Rivalry CEO: US sports betting an “almost impossible race”
Steven Salz says duopoly of DraftKings and FanDuel has sewn up huge swathes of the market with spending power as he notes need to carve out a niche as a smaller firm
Rivalry CEO Steven Salz has said taking a more cautious approach and carving out a own niche are the keys to succeeding in North American markets for smaller operators.
Speaking to EGR following the release of the company’s Q3 report, Salz lifted the lid on the strategy which has seen revenue continue to increase at the esports-focused firm.
The CEO said that facing up against the likes of DraftKings and FanDuel using the same playbook would have resulted in little success.
Salz said: “When it comes to the likes of DraftKings and FanDuel, people were aware of these brands, and they understood what the customer wanted, and then when the US legalized they were both funded like crazy.
“In comparison, If you look at the amount DraftKings spend on marketing in a quarter, we would have to spend for 22-and-a-half years to spend the equivalent.
“You can see other consumer industries that get competitive like this and new market launches, everyone races and gets excited. The way I’ve always described it is you have two capital cannons firing at each other, and it ends up being a race to the bottom.
“I think that is what is happening in the US igaming industry. It’s really hard to fight that spending wave and the momentum they [DraftKings and FanDuel] are building and maintaining their spend. It is almost like a dualistic state at this point because it became almost an impossible race.”
Salz referenced Kindred’s decision to pull out of the US as indicative of the power these duopolistic operators have.
He remarked: “I saw the stuff they were doing. When they came into the market, they signed a bunch of celebrities, did a lot of expensive ads, and were bidding like crazy on SEO and paid media affiliates.
“We don’t do that; we don’t mind not having the greatest results in a market launch or a slow ramp and then inject a little capital and build it from there until it’s working. Otherwise, you will get a position, where you have gone crazy at the beginning and tried to repeat your usual playbook and you get a result like that.”
Salz went on to say Rivalry needed to carve its own niche by targeting Gen Z consumers rather than going after the core demographic for sports betting.
The CEO continued: “We were not going to go after the 35-year-old bettor because we would just be outspent; it would have been impossible. That is why we have done our own thing to try and find an edge.
“What was also more interesting and exciting for us, is that this [Gen Z] demographic was ripe for product innovation and something new. We definitely do that.
“We knew that there was a clear market opportunity as no one was focusing on this demographic. If we tried going for a market share of the 35-year-old bettor or 40-year-old slots player, we would have burned the company to zero and had nothing to show for it.”