Brand development key to Flutter’s purchase of Stars Group
Flutter Entertainment’s $6 billion acquisition of Stars Group ties together the fates of FanDuel and Fox Bet, the latter a Stars/Fox joint venture that has drummed up heavy exposure in recent weeks through free-to-play Super 6 contests promoted on-air by Fox.
Flutter management made clear that while it will look for cost savings through the consolidation of operations onto a single online platform, it intends to continue with both brands, which it sees as complementary.
That decision highlights the role brand development may play in the U.S. rollout of sports betting. Operators are jockeying to distinguish their products to a consumer base that ranges from millennials who have bet through illegal offshore websites since their dorm days to sports fans who express interest in wagering but have little experience beyond office pools.
Operating both FanDuel and Fox Bet gives Flutter the breadth to develop distinct products for each of them.
“Our core view is to target certain customer segments and create a product that they absolutely love,” said Matt King, CEO of FanDuel Group, which includes the brand’s sportsbook and daily fantasy services and also the horse racing network TVG. “And that requires a bit of tailoring. It’s helpful to have multiple brands in the portfolio to do that.”
The betting menus of the respective sites reflect their contrasting approaches. For the typical NFL game, FanDuel will offer upward of 250 betting options, ranging from odds that vary based on adjustable point spreads to prop bets on individual player or team stats. That’s three to five times as many as most sportsbooks, including Fox Bet.
“The FanDuel brand people like and want that level of choice, but the more casual user is probably going to find that overwhelming,” King said. “So it’s important to give that person a bit more curation so the experience isn’t quite as intimidating.
“The product that is right for that casual audience and the marketing message that is right for them is different than the one for that more engaged core bettor. There is an opportunity here to tailor a customer proposition that is distinct for each market based on their level of engagement.”
Fox Bet’s approach to target the casual bettor follows the lead of SkyBet, which has emerged as the largest sportsbook brand in a crowded U.K. market, thanks largely to the promotional heft delivered by TV network Sky Sports. Riding the popularity of a weekly free-to-play Super 6 picks contest that offers cash prizes to those who correctly predict outcomes from the day’s Premier League games, SkyBet has managed to engender rare customer loyalty.
The typical U.K. bettor maintains two or three sportsbook accounts, driven by promotions that match the cash they place in their account or offer daily discounts. In contrast, Sky reports that 60% of its bettors play only with Sky. Initially drawn in by the free-to-play contest, they graduate to low-stakes wagers that make their afternoon of Premier League watching more interesting.
Those customers will bet far less than more engaged players, but they also can be acquired at a far lower cost.
“We’ve got lots of big, highly resourced firms batting it out, spending hundreds of millions of dollars every year in the U.K., trying to attract customers and increase share of audience by stealing customers from other operators,” said Robin Chhabra, CEO of Fox Bet. “And yet Sky has this 60% loyalty, which is incredible.
“There are clearly very different segments in the market. Skybet is incredibly successful, but it doesn’t have that much traction with the more engaged type of customer that Betfair (a Flutter-operated betting site) attracts. It’s brand segmentation that’s the key here, and I think that will be the case for us [in the U.S.].”