As U.S. senators take aim at sports betting giants FanDuel and DraftKings for potential antitrust violations, their market dominance still isn’t stopping new launches from challenger brands.
Soft2Bet, a Malta-based iGaming company, announced that it has partnered with Caesars Entertainment to launch a mobile sportsbook and iGaming brand set to debut in New Jersey this summer. Their plans come as senators Mike Lee (R-Utah) and Peter Welch (D-VT) wrote a December letter to the FTC and DOJ alleging that DraftKings and Fanduel are violating anti-trust laws with “anticompetitive conduct” against other gaming operators.
“The assumption is that we are immediately trying to compete with DraftKings and FanDuel, and I don’t think that’s what we’re trying to do. I think a lot of market share right now still sits in between these two giants and others, and that’s what we try to aim for,” Soft2Bet’s general counsel David Yatom said at last week’s NEXT Summit in New York City.
FanDuel and DraftKings combined for about 77% of gross gaming revenue among online sports betting operators across six states for the month of February, according to Dustin Gouker’s newsletter The Closing Line that combines data from New York, New Jersey, Maryland, Indiana, Iowa, and Kansas. BetMGM ranked third with 6.9% gross gaming revenue, followed by Fanatics (5.14%), Caesars (4.17%), and ESPN Bet (2.3%).
At the NEXT Summit gaming industry conference, Awful Announcing asked Soft2Bet’s Yatom if he perceived DraftKings and FanDuel to have a “duopoly” in the U.S. market.
“I think they pretty much answer that definition, yes. And great work to them for achieving such a market share. But I think the result of having these two giants operating in the market is that you lack some innovation,” Yatom said. “Hopefully some of these big operators become our partners later on using our own gamification feature, they see it’ll be beneficial for them.”
In the U.S., 18 states still have not legalized online sports betting, including population giants such as California and Texas. As big as DraftKings and FanDuel are, the offshore gaming brand Bovada remains the most widely-used sportsbook in the U.S., according to a new study from research firm Blask and gaming event organizer Next.io.
“Is there an opportunity for challenger brands? There is. I think it’s moved a bit from who can spend to product-led growth,” Meredith McPherron, CEO and managing partner of the venture capital firm Drive by DraftKings, said at the NEXT Summit.
McPherron spoke on a panel hosted by CNBC’s Contessa Brewer alongside Jackpot.com CEO Akshay Khanna, Underdog CEO Jeremy Levine, and Betty co-founder Justin Park. DraftKings is an investor in Drive by DraftKings, but the firm operates independently of DraftKings.
“No doubt there’s a huge concentration—FanDuel, DraftKings have about 75 percent of the market—it’s a huge concentration,” said McPherron. “When you innovate with product or mechanics, niche markets or demographic focus—there’s an opportunity to innovate and gain some share.”
From Disney to Fanatics, PENN and BetMGM — legacy brands across casinos and sports media have poured billions into their efforts to challenge DraftKings and FanDuel in their dominance atop the legalized U.S. online sports gaming ecosystem. The emergence of prediction markets from Kalshi has also spurred financial giants such as Crypto.com and Robinhood to dip their toes into adjacent sports betting offerings.
As PENN and Disney contemplate their upcoming 2026 opt-out decision on their deal to continue ESPN Bet, investor Davis Catlin of Discerning Capital suggested the WorldWide leader to pivot from its partnership as a brand licensee for a sportsbook.
“Being as simple as like,’ oh we’re Disney we’re going to partner with PENN and it’s going to go great, it just doesn’t work well. I think showing up and knowing what your competitive advantage is, is very core,” Caitlin said. “If I was ESPN, why aren’t they running as an affiliate? You want to make money in this industry, know what you do and do it well.”
