FanDuel, DraftKings cash in on pent-up demand over the summer
It’s safe to say that everyone was feeling a little antsy as spring turned to summer and COVID-19 continued to keep many aspects of “normal life” frustratingly out of reach.
But people who like to wager on sporting events? They were feeling really antsy. They had a serious itch to scratch, and the pandemic was depriving them of one of their preferred pastimes.
A close look at consumer financial spend data for two popular online betting and fantasy sports companies, DraftKings and FanDuel, reveals just how much pent-up demand had been building around sports-related betting.
Spoiler alert: It’s even more than you think.
After a slight dip in year-over-year growth in the early days of the pandemic, DraftKings stabilized and picked up steam at the end of May and hit 100% year-over-year growth by the tail end of June. In that same time, FanDuel racked up impressive 100%-200% year-over-year growth numbers.
Believe it or not, this is just the warmup.
In July, DraftKings shoots up to 300% year-over-year growth and despite a few dips down to “only” 50% year-over-year growth, finishes up the summer at 240%.
FanDuel, however, really turns on the afterburners, achieving an eye-popping 800% year-over-year growth for July. This growth slows down a few weeks later, but then climbs back to the same towering peak in August, finishing summer with 412% year-over-year growth.
These astronomical figures were fueled by several factors. First of all, professional sports started to come back online as summer rolled on, providing an outlet for pent up demand. The skids were further greased by the fact that DraftKings and FanDuel offered $3.6 million and $3.2 million of promotional credits, respectively, to customers in July.
The Belmont Stakes occurred on June 20, and a Major League Soccer (MLS) tournament — named, appropriately enough, the MLS is Back Tournament — got rolling on July 8 and likely contributed to FanDuel’s first 800% spike.
Major League Baseball brushed the dust off home plate on July 18. The NBA took the court on July 30. The NHL skated onto screens on Aug. 1. Throw in the arrival of perennials like the PGA Championship in early August, and suddenly there were a lot of sporting events, all at once, to wager on.
Amid this excitement, FanDuel doled out an additional $3.5 million in promotional credits for August, which likely fueled its second 800% spike.
This kind of bumper crop of sports seasons all occurring simultaneously never happens. And let’s not forget that the NFL season kicked off on Sept. 10.
But these are not normal times.
In the first few months of the pandemic, traditional outlets for people who like to gamble weren’t available. Las Vegas casinos were closed for more than two months, and casinos in other parts of the country opened in fits and starts.
Combine that with the fact that thanks to the pandemic, almost all professional sporting events were on hold, and a lot of people were at home twiddling their thumbs because of various pandemic-related lockdowns or restrictions. Then add a loosening of online gaming regulations in more states, including Colorado, which went live with sports betting in May, during the heart of the shutdown.
Suddenly, you have a perfect storm of demand brewing for people who like to test their luck and place a bet.
What’s surprising is just how much pent-up demand there was. Whether this late-summer surge in sports betting activity has helped gamblers scratch their itch, or is a harbinger of even bigger things to come, remains to be seen.
If the numbers from DraftKings and FanDuel are any indication, there are still quite a few people looking to slake their thirst for a taste of the action.
Randy Koch is CEO of Facteus, a leading provider of actionable insights from financial data.