AMY HOWE Bringing the leadership factor

betting across the US was a large part of many discussions at Live Nation Entertainment, particularly when it came to liaising with major sports leagues such as the NFL and the NBA.

“When working with these huge sports leagues, I knew that sports betting was really taking off - we had big events like the NBA Tech Summit, the MIT Sloan Sports Analytics Conference. Sports betting was always front and centre of the conversations.

“At the time, I was working in an adjacent space, which was ticketing. As you can imagine, the pandemic was not particularly kind to the live entertainment industry. So when things started to shut down in the US, one of the pivotal moments was when the NBA suspended its season. After that, it was like dominos. Everyone subsequently suspended play.

BY ERIN GALLAGHER

When you think about leadership, a number of different images can often come to mind - whether that be influence, empowerment, integrity, trust or even financial growth of a company. Quite often, a ‘true leader’ is hard to come by. But when speaking with Amy Howe, CEO of FanDuel, it was very clear that she not only embodied all of these qualities but has become the poster figure for the growth of the US gambling industry.

Howe joined the ranks at FanDuel back in 2021 after heading up the North American ticketing operations at Live Nation Entertainment - a company that some might argue bears very few similarities to the gambling industry.

But as the FanDuel CEO explained to SBC Leaders, the roll out of sports

“There was a period of time when I was helping the company to manage its strategy throughout the crisis and, quite simply, get to the other side of the pandemic. But it became very clear that we were going to be in a holding pattern for quite some time. This was when FanDuel reached out.

“As I started speaking with FanDuel, I thought about the types of industries and opportunities that I'm attracted to. For me, there were really a few criteria that were very important. The first is that I’m very attracted to high-integrity teams with really inspiring cultures.

“I always say, life is too short. If you don't trust and respect the people you're working with, there's lots of other places to work, right? That mantra has always been a prerequisite for me. It’s

I KNEW SPORTS BETTING WAS AN UNBELIEVABLY DYNAMIC INDUSTRY WITH MASSIVE GROWTH POTENTIAL, BUT IT ALSO COMES WITH SOME VERY COMPLEX PROBLEMS front and centre of any work decision I make. But at the end of the day, you also have to be interested in the content.”

For Howe, the sports betting industry was a space that presented huge growth potential. But with those opportunities came a new set of challenges too.

Her background in consultancy and prior experience as a Partner at

McKinsey & Company did provide ample insight into ways in which she could find new solutions to the hurdles that the sports betting industry faces.

“I knew sports betting was an unbelievably dynamic industry with massive growth potential, but it also comes with some very complex problems,” Howe continued. “I previously worked at McKinsey where I had spent 15 years of my life solving really complicated problems. I knew this industry had all of that, and then some.

“Then, being where I am in my career, I felt like this was a company and an industry where my leadership style and platform can really elevate the company's performance. But a lot of that also has to do with the things that we’re also doing around diversity, equity and inclusion.

“The opportunity that arose at FanDuel had a lot of the right ingredients for me to go in and have an impact and also have a lot of fun along the way.”

The entertainment factor

The switch from ticketing to sports betting was a move which, on the surface, did not seem like an obvious one. However, when you consider that both industries involve something of an ‘entertainment factor’, you can begin to see the connection.

As Howe pointed out, her time at Live Nation, which was preceded by a role at Ticketmaster, involved working in a sector that is facing digital disruption and experiencing substantial growth. She continued: “I think one of the most pivotal things I took from my previous roles is how you position an organisation for massive growth or change. You could argue that what Ticketmaster was going through is very similar to what sports betting is going through now - it’s an industry that is being disrupted by digital technology.

“It is also an industry that is going through huge growth. So the ability to come in and understand how you structure your organisation and create a culture for massive change and growth was one of the biggest learnings that was very applicable.

“Both Ticketmaster and FanDuel are big technology companies. And both companies show the importance of building scalable tech and introducing sustainable processes. We always speak about how PASPA was only repealed four years ago, we’re still in the very early innings of sports betting. So as you build your business from the ground up, we need to make sure we’re doing it in a scalable, sustainable way.

“There’s a lot of focus on the path to profitability while also gaining share and driving growth in the market. So scalability becomes really paramount for success as we think about the longevity of our business model, as well as the success of the industry as a whole.”

Learning how to position a company for further growth and regulatory change has also come with the challenge of learning how to prioritise different strategies - and more importantly deciding what areas of business do not require time, energy or resources.

Howe made reference to the magpie effect in which she explained it can often be very easy to become distracted by “bright, shiny objects” that may seem like attractive business opportunities.

However, she soon pointed out that when leading a company, you must keep the long-term goals in mind and only pursue sustainable ventures.

Delivering that element of entertainment is arguably the longterm ambition that Howe has in mind for FanDuel as she continues to scale the company even further. But with that sense of bettor enjoyment comes the added responsibility of ensuring that everyone bets in a responsible manner.

She continued: “We speak about FanDuel as being an entertainment business, and our platform being an entertainment platform rather than solely sports betting. I think that that’s an important point to make. We want to keep sports betting as a form of entertainment but also an industry that is responsible. FanDuel is doing a lot of work around responsible gambling.

“This was particularly apparent in the run up to the Super Bowl back in

February. In the US alone, there were 50 million Americans, most of whom were recreational customers who are just excited about betting being something that makes the game that bit more exciting. So having that entertainment factor balanced with responsibility is incredibly important.

“I think that as a leader of the largest sports betting company in America, it is my job to help consumers keep betting entertaining.”

Path to profitability

To say that a company is a leading force in a market as big as the US is a very bold statement to make. But when it comes to FanDuel, the numbers from recent industry reports are testament to the fact that the company is making its name known.

According to a recent report by Eilers & Krejcik, there are approximately 60 sports betting operators in the US market. And as it stands, FanDuel holds a market share of between 4050% - making it the title holder for the sportsbook with the largest presence.

A large part of being able to gain such a significant market foothold, according to Howe, can be attributed to what she called "the Flutter Edge” and the knowledge that FanDuel has acquired from the senior leadership team of its parent company. It should also go without saying that Howe has played a significant role in accelerating FanDuel’s path to productivity.

“Gaining such a share in the market, for us, really comes down to three different things. It’s driven by our leadership position, which is a big reason as to why Flutter invested in FanDuel in the first place. We have that brand identity that everyone recognises. But we also had a head start because of the fantasy sports business. What that’s allowed us to do is acquire customers much more efficiently than many of our other competitors,” she said.

“So if you look at our economics of how we bring users onto the platform, they're significantly advantaged relative to the rest of the field. But I think perhaps equally, if not more important, is our product advantage.

“A lot of this comes from other parts of Flutter - from their strongholds in Australia, Ireland and the UK. Flutter has made considerable progress in product innovation around things such as player props, in-play betting and multiswhich has really fuelled our success.

“It’s a combination of that product innovation with the fact that we’re doing most of our developments in-house. We have a risk and trading organisation that operates on a global scale - you have almost 1,000 people spanning the engineering, trading and data science teams that are waking up every day and building these fantastic models that we use. That’s then translated to a stronger retention of our players. But it’s also better economics.”

These last 12 months have seen FanDuel become the first sportsbook in the US to reach profitability in a trading quarter. Howe fully expects this to continue going into 2023 and beyond.

Howe added: “To your question of profitability, so far we’ve been able to demonstrate that you can continue to grow market share but also be profitable. In 2022, we were the first sports betting company in the US to be profitable in a quarter. We fully expect to be profitable for the full year and in 2023 too.

“If you’re looking at FanDuel from an outside perspective, there’s always been a level of discipline. If you think about the deals we do, and more importantly those we don’t, there’s so much money going into the landscape right now. One of the things that we have tried to maintain throughout - and something that actually predates my time as CEO - is that discipline around marketing and investments.

“When we think about bonuses and player incentives, it’s very easy to get caught up in what the market is doing. But we look at our numbers and we know what numbers pay off. I think that has been one of the key drivers of our success and our ability to actually hit profitability perhaps sooner than some of our competitors have done.”

The US betting industry is currently valued at approximately $9bn, split between both sports betting and gaming. Howe predicts that at “market maturity”, which she believes will be in around 2030, the industry could reach the $40bn mark as more states begin to open up.

“There is still quite a bit of runway ahead of us. If you break that down into its different components, there's still quite a bit of momentum in the sports betting space.

“But we’re still only at 40% of the US population that can legally place a sports bet, which translates to around 18 states. We're very focused on market expansion, however. We just had some very successful recent launches in Maryland and Ohio, both of which are going incredibly well.

“Our government affairs organisation is then doing a lot of hard work to keep driving legalisation in other states. I’m always reminded just how difficult it is to predict with any certainty exactly which states are going to legalise, when. It looks like a nice, steady line to that $40bn mark.”

With the growing regulated market also comes the lurking shadow of the offshore sportsbooks which, as a market in itself, is estimated to be around the $64bn mark according to the American Gaming Association. So it goes without saying that there is still work to be done to keep bettors within the regulated market.

As Howe outlined, the shift towards regulation can also present new opportunities not just for sports betting expansion, but also for the roll-out of igaming too. This is a vertical that the CEO believes presents a number of cross-sell opportunities for sportsbooks as they look to engage new bettors.

She said: “Sports betting does still stand to be the biggest growth driver, but behind that in close second, we think there is a very attractive igaming opportunity. It hasn't had the same regulatory momentum that sports betting has but eventually we think that will come. Even with the five states that are online right now, FanDuel has an opportunity to take all of the assets and the successes that we've had in other parts of Flutter and bring those to the US.

“We're really starting to get some nice momentum. Our product proposition, our promotional offering, our overall marketing and branding of our casino product has improved exponentially. Over the last 12-18 months, we’ve also seen the fruits of our labour in that regard.

“We speak about our business as a flywheel. We have this amazing scale advantage, so once you have that, the question really becomes ‘how do you use that momentum to introduce your consumers to other forms of entertainment that are complementary and that also improve your overall economics?’

“At FanDuel, we’re very thoughtful about how we do that. We were the first operator to integrate our racing product into our sportsbook - which, to me, was a non-trivial undertaking. Ultimately, you have ˝four million engaged sportsbook users who are effectively one tap away from horse racing, which is obviously a huge sport outside the US. But it’s also a vertical that we believe has real potential. I really do think there are some huge opportunities ahead of us in 2023 and beyond.”

Regulatory hurdles

It should come as no surprise that when discussing regulatory changes and the roll out of new verticals, the conversation soon turned towards the recent failure of Prop 27 in California.

At the time of the vote, many commercial sportsbooks expressed their disappointment that sports betting regulation would not be making its way to the Golden State. But while the market is not yet open for business, FanDuel remains committed to creating a “safe, regulated and competitive mobile sports betting environment in the US, particularly in California”.

“California is obviously a hugely important state - it's 12% of the US population. We were certainly disappointed with the outcome of the Prop 27 vote.

“We’re regrouping on the outcome of the vote, but we do think that any change is going to take some time. I think we're still seeing some positive momentum in many of the states. I just think it's going to take ongoing education.”

Something that does need to be taken into consideration when bringing in regulation across California is the unique stakeholder relationships at play. State regulators must work closely with casinos, racetracks, the tribes and sports teams before greenlighting any sports betting legislation.

Howe continued: “As we regroup and think about what that strategy is for California, we want to make sure that we can build the right coalitions with the right stakeholders. I also think it's going to be increasingly important to educate the stakeholders, and also the California population around the implications of not legalising sports betting.

“When you think about a $64bn illegal market where all you're doing is pushing consumers and underage kids to a black market, there's some unintended consequences of not legalising it. We have got to keep doing the hard work and making the investment to make sure that we can provide the right safe environment that consumers want.”

This is a strategy that FanDuel is also considering when it comes to New York - another market that has been a hot topic of conversation when it comes to US sports betting, largely due to the state’s high tax rates.

“The right regulatory environment matters a lot. As we’ve seen from some of the more mature markets in Europe, there are implications of not getting that balance in regulation. At the end of the day, we want to make sure that consumers keep betting as a form of entertainment and that you’re not encouraging any form of unsustainable behaviour. That’s the first objective with regulatory change.

“The second objective is that if the regulatory environment is very draconian and governments are introducing unrealistic deposit limits, then what you’re doing is pushing people back to the unregulated market. So finding the right balance is important. So the reason why Christian Ganetsky and some of our other competitors are there is to educate on the implications of not getting that regulatory balance right.

“Because what eventually happens is that legal operators start to pull back because of a 51% tax structure. It becomes very difficult to make money. You’re then going up against offshore and illegal operators who don’t have to pay taxes. They don’t invest in KYC, AML, responsible gambling tools to protect their customers. As an industry, it’s a balance we really have to get right.”

It’s all about sustainability

Keeping regulatory balance in mind, Howe explained that individual sportsbooks also need to look introspectively at their own strategies to ensure that they are operating in a sustainable way.

One way that FanDuel is doing this is with its responsible marketing efforts such as becoming the first operator to sunset the term ‘risk free betting’ from its marketing strategy.

“As we think about it here in the US, we’ve got to build a sustainable business. On the one hand, you can look at the industry and say ‘wow, there’s so much growth potential’.

But if we don’t build a responsible business, we will come up against unintended consequences further down the line.

“If you look at consumer data, the number one driver for consumers as to why they pick a particular platform is trust. If we don’t get this right, this fundamentally impacts who you acquire and whether customers actually stay with you in the long run.

“In 2022, we were the first major operator in the US to sunset the term ‘risk free’ from our marketing. As a business, we made this choice because we thought it was important to offer much better transparency to the consumer, while also keeping our strategy in line with Flutter’s Positive Impact Plan.

“We’re now starting to see more pressure from some of the leagues and, as a result, more operators are beginning to follow suit. We thought it was important to make sure that we could be clear and transparent and not misleading in the language.”

Finding your voice

Looking towards the future, something that cropped up was the role of diversity, equity and inclusion and the way in which this can inform a company’s wider strategy for growth.

More often than not, many female CEOs face the question of ‘how difficult is it to work in a maledominated environment?’ - and Howe is no exception. As she told SBC Leaders, this is a question that has cropped up in many interviews in the past.

Howe suggested that her previous experiences within male-dominated industries have not only spurred her on to “find her voice”, but has also pushed her to advocate for meaningful change when it comes to diversity, equity and inclusion.

“I was very fortunate to grow up at a firm like McKinsey where you’re given the toolkits to be able to flourish as an individual. I can go toe-to-toe with any executive on an intellectual level - I don’t have a hard time finding my voice when I’m the only woman at the table,” Howe said.

“There are a few observations to make though. One reason why I love what I do is because I can actually use my platform to advocate for talented women to make meaningful change around diversity, equity and inclusion at my company. That was also something that has driven my performance at McKinsey, at LiveNation and now here at FanDuel.

“The other side of the coin is that it’s a very clear indicator that we do have a long way to go when it comes to diversity, equity and inclusion. I’m incredibly proud of what we’re doing at Flutter.”

Drawing reference to Flutter’s Positive Impact Plan, FanDuel aims to have 40% of senior leadership positions filled by women by 2026. However, something that Howe underlined is that there is much more to diversity, equity and inclusion aside from gender representation.

“I have the opportunity to lead our Global Advocacy group and the Global Equity Committee that drives improvements in our diversity efforts. We’re doing some really exciting things right now around expanding our inclusivity.

“What is clear is that it’s a twopronged approach. You have to expand the pipeline of women coming into the organisation, especially in functions that have historically been underrepresented, like engineering, data analytics, risk management and trading. At the same time, you then have to support women on the way up the career ladder.”

“It’s very important to remember that it's not just about gender diversity. We're talking about all forms of diversity, as we think about how to make the organisation, and the sector as a whole, better. We have a long way to go, but we are making positive steps.”

Power of the pack

Rounding off the discussion with SBC Leaders, Howe left us with some advice for those looking to climb the career ladder in the betting and gaming industry.

“Some of the most common advice I give to folks who are starting out is that regardless of what level you come into the organisation, you are hired for a reason. So, find a way to find your voice.

“You don’t always have to be the one that’s driving a meeting or someone that has all of the answers. But make sure that you have your own perspective and bring that unique viewpoint into conversations. I think that is really important.”

Howe reflected on her own career for her second piece of advice - a journey that, as she explained, has taken her on many “twists and turns”. This variety in job roles has exposed her to various different opinions, experiences and perspectives that have ultimately led her to where she is now.

“I think one of the common themes for my success was that I exposed myself to a broad range of problems early on in my career. This was partly because I went into consulting, so by definition, you have to consider a wide range of issues on a daily basis.

“I would encourage young folks to not get so pigeonholed into one thing. Try to get exposure to different ideas and different roles because that may change your view on what you ultimately want to do in your career.”

Her final bit of advice was what she described as finding “power in a pack”, as she referenced an article by the Harvard Business School. “This is a gender agnostic point, but I do think it is particularly true for women, is that you need to find your pack.

“There’s a great article by Harvard Business School called ‘Power of the Pack’ and it’s all about women who support other women and how this ultimately leads to more success in their respective fields. This is something I fundamentally believe in. You can find your own pack in different ways - at work, through friends, industry events. But leverage those connections because you never know what doors will open up for you.” •