Getty Images
Betting is now so firmly entrenched in the US sports industry thanks to broadcast integrations, commercial partnerships and the vernacular of sports fans that it’s hard to believe that it was illegal in most states just seven years ago.
The liberalisation of betting legislation back in 2018 opened up the world’s largest economy, and the planet’s biggest and most influential sports market, to global bookmakers and a new wave of daily fantasy firms such as FanDuel and DraftKings.
This unleashed a period of explosive growth which saw vast sums spent on marketing, technology and acquisitions as established global brands and young native upstarts sought to popularise the idea of sports betting and maximise signups through generous promotions and exciting new products.
Yet the past few years have seen a period of market correction and consolidation as those with first-mover advantage squeezed out minor players, leading to several high-profile casualties. The pace of legislation has also decelerated, with sports betting now legal in 38 states. Although Missouri is expected to join the list later this year, there are fewer markets to expand into and, crucially, the huge populations of California and Texas are still beyond reach.
Betting is now a huge part of social media sports culture
Meanwhile there is growing awareness of the social harm caused by sports betting and gambling addiction, while adverts highlighting the issue of college athletes receiving abuse from angry punters were aired during the National Collegiate Athletic Association (NCAA) March Madness tournaments.
Even ESPN, the self-styled worldwide leader in sports, isn’t guaranteed success. Despite the network’s wide broadcast and digital reach, partner Penn Entertainment has conceded there is still plenty of work to do to maximise the potential of its US$1.5 billion licensing agreement.
All signs point to an oversaturated market adapting to changing economic, societal and regulatory forces. But the truth is a little more nuanced than that. The US sport betting industry generated a record US$13.7 billion in revenues during 2024 – a 25.4 per cent increase year-over-year – as US$150 billion worth of bets were placed with legal bookmakers. As much as US$1.39 billion was believed to have been placed on Super Bowl LIX in February alone.
A maturing sector is now ripe for further innovation. It’s been a long time since every notable technology was created in Silicon Valley or Seattle, but the opening of a vast new market has seen the centre of betting tech development shift across the Atlantic and access to US capital, engineering talent and entrepreneurial spirit is unleashing a tech revolution.
Physical betting isn’t an established part of US sporting culture (Image credit: Getty Images)
The absence of an established gambling culture or a network of physical betting shops meant digital platforms were essential in driving adoption and awareness. This meant entirely new products were developed, benefiting bookmakers in both the US and abroad.
Leagues have signed multibillion-dollar data partnerships with the likes of Genius Sports and Sportradar, who are creating new products for the industry, such as 3D visualisations, broadcast graphic integrations and live social media betting integrations.
Seven years on from the initial sports betting ‘big bang’ in the US, a new wave of startups and the advent of artificial intelligence (AI) are having an impact. Last month, FanDuel rolled out an ‘industry-first’ generative AI (Gen AI) feature that provides users with data and insights to analyse and place bets, while the National Basketball Association (NBA) has invested in AI predictive analytics and micro-betting firm nVenue, whose technology has also been used on Apple TV.
Jake Paul-backed Betr, which wants to ‘TikTok-ify’ sports betting, was valued at US$375 million after a US$15 million fundraise last year, and Lucra Sports, which has the ambition of applying the gamification element of betting to activities where no money is at stake, raised US$10 million in 2024 as well.
Underdog Sports, which started out as a fantasy sports application before expanding to betting, has just raised US$70 million in a Series C round led by Spark Capital that values the company at US$1.2 billion.
The company expects the round to raise US$100 million by the time it closes and claims Spark’s investment is the single largest by a “top tier” Silicon Valley venture capital firm in a betting company to date. Spark joins previous backers such as BlackRock, Acies Investment, former Dallas Mavericks owner Mark Cuban, National Football League (NFL) wide receiver Odell Beckham Jr, former Paddy Power Betfair chief executive Breon Cororan, and Zynga founder Mark Pincus.
What’s more, the valuation is three times the figure achieved in Underdog’s Series B round three years ago and elevates the company to ‘unicorn’ status. According to Tracxn, only six other betting firms have achieved such rarified air, including DraftKings, FanDuel and Dream Sports.
The US sport betting industry generated a record US$13.7 billion in revenues during 2024 (Image credit: Getty Images)
While the US betting market is now dominated by a few major players, as ESPN Bet is finding out, the size and valuation of Spark’s investment – as well as its high-profile backers – suggest there is plenty more growth to come and that technology can be a key differentiator.
Underdog, which was founded five years ago, develops technology and products that it says are designed specifically for the US market as opposed to innovations that scale globally. It has more than four million customers and claims to be the fastest growing sports gaming company in the country.
But Underdog’s focus on proprietary technology could explain why it’s such an attractive investment. Its engineering capabilities give it greater flexibility in terms of rollout and product differentiation, making it more capable of attracting American bettors who have never previously considered wagering.
Indeed, Underdog co-founder and chief executive Jeremy Levine has sold a startup each to DraftKings and FanDuel and, according to Axios, has no intention of “finishing third again”.
Technology alone won’t deliver success in a market that also relies on scale and marketing nous, nor should innovation come at the expense of responsibility and duty of care to the public. But as the US sports betting industry enters its next phase, it’s pretty damned important.
This article was first featured in the new and improved SportsPro Ignition newsletter – your essential guide to the world of sports technology, featuring the latest news, insights, and market intelligence into your inbox every fortnight. You can subscribe here.