Analyzing The Flutter-TSG Merger Part 2: US Sports Betting Opportunity

This is Part 2 of a three-part series examining the merger of Flutter and The Stars Group. The focus in this column is the US sports betting market.

As explained in Part 1, the announced merger of The Stars Group and Flutter has global implications, but like prospectors rushing to California in 1849, the repeal of PASPA and the opening of the US sports betting market is acting like a klaxon to online gambling operators around the world.

In this installment, Betting USA will look at how the new company is positioning itself as it tries to rule the sports betting roost in the US. Flutter executives highlighted the US market as a major growth opportunity when the deal was announced.

Market Access

The US market is a misnomer. The US is actually a collection of smaller state markets, each with its own licensing and regulatory requirements. In most cases, legal sports betting runs through existing land-based casinos or gaming operators.

What does that mean? In most states, online gaming companies will be shut out of the market unless they enter into partnership agreements with land-based operators.

The more markets a company has access to, the more opportunities it will have in the US. The combination of Flutter and TSG already has deals in place that provide market access to some two dozen states.

A number of those states are already live or soon will be, including:

Flutter-TSG also has access to highly prized states that are prime candidates to legalize sports betting, including:

The Benefit of Having Multiple Strong Sports Betting Brands

The legal market is barely a year old (not counting Nevada), but US sports betting operators have quickly learned it’s hard to please everyone. Go after the big bettors and sharps and risk alienating casual bettors. Focus on the casual bettor, and you run the risk of losing the sharps. At the end of the day, no single site is going to corner the US market.

But what if a company, like the combined Flutter-TSG, possesses more than one site?

That gives them multiple options. Like Landry’s Inc., which owns multiple restaurant chains, you could offer a fine-dining choice like Morton’s and a more casual dining option like Rainforest Café.

For Flutter-TSG, FOX Bet could be a casual-bettor-friendly option while FanDuel caters to experienced bettors.

That could be a huge advantage in the nascent US market. Unlike the more mature legal markets around the globe, the US customer base is largely untapped. The ability to offer seasoned sports bettors and newbies well-known (FOX Bet and FanDuel) but differentiated brands is an asset exclusive to Flutter-TSG.

And with modern tech, the company can easily identify when bettors begin to shift between the two categories, and it can change the way it markets to these players. It might mean a shift from FOX Bet to FanDuel, but it’s keeping that player from exploring other options.

Cross-Selling Is the Name of the Game

The FOX Bet, FanDuel, and other Flutter-TSG associated brands will also benefit from cross-selling. Not only will they boast two of the best sports betting brands in the US market, but those brands will be attached to top online poker, horse racing (TVG), daily fantasy sports and casino products.

Whether it’s PokerStars, TVG, FanDuel, or Betfair, Flutter-TSG should be able to leverage cross-selling opportunities to and from sports betting. And if New Jersey is any indication, cross-sell is the difference between a solid product and a supercharged product.

Since the launch of online sports betting in the Garden State, the state’s five-year-old online casino industry has routinely seen year-over-year revenue growth of 50% or more.

Legalizing online sports betting or online casinos is nice, but a state won’t realize the full potential of either unless they are both available.

Bottom Line

The Flutter-TSG merger creates a company that will have every conceivable advantage in the US:

  • Unparalleled market access
  • Well-known brands it can leverage to different customers
  • The ability to cross-sell to leading online poker and casino products

To sum it up, Flutter-TSG has set itself up for success in the US.

Betting USA will wrap up this series next week with a look at the new company’s US online casino and online poker prospects.

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