Updated:Dec 12, 2022
We’re coming up on nearly five years since the ban on online sports betting was lifted in
America, but the industry is still very much developing.
There are now close to two dozen states with legalized online betting, and more than twice that
number of betting sites to pick from, so it seems like the sports betting industry is better than
ever. But that may not be entirely true, with quite a few sportsbooks shutting down not too long
after they opened up shop.
So, what’s really going on with sports betting in the US?
Let’s talk about profit to start, as it’s generally a pretty clear metric for success. 2022 was a big
year for online betting, but only a couple of sportsbooks managed to get into the black during any
This makes sense since the hundreds of millions being spent every year in the early stages of
setting up a betting site is a hefty cost to recover quickly. Coming not only from the development
of the platform and funding the wagers, but also from the massive marketing and advertising
drives that are critical to growing a player base, sportsbooks are expensive to run in the US,
especially with certain states like New York taking a huge tax cut.
Plus, launching with high-value betting sign-up bonuses to convince new players to join is
pricey, and most of these enticing offers get scaled back pretty quickly once each sportsbook
gains some footing or just realizes they can’t recoup losses.
FanDuel Sportsbook was the first sportsbook to turn a profit in the States, which makes sense
given their long established, and incredibly popular Daily Fantasy Sports platform (along with
competitors DraftKings). But they are also the only ones to have any quarter with profitability,
and overall are still deep in the red even after being the most popular sportsbook for several
The Cost of Entry
FanDuel and DraftKings are clearly the most well-known sports betting brands right now, and
have paid an insane amount of money to get that recognition. Both sportsbooks have spent
billions in marketing and advertising to stay ahead of the competition, including plastering their
names on every available space in stadiums, and taking up as much air time during commercials
breaks as possible.
There are a few others who’ve been able to spend big and join the DFS giants in the sports
betting upper echelons, most notably Caesars Sportsbook and BetMGM, but even with these
Vegas-based operations spending big they don’t come close to matching the market share of
the big two, with FanDuel closing in on 50% nationwide.
While we certainly won’t besmirch the good name of the Mannings or J.B. Smoove who have
been the main celebrity spokespeople for Caesars and helped them get a footing with clever
ads, the decade-long headstart from DraftKings and FanDuel as DFS platforms make it a pretty
steep and prohibitively expensive hill to climb for most new sportsbooks. Even PointsBet, who
paid hundreds of millions to partner with NBC Sports as the official betting partner, barely breaks
2% of the market share.
There have also been quite a few betting sites that launched with a lot of promise and backing
that just couldn’t continue in the current climate, and effectively ran out of money before they
could generate revenue. MaximBet is a prime example and even building off the reputation of a
well-known media company they closed down after dipping their feet into the industry for only a
To recap a very brief look at the current state of online sports betting in the US, there is no doubt
the industry is bigger than ever and growing rapidly as new states legalize gambling – but on the
flip side it has become even more difficult to compete with established sportsbooks on a national
As the big brands keep growing, it will become almost impossible for smaller sportsbooks to
carve out enough of a market share to stay in business, and the industry will continue to be
dominated by large companies with deep pockets.
This may not be so bad for bettors who can expect these companies to be very generous as they work to maintain dominance, but the downside is limited choice and effective monopolies being created. In an industry that usually relies on small margins since players could just look elsewhere, it’s unclear if the US bettors can really support dozens of sportsbooks in each state to maintain this level of betting diversity.