Analysis: Seven-horse race in Kentucky, including Circa, ESPN Bet and bet365

The Kentucky Horse Racing Commission (KHRC) has received sports betting license applications from seven retail locations – but everyone’s focus will be drawn to the seven mobile license applicants: bet365, BetMGM, Caesars, Circa, DraftKings, FanDuel and Penn Sports Interactive (ESPN Bet).

Retail sports wagering is scheduled for a September 7 launch in the state of Kentucky and, should their applications prove successful, seven locations that will offer in-person betting will include:

• Churchill Downs, Louisville
• Cumberland Run, coming soon to Corbin
• Ellis Park, Henderson
• Oak Grove Gaming and Racing, Oak Grove
• The Red Mile, Lexington
• Sandy’s Gaming and Racing, coming soon to Ashland
• Turfway Park, Florence

Kentucky Governor Andy Beshear said: “The countdown is on. Kentuckians can plan to place their first sports wagers, at a retail location, in just 28 days.

“Bringing sports wagering to the state not only gives Kentuckians a much-anticipated new form of entertainment, but also brings money to the state to support pensions; freeing up money that can be used to build a better Kentucky through the funding of education, economic development, disaster recovery and other necessary projects, like providing cleaner water, building roads and high-speed internet.”

With a launch date of September 28, however, it is the mobile sports betting market that will no doubt draw the most attention in Kentucky – as it has across the rest of the US.

The KHRC has advised that application does not guarantee licensure, with all bids currently being reviewed, including those of ‘key employees.’ Final votes will be cast at a KHRC meeting on August 22.

So which operators have already thrown their hats into the ring and what will they be expecting once Kentucky’s mobile market goes live?

Bet365

The global powerhouse, which is particularly successful in its home UK market, is gradually ramping up its US expansion. Live in Colorado, New Jersey, Virginia, Ohio and most recently Iowa, the operator will be hopeful of securing a key foothold in what would be its sixth US state.

It might be too early for market-leader status in Kentucky, but bet365 has been strategic with the states it has thus far hand-picked – Ohio and Iowa being cases in point – so the brand will be confident of gaining a reasonable level of market share.

BetMGM

Much was made by Entain executives of BetMGM’s EBITDA-positive Q2 – and plenty of noise and positivity followed its H1 trading update.

Entain Chairman Barry Gibson recently told the GI Huddle he is confident of BetMGM gaining a #1 or #2 spot within the US. So there is no doubt the brand is on a high, with momentum aiding confidence in what could be one of the most competitive market openings yet.

Given that its best results have so far come in iCasino, though, and that any Angstrom Sports updates will take time to enhance the brand’s sports betting product, it would be a surprise to see BetMGM take too much market share off the usual suspects early on (FanDuel and DraftKings).

Kentucky Governor Andy Beshear.

Caesars

It is a similar story for Caesars Digital in the Bluegrass State. Like BetMGM, it has so far had to settle mainly for #3 and #4 spots within most sports betting markets, while its Q2 results were encouraging… but not as encouraging as the likes of the aforementioned BetMGM, FanDuel and DraftKings.

Brand recognition will help the operator in Kentucky, but it would not be unfair to project a middle-of-the-road start to life in this market for Caesars Digital.

Circa

The wild card in the pack here (much like Owner Derek Stevens in most packs), Circa Sports is very much the underdog in Kentucky. Live in even less states than bet365, Circa Sports is currently available in Nevada, Colorado and Iowa – and is predominantly known for its physical sportsbook in Downtown Las Vegas, rather than its online app.

But this can be seen as a free hit for Circa. The pressure facing the brand in Kentucky will be far less than some of the big-name online operators joining the list. So every percentage of market share it gains will represent success for what is essentially a market disruptor.

DraftKings

One of the favorites – and arguably the winner of Q2, given its huge revenue growth and drastic reduction in net loss, DraftKings could really make a push for pole position in Kentucky.

In New York, while FanDuel still leads market share for revenue, DraftKings is now the leader for sports betting handle. Given improvements in its product and strong performance in existing states funding launches in new states, there is not much standing in DraftKings’ way from achieving a similar feat – or better – in Kentucky.

FanDuel

Of course, there is usually one main hurdle standing in DraftKings’ way across the US – and that’s FanDuel. The market leader will be disappointed if it doesn’t claim an early #1 spot in Kentucky and its performance across key states points to that very outcome.

Yet, with increasing pressure from DraftKings, and perhaps on a lesser scale BetMGM and bet365, FanDuel may be starting to feel the pinch.

Despite its Q1 revenue showing over 90% yearly growth this year, Q2 saw closer to 40% – and parent company Flutter’s US market share currently stands at 47%. Yes, that remains a huge lead – but last year, FanDuel had 51% of the market, so the heat is rising ever so slightly.

ESPN Bet

Finally, we have the newest member of the herd. Still currently branded as Penn Interactive, the official launch of ESPN is slated for November.

Again, it is very early in the lifespan of the multi-billion-dollar collaboration between ESPN and Penn – so we can’t necessarily expect too much, too soon. However, there is nothing stopping ESPN Bet from hitting the ground running.

Both FanDuel and DraftKings utilized their fantasy sports databases very soon after launching sports betting and, given the power of ESPN’s broadcasting (and fantasy) reach, ESPN Bet might just provide the biggest unknown quantity within the Kentucky market.

It’s very possible this new brand pushes Penn Interactive from a middling brand to a serious player straight away. If that proves the case, the biggest question is: who will lose that market share?

If the ESPN effect is not so immediate (or indeed successful at all), FanDuel and DraftKings are the best bets to once again set the early pace.

A gambler might just pluck for DraftKings.

Tim Poole

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