Facebook Has Got Game – by Dan Kustelski, CEO of Chalkline

Dan Kustelski, CEO of Chalkline, takes a closer look at Facebook’s decision to launch freeplay fantasy games and what impact it will have on the US sports betting sector.

Facebook’s decision to enter the free-to-play sports betting space with the launch of Facebook Fantasy Games should have come as no surprise.

It is a natural progression for any media company to explore ways of identifying and engaging sports fans, and freeplay games are a very effective way of doing this.

Facebook says its “free, simple prediction games” will be rolled out in the Facebook App to customers in the US and Canada over the coming months.

The offering includes three different pick ‘em games – MLB Home Run Picks, La Liga Winning Streak and Fantasy “The Bachelorette”.

Built-in partnership with Whistle Sports, they will be hooked up to public leaderboards and private leagues for players to compete and chat with each other.

Other media companies might lack the resources and data that Facebook has, but they can learn from the social media giant’s attempts to acquire sports bettors through these games.

Facebook is not the only company doing this, of course. Barstool Bets used our free-to-play games to engage, educate and acclimate sports fans for many months.

Media companies have large, engaged audiences but they need to focus on collecting first-person data for all sports fans that lean towards sports betting.

Once this funnel has been opened, they then need to build player profiles on a state-by-state basis in line with the state-by-state rollout of sports betting and iGaming in the US.

This allows media companies to build a database of real-money sports bettors and at a fraction of the cost that operators are currently spending.

Right now customer acquisition is hard and expensive.

Sportsbook brands are currently allocating up to 100% of GGR on customer acquisition and marketing efforts to acquire bettors.

Eventually, this will level off at 30-40% of GGR as it has in mature markets but operators will continue to spend big on acquisition and marketing for many years to come.

In fact, major operators are on track to spend more than $1bn on marketing and bonuses per operator in the US during 2021.

A land-grab is very much underway in the US market and we will eventually see operators spend in excess of $4bn a year on customer acquisition for the foreseeable future.

Media companies that act now and launch their own freeplay games can convert their readers, listeners and viewers into a database of sports bettors at a fraction of the cost.

They can then look to monetize this database by partnering with a sportsbook operator or in the case of some media companies, launch their own real-money sportsbooks.

Media companies that have built a player base at a sensible cost and then driven bettors to their branded sportsbook have the potential to become power players in the market.

Operators are wise to identify the media companies that are able to drive First Time Depositors and customers that are good long term bettors.

Savvy operators will then look to partner with media companies to leverage their ability to acquire customers at scale but at a much lower CPA and higher Customer Lifetime Value.

Operators must then arm themselves with the tools they need to extract as much value from these relationships as possible and to also deliver value back to their media partners.

Partnering with a sportsbook does present opportunities for media companies, too. Mostly, it allows them to take a relatively risk-free bet on the betting industry.

While they may take a low percentage of revenue – the average seems to be around 8-9% – they are far less exposed to any regulatory and legal requirements that have to be met in each state.

It is unlikely that Facebook will ultimately look to monetize its database through real money sports betting and will stick with simply being a supplier of bettors to operators.

Collecting more data on each sports fan that is betting inclined makes Facebook more valuable to operators which is why it will surely squeeze more revenues out of operators through the process of providing free-to-play games.

It’s a smart move and one that shows Facebook has certainly got game.

By Dan Kustelski, CEO – Chalkline
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