Bally’s is banking on the quality of its Bally Bet product being the draw when it enters the New York and Arizona online sports betting markets. While most operators try to jump into a new market on day one or at least as quickly as possible, Bally’s is taking its time.
In last week’s earnings call, Bally’s CEO Lee Fenton put it bluntly, saying, “We do not need to be first to market with an inferior product.”
Of course, that assumes his competitors’ products are truly inferior and that customers will notice this. Regardless, he is quite confident.
“Customers will always have choices and your first impression is more important than timing of launch,” Fenton added. “We will launch when the product is right and we’re willing to miss short-term gains to build long-term trust and value with our customers.”
Fenton also said that sportsbook operator marketing spending is “irrational” at the moment. Bally’s is opting to save those dollars and plow them into a “betting products that are US-centric and easy-to-use for the mass market.”
It is an interesting strategy. It is not easy to differentiate one’s sports betting product from competitors’. Generally, as long as the app or website is easy to use and works, customers are not going to care all that much about the extra niceties. So companies have been clamoring to grab as many customers as they can as states legalize online sports betting, hoping that they stay long-term.
But making sure the app works is important. DraftKings, for instance, went petal to the metal when New York online sports betting opened last month, offering a massive promo for new accounts. It has succeeded in carving out market share, but while its revenue continues to grow, its expenses do, as well.
Take its 2021 numbers. Fourth quarter revenue grew 47% to $473 million and its number of unique paying customer soared, but it still suffered a net loss of $326 million for the quarter. It’s spending tons of money on customer acquisition and even though it expects more great customer and revenue growth in 2022, DraftKings also believes it will have an annual net loss of close to $1 billion.
Caesars has been similarly aggressive – if you watch sports, you’ve probably seen loads of Caesars Sportsbook commercials starring JB Smoove in the past few months – and has now said it is going to stop advertising on television (some pre-planned commercials will still air during March Madness). And to Bally’s point about quality, it doesn’t help that DraftKings’ app in New York failed on multiple occasions.
It will definitely be an interesting race to watch, to see if Bally’s can find a foothold in New York and Arizona while being late to the party. It is easy for customers to jump around from app to app, so Bally’s is betting (heh) on people enjoying its product so much that they don’t feel a reason to switch, even if there are incentives to do so.
