
As for market share concerns, securing an official partnership with a major governing body or franchise provides a boost. DraftKings, FanDuel and betMGM account for large swathes of the market partially due to their association with athletic governing bodies as seen in the figure below. While this association is largely for advertising, it lends legitimacy to an industry just coming into widespread legality. Outside of FanDuel, DraftKings, and betMGM, there are a wide range of industry players divvying up the market. Many are backed by established casinos, while some are smaller independent sportsbooks. Barstool Sports for instance, long existed as an online lifestyle and sports content creator before opening an online sportsbook in September 2020.
Which of the following online sports apps do you regularly use?
(Asked of online gaming participants only. Top 3 responses shown.)
Tying an online sports gambling company to a university lends credibility and creates interaction points between the company and students. It seems likely that sportsbook companies are targeting both college graduates (likely high earners) and Gen Z through these relationships. Gen Z’s immersion in technology also makes them a ready market for online sportsbooks. Online sports betting participation drops off after the millennial cohort – likely due to trust and technological know-how. While older wagerers might earn more income, what online sportsbooks need are customers who come ready-made to interact with their apps. Gen Z checks this box in spades.
Geographical demographics also come into play. The laws vary by state from total legalization to complete illegality, and many points in between. This map breaks it down nicely. Regardless of state-to-state legality, there are several ways to circumvent sports-betting laws and the obvious demand cannot be ignored.
While we see a drop in participation in the south, it is obvious that many consumers are finding ways to skirt the law and place their wagers. These effects are likely understated due to regulations. There is an inevitability about the growth of online sports betting. States seeking a new revenue stream move to legalize. As they do, established sportsbook companies move into coopt the existing underground market. Corporate and university partnerships further lend credibility, and the market expands to new consumers. Will all states legalize sports betting? That remains to be seen. However, no one wants to miss a gold rush. Just as states often use lottery proceeds to fund education, an excise tax on sports betting could be applied to a myriad of widely supported issues.
Do you currently participate in sports betting? Regional breakdown
U.S. Sports Betting: Mobile
In general, the demographics of growth skew towards young and male population. As collegiate athletic programs open-up to partnerships, growth amongst college aged males is likely to further explode. Ten percent of women also participate in online sports betting and represent an important growth market for sportsbook companies. While gender demographics matter to these companies, their ability to convert customers seems to rely most heavily on consumer’s comfort and trust in the mobile marketplace. With the legalization zeitgeist, more states will legalize sports betting, opening new opportunities and surfacing underground markets.
As online sports betting goes from the backroom to the boardroom, i360’s Consumer Pulse will continue to monitor the market’s growth.
Disclosure: The information in these blog posts, based on i360’s Consumer Pulse, is for informational purposes only and should not be construed as investment advice on any matter.