Record NFL Season Boosts FanDuel's Profit Margin Strategy

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00:00Let's check in with Sam and Sam, as you know, this NFL season was quite different than in

00:04years past.

00:05In fact, betting favorites, favorites was the way to go in the NFL season, which almost

00:11never happens.

00:12So therefore, sportsbooks generally don't do that well.

00:15How did FanDuel do based on that?

00:18And what do you think that meant for their overall handle in the NFL season?

00:21Yeah, it's really interesting.

00:24Now that we have some time removed from the NFL season to kind of review what happened.

00:28You had, there were 10 weeks during the middle of the season where at least 75% of favorites

00:34on a given week won their games, which DraftKings pointed out a few weeks back, it hasn't happened

00:40since the history of sports betting when we started tracking this kind of thing.

00:44So naturally, it was going to throw off what sportsbooks do.

00:47Usually people tend to bet on the favorite.

00:49Usually sportsbooks tend to be more successful than the public.

00:53But this year was quite different.

00:55You had a lot of sportsbooks sort of figure out halfway through the season that maybe

01:00we need to change our approach here.

01:03And that approach for companies like FanDuel aligned with pushing more same game parlays,

01:08these higher margin bets that we talked about over and over.

01:11And it's really interesting.

01:12Despite this historic season of favorites winning, you had companies like FanDuel having

01:18basically their best ROI ever.

01:20They were able to hold 14.5% win margin on all the handle that was bet with them this

01:27season, which was a record.

01:29It's a good long-term, it's a good step towards their long-term target of 16% by 2030.

01:36And the industry standard has been about 8.5% over the last couple of years.

01:40So again, much bigger than that number, bigger than the number DraftKings posted, which was

01:44about 13%.

01:45And it's impacted handle, like you mentioned, Craig.

01:48People aren't betting as large amounts.

01:51They are betting smaller amounts on these big lottery ticket parlays, which FanDuel

01:56talked about.

01:57We've gotten customers to start betting more legs.

02:00They have this new product, Now Your Way, which allows more customization with same

02:05game parlays, customization with parlays in general, which they said is basically attributed

02:09to a higher leg count, essentially meaning that the bets are harder to hit for people

02:13with bigger payouts.

02:15So it's been interesting to see them kind of change their approach there.

02:18They had a really great year, again, despite the NFL favorites winning.

02:22They were the top sportsbook in terms of revenue with about 43% of the market.

02:27And they produced over half a billion in profit from their sports betting and iGaming operations

02:32in the US, which compared to other sportsbooks who are still trying to become profitable

02:37just in one quarter, let alone one year, is obviously a big jump.

02:41So going forward, the book is going to try to push more of these parlays and increase

02:47their ROI in turn.

02:48Now with March Madness on the rise, I wouldn't be surprised if you see them make similar

02:53pushes with a product there, and then obviously with the NBA playoffs on the horizon as well.

02:57So they actually came out pretty good after football season, despite how awful it was

03:04kind of for the industry to deal with.

03:06So we'll see if they can continue to roll this momentum forward as we get further into

03:10the sports calendar.

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