Competition in online sports betting is fierce and not profitable – Axios

The growth potential in the nascent market for American sports betting is huge. But for now, operators are still losing money a lot of it.

The big picture: Sports betting is taking a page from the playbook of tech giants like Netflix, Amazon and Twitter, sacrificing profitability in the early days in the hope of ingraining themselves in customers lives.

Even if youre not a sports fan, youve probably seen or heard the deluge of ads from online sports betting companies offering major financial incentives to use their apps.

What we're watching: This NFL season will go a long way in determining which companies live to fight another day in the ultra-competitive sports betting arena.

Where it stands: The Supreme Court only opened the door to widespread legal, online sports betting in 2018, and the sector is still in its infancy.

State of play: The weekly fantasy sports operators FanDuel and DraftKings have taken the lead with market shares of 33% and 19% respectively, in the first half of 2021, the Wells report says.

Those companies are shoveling money into marketing and promotions, sometimes including hundreds of dollars of free bets.

What's next: The operators are chasing a market that has massive growth potential Politzer estimates annual U.S. sports betting revenue could grow to $11.3 billion in 2025, compared to $3.8 billion estimated this year.

Yes, but: Analysts think consolidation is ultimately the most likely endgame, with 3 to 4 players all but dominating the field.

There's a Catch-22 for sports books: Making too little money is obviously bad for business, but if they start making too much money it may attract the attention of regulators.

The big question: Whether regulators become concerned about the gamification of the old in-person betting process too easy, too fun, too instantaneous similar to the scrutiny that Robinhood's received for gamifying stock trading.

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Competition in online sports betting is fierce and not profitable - Axios