In the wake of Penn Entertainment introducing EPSNBet, rumor has it that two more sports giants are looking to get into the sports betting game.
Who will be the next big company to get into sports betting?
ESPN and Penn Entertainment revealed its new logo for ESPNBet which will start in November. The company will launch in all 16 states that Penn was licensed when it was partnered with Barstool Sports and it appears Barstool will still maintain its licenses to operate separately as well. There is an expectation that ESPN may do some sort of cross promotion that will give bettors access to the paid ESPN app and content for free in exchange for holding a BetESPN account.
Similarly, Fanatics, the sports merchandise licensing company, which began operating this year in Kentucky, Massachusetts, Maryland and Ohio and are expected to launch in almost every state where they have already received a license, including New York, in the next few months. The company offers “Fan Cash” in exchange for wagers with 5% fan cash on same game parlays, 3% on regular parlays and 1% on all other bets. Fan cash is a rebate on products offered on the Fanatics website. So, if a bettor wagered $500 on a same game parlay, they would get $25 to use towards the purchase of something at Fanatics, although the discount is only on regular priced items. So technically, to get a free NFL jersey valued at $200, a person would need to wager $4,000 on same game parlays or $6,000 on parlays or $20,000 on single game bets. It really is no different than loyalty cashbacks offered elsewhere, but appeals to many fans since they get actual merchandise.
Next sports giant to take the plunge
After hearing about the two latest launches, I started researching and asking contacts if they know of any other companies that may be considering a foray into sports betting as well. My thinking was that if Fanatics could offer sports betting, then maybe Nike, Reebok or Under Armour would follow suit. As it turns out, there are two companies that I am told who are seriously looking at expanding into sports betting although none of them are apparel companies. The two companies? Warner Brothers Discovery and Underdog Fantasy.
The Warner Brothers Discovery Networks run various channels, although the two that have a sports focus are TBS and to a lesser degree TNT. TBS has over 90 million subscribed households and are one of the biggest broadcasters of live sports, along with ESPN. They focus on MLB, NHL, NBA and the NCAA, along with wrestling. They are also the hosting network for all Atlanta based teams. Like ESPN they have a large worldwide following that will be of interest to bettors in the U.S. who were born elsewhere. The company even has a Spanish network that offers a broadcast to Americans born in Latin America interested in soccer matches and baseball and basketball games. From the rumors the analysts have been telling me, Warner Brothers was looking at sports betting even before ESPN but wanted to make sure that a foray into betting would not harm their reputation, since sports is only a small part of their overall business, unlike ESPN. As well, since Georgia has yet to legalize sports betting, there is some belief the company may be waiting for legal sports betting in Georgia and may partner with another Atlanta based company, such as Coca Cola, to make a huge splash into the industry that would immediately vault them to the top. Asked if their move into sports was imminent, I was told that it won’t be in the next few months, but we will likely hear something about BetTBS by 2025 or 2026.
Fantasy games to sports betting
The other company apparently sniffing about in the sports betting space is Underdog Fantasy. Naturally, Underdog is not as old or famous as DraftKings or FanDuel, but they have a very large following and are growing each year. Underdog Fantasy was founded in 2020 by New York based businessman Jeremy Levine and has received funding by several wealthy individuals, including Mark Cuban and Kevin Durant. Unlike DraftKings, FanDuel and even Yahoo Daily Fantasy, which rely on salary caps to pick players for fantasy contests, Underdog utilizes a “best ball” format for year long contests, where Underdog clients participate in snake drafts to pick players and then use them in head-to-head matchups to score points based on a scoring system for each sport. The year long NFL contest called NFL Best Ball Mania has a $15 million prize pool including $3 million to the winner making it the biggest fantasy sports contest in the world. The entry fee is only $25 and is limited to 150 entries per person. The company also has similar contests for daily sports as well as a pick ‘em contest for props. Some states allow best ball contests because they are still seen as skill games but require a sports betting license for pick ‘em games, because they are seen as sports betting. So, if the state has not legalized sports betting or if the fee to offer it is astronomical, Underdog does not offer daily pick ‘em games in those states. DraftKings and Yahoo borrowed the best ball format from Underdog and has launched it on their sites too.
One analyst I spoke to who knows the staff at Underdog well, has told me that Underdog feels if they launched into sports betting, they could make a bigger splash than even FanDuel or DraftKings because they have staff who know more about player performances than players themselves and could use their current staff as traders, which will lower costs. They also feel that they could make a huge profit in sports betting by avoiding high tax and high license fee states such as New York. Instead focusing on states where Underdog Fantasy is very well known and has a large client base, such as New Jersey, Connecticut, West Virginia and Tennessee, as starters. In that regard they wouldn’t be looking for the volume that DraftKings and FanDuel are and thus wouldn’t need to spend as much on advertising. Cross promotions could involve incentives offered by its investors like Mark Cuban. Along with all traditional team sports, Underdog also currently has contests for Esports, MMA, NASCAR and even F1. Asked when Underdog may be looking at launching a bid into sports betting, the analyst said he wouldn’t be too surprised to see an announcement before the NCAA Tournament begins in 2024.
So, ESPN and Fanatics are the talk of the town now as many expect them to make a massive splash into the sports betting market in the U.S. But, if the rumors are true, TBS and Underdog Fantasy may not be too far behind and they have the backing to be just as large as the ESPN and Fanatics juggernauts.