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Ever since legal sports betting in the United States began rolling out in mass more than seven years ago, so much about the market has been predictable.
Indeed, certain trends and revenue streams shifted. When it came to top operators and software providers, though, everything else seemingly remained constant. You knew the major players. You open up an in-depth sportsbook betting review, and could guess which company (or companies) you’d be reading about. At times, the industry could even feel like a monopoly—a playground for, above all, FanDuel and DraftKings, not to mention their stock shareholders.
Circa Sportsbook may have just shown that is about to change.
Circa Sportsbook Beat Out FanDuel in Missouri
Missouri sports betting was officially legalized during the last election cycle. It is not scheduled to be launched in December 2025. As part of the amendment that allows sports betting, two operators are allowed to secure what they call “untethered” licenses. These stamps of approval essentially permit the carrying sportsbooks to operate independently of a pro sports franchise or Missouri casino.
Naturally, the United States’ two most popular sportsbooks, DraftKings and FanDuel, were favored to bag the untethered licenses. Not only do they have the deepest pockets, but they have already shown they’ll open them up. They were the two largest donors to the petition initiative that wound up legalizing sports betting in Missouri.
Both sportsbooks were thrown for a whirl, however, when applications were due. They were supposed to be the only submitters. Instead, Circa Sports entered the running at a third one. Even at the time, many wrote it off as a long shot. The Missouri Gaming Commission would surely roll with the more established operators.
As it turns out, this won’t be the case. DraftKings and Circa will carry Missouri’s two untethered sports betting licenses. FanDuel has been left to partner up with Major League Soccer’s St. Louis City SC to ensure they have a presence in the market. The thing is, they can only open up physical locations inside St. Louis City’s venue or somewhere adjacent to it.
This is both a gamble and coup for Circa Sports. Known predominantly for their presence in the Nevada sports betting market, they are trying to expand their footprint across the country. Success is limited, but they are seeing good returns in the Kentucky sports betting market. This is arguably their most aggressive play yet. And while it is obviously important to their future, it’s perhaps equally critical for what it says about the industry.
The Missouri Sports Betting Launch Could Signal a More Competitive Industry for Operators
Conventional wisdom suggests it will get harder and harder to knife into market shares for the Big Two sportsbooks in the United States. Even ESPN Bet, which is owned and operated by Penn Entertainment, is struggling to conjure up meaningful market shares. As many point out, if the brand most synonymous with sports at large can’t get traction, what does that say about the chances of other companies.
Circa Sportsbook’s victory in Missouri could potentially provide a nice counterargument. They are winning over state regulators with their well-documented plans. As Matthew Waters writes for Legal Sports Report:
“The Missouri Gaming Commission gave each operator 30 minutes to sell why they would benefit the state the most based on seven key guidelines. DraftKings and FanDuel did what they have done time and time again in front of regulators and broke down why they each have one of the best sports betting products in the country. Circa CEO Derek Stevens did not shy away from acknowledging that — ‘I realize, we are small potatoes compared to what was just presented’ – and instead used his time to show how Circa is different than the betting giants with mass appeal…He quickly pivoted to what will make Circa valuable to the state of Missouri: attracting bettors that likely will not bet within the legal industry without a sportsbook like his. Stevens suggested just 25 percent of sports betting is done legally, and Circa offers the kind of product that will pull offshore bettors into the legal industry.”
Among the details Stevens harped on is Circa Sportsbook’s ability to attract higher-than-average betting amounts per transaction. The average Circa Sportsbook wager is over $50, he says.
This could lay the blueprint for other moderately sized and boutique sportsbooks to compete with the FanDuels and DraftKingses of the world. Rather than focus on betting holds or the size of their customer base, they can emphasize transaction amounts. Essentially, it boils down to prioritizing quality over quantity.
Will Other Sportsbook Operators Have the Stomach to Follow Circa’s Lead?
Replicating this model will not be easy. Circa is taking a series of calculated yet nevertheless high-leverage risks. They are investing a lot of money in scaling a smaller idea into a much larger, broader form. That is a big bet to make.
Immediate, if not medium term, losses are sure to follow. Building something up takes time. Especially when there are so many other bigger and more established alternatives.
Still, Circa Sportsbook is already making waves throughout the industry. In fact, Flutter Entertainment, which is FanDuel’s parent company, saw their stock price slide after they missed out on the untethered Missouri sports betting license.
One example is not tantamount to a trend. It definitely isn’t a harbinger of permanent. Make no mistake, though, people are clocking this Missouri sports betting launch. If Circa Sportsbook’s, ahem, gamble winds up paying off, we could see more sportsbooks try to ratchet up the pressure on the Big Two. And if that happens, there is no telling what the ripple effects might be on the industry.
Sportsbooks themselves may not be the only ones feeling the impact. Software providers for these operators could feel the squeeze. Two or three companies seem to supply software for pretty much all of the United States’ legal sportsbooks. It is yet another part of the industry considered closed off. Time will tell whether that—whether any of this—is trundling along toward material change.
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