[ad_1]
Before Fanatics Sportsbook launches its highly anticipated mobile sports betting app in the coming months, Michael Rubin provided a sneak peak on Tuesday in Los Angeles.
Perched on a white leather chair, the vibrant Fanatics CEO addressed an audience inside the J.W. Marriott’s Diamond Ballroom at the CAA World Congress of Sports. Hours earlier, NBA Commissioner Adam Silver conducted a fireside chat on the same stage at an event regarded annually as one of the nation’s most prestigious sports business conferences.
Without divulging the sportsbook’s targeted range for the cost it will take to acquire a new bettor, Rubin said the app’s success should be measured based on the quality of its customer experience.
Speaking at Tues’ #SBJWCOS, @Fanatics CEO @michaelrubin backtracked from previous estimates that #FanaticsSportsbook will be live in 15-20 states by WK 1 of the @NFL regular season. Rubin placed the number at closer to 12, while adding that it will be the “biggest states.” pic.twitter.com/M1TExH7XLb
— Matt Rybaltowski (@MattRybaltowski) April 18, 2023
“You’ll measure that based on the app score, you’ll measure that based on customer satisfaction,” Rubin told Sports Business Journal editor Abe Madkour. “I think we’ll have a great product by the end of the year. I think we’ll have a product that’s every bit as competitive as FanDuel and DraftKings. Those are two really good products — that’s what my team is telling me and I believe we can.”
At the moment, the industry is split on whether Rubin and Fanatics can deliver.
Sign Up For The Sports Handle Newsletter!
A glitzy app
For about a year, Fanatics’ entry into the sports betting space has fueled polarizing views on whether Rubin’s model can transform the industry or if he will fail to make a dent into the market share enjoyed by the nation’s top sportsbooks.
After raising $700 million in a funding round led by private equity firm Clearlake Capital last December, Fanatics received a whopping $31 billion valuation. Unlike a traditional sportsbook, Fanatics can leverage its massive e-commerce merchandising platform and a budding NFT collectibles arm in building its sports betting division.
Fanatics has not released a date for when the company will roll out its mobile sportsbook, but there are strong indications that it will come soon. Sports Handle recently obtained screen caps of the beta version of Fanatics’ app, which is being tested in two states and is built with source code from Amelco.
Last month, Appinvest released a breakdown of critical features that resonate most with gamblers when designing an app. Characteristics such as user interface, promotions, and payment options are among the top factors that enhance the experience for bettors, wrote Sudeep Srivastava, co-founder and director of Appinvest. Other features that can serve as differentiators include bet types, sports coverage, ease of use, and the ability to facilitate quick withdrawals.
An industry expert who formerly served as a C-suite executive at a Top 10 sportsbook has been underwhelmed in the past by apps from several major operators. Without naming any names, he noted that some apps were expected to be really good, but wound up being extremely slow and “breaking half the time.”
With an increased emphasis on in-game betting, speed is at a premium. The apps that can deliver sub-second latency, from the time a play occurs to the instant the odds are updated, will likely be the ones that prosper.
In his estimation, the three apps that have met the gold standard are FanDuel, DraftKings, and PointsBet.
“If Fanatics is anywhere close to as fast as those, then that’s a win,” he told Sports Handle.
Data science teams are also challenged with balancing user experience (UX) and user interface (UI), two mutually reliant conditions. The interface component deals with a customer’s interaction with the app software, while user experience relates to the bettor’s experience with the brand. Many apps strive to reduce as much UX friction between the player onboarding process and their initial bet, according to the insider. Friction as it relates to mobile sports betting users is defined as any impediment that prevents a user from achieving a desired action on an app.
“Some apps have a lot more friction than others,” he said. “Hopefully they have good product people and, by all accounts, they should, just looking at their team.”
Attaining high conversion rates
Rubin projects that Fanatics will process about 42 million orders in its e-commerce business in 2023, with another 20 million from Lids. By next year, those projections jump to 70 million combined orders. Based on U.S. population figures, live commercial (excluding tribal) wagering is available to 47.6% of the U.S. population in the 50 states and Washington D.C. — or 161.45 million people out of 339.17 million.
Fanatics Sportsbook began beta testing its app in Tennessee last month and expanded to Ohio earlier in April, a company spokesman told Sports Handle. In these states, Rubin indicated that Fanatics is converting between 2 and 2.5% of customers from its e-commerce business without offering promotions.
Shots taken from beta testing in Tennessee and Ohio show a #Fanatics mobile betting product that looks ready for prime time.
(via @jeffedelstein)https://t.co/FZxDVCpdZN
— Sports Handle (@sports_handle) April 19, 2023
The sample size of beta testers in those states is relatively small. Assuming legal sports betting is available to 40% of eligible U.S. bettors next year, Rubin estimates that Fanatics will be able to cross-sell sports betting to the purchasers of 28 million orders. Keep in mind, there’s a strong chance that California, Texas, and Florida, the nation’s three most populous states, will not offer mobile sports betting by this time next spring. Nevertheless, Rubin is optimistic that Fanatics can convert customers at a relatively high clip.
“We’re pretty bullish. I’m either going to be right, or I’ll tell you that I was wrong and I screwed up,” Rubin said.
Fanatics’ value proposition
While conversion rates across the industry are a tightly held trade secret, another trend may bode well for Fanatics.
Shortly after the U.S. Supreme Court’s PASPA decision, several sportsbooks forged commercial deals with professional leagues, teams, and media conglomerates. But as the fifth anniversary of PASPA approaches, a number of books have drastically adjusted expectations on how to target bettors. In the estimation of one industry expert, it has been tougher than expected to turn die-hard sports fans into sports bettors.
Several years ago, an argument could be made that a sportsbook attained success by converting about 5% of season-ticket holders. Last season, the average NBA franchise sold between 8,000 and 9,000 season tickets, the New York Post reported. As top books reset projections, a conversion of “0.5%” should be applauded, the insider told Sports Handle. At that rate, a sportsbook aligned with an NBA franchise will only convert about 40 to 45 customers.
Drawing comparisons to the Amazons and the Wal-Marts of the world, Fanatics will present a different twist with its “integrated marketplace” model, according to the insider. For example, Fanatics can offer a sports fan a Knicks jersey or discounts on other merchandise as a carrot to open a betting account. Hence, Fanatics’ cross-selling opportunities may give the company a leg up in delivering higher conversion rates.
Others are more skeptical. Last summer, a leading gaming stock analyst told Sports Handle that it is hard to envision Fanatics dramatically lowering customer acquisition costs simply by “giving bettors a free hat.”
Screen caps obtained by Sports Handle indicate that the company is testing a new loyalty program, dubbed “FanCash,” that customers can activate by placing bets. In turn, there are indications that bettors can exchange FanCash for merchandise and other products.
“Investors are paying particular attention to the conversion rate from Fanatics’ legacy business, as well as the utilization rate of FanCash promotions,” said Lloyd Danzig, founder and managing partner for Sharp Alpha Advisors, a venture capital fund for early-stage sports betting tech companies. “Success for Fanatics will rely on acquiring customers more efficiently and monetizing them more effectively than competitors.”
At a separate event two years ago, Rubin predicted that, by 2026, a Fanatics customer will be able to watch live sports, bet on sports, get a ticket to a live sporting event, buy merchandise, and trade an NFT all from the same platform. Madkour, the Sports Business Journal editor, asked if Rubin’s vision is still coming into shape.
“You always have to dream big to start,” Rubin replied. “It’s always easiest to lay the strategy out. Doing things are always a lot harder. We’re making good progress in the three businesses we’re in today.”
Chris Altruda contributed to this story
[ad_2]
Source link