SBJ Betting: Circa likes Midwest dynamics that Blackhawks deal offers

When Derek Stevens decided to put the logo of his Circa Sports sportsbook on the jerseys of the Golden Knights in time for the 2022-23 NHL season, it was a local marketing play designed to raise his downtown casino's profile in a market dominated by larger, long-standing competitors.

But when the Golden Knights won the Stanley Cup last season, he found he’d also attracted attention beyond the Nevada state lines.  “First year, we got lucky on it,” said Stevens, whose downtown Vegas flagship hotel boasts the world’s largest retail sportsbook, with a 1,000-seat indoor theater and a rooftop pool complex that can accommodate 4,000. “We definitely got our money’s worth. And then the floodgates opened. We probably got 15 different professional sports franchises reach out saying, ‘I see you got your logo on a jersey -- what do you think about this or that?’”

Mostly, Stevens thought he’d been the beneficiary of a well-timed one-off. Though hopeful of eventual expansion into more states -- and already well-known in Vegas -- Circa’s sportsbook app was live in only Nevada, Colorado and Iowa came online at the start of 2023. A sponsorship outside that footprint made no sense for the brand.

Then, in October, Circa launched in Illinois, a highly competitive market that produced the third-best handle of any state in 2023, taking $11.6 billion in bets. Approached by the Blackhawks about a jersey patch sponsorship, Stevens was intrigued.  Along with branding that puts the script Circa Sports logo over the right breast of each jersey, the Blackhawks pitched a package that would include radio and TV spots on games airing state-wide, seats on the glass and suite packages for Circa to entertain high-dollar bettors, email and database marketing (something especially attractive to a newcomer to the market) and a commitment to use the Vegas resort to host fan parties when the Blackhawks visit the Golden Knights. 

There’s also significant bleed of Blackhawks broadcasts into Iowa, where Circa’s app has been available for 2 ½ years, but accounts for only 1% of handle.

Last week, the team and the sportsbook operator announced a five-year deal -- a surprising coups for the Blackhawks, who benefited from the rare entry of a motivated new player in a state that has allowed online sport betting for four years. The team already has a deal with FanDuel, which hosts a betting lounge at United Center and sponsors the Blackhawks’ 50-50 raffle.

Financial terms were not disclosed. But jersey patch deals in the NHL average $3.9 million annually, according to sponsorship tracking firm SponsorUnited. The Blackhawks declined interview requests, citing scheduling conflicts. “This one came about in a big state where they’re bringing together a big statewide radio package, which was important to us, and a statewide television package, which is very important to us,” Stevens said. “This is a lot more than the jersey patch. It’s the whole combination that made me want to do it.”

Prairie state companion

Typically, sportsbooks won’t be willing to spend as much on sponsorships in a state that has been open for as long as Illinois has been. Those deals are seen largely as a means to acquire new customers, most of whom will have signed up and developed preferences within the first two years.

But there is little typical about Circa, especially its brand positioning and strategy.

FanDuel and DraftKings are the leading players in Illinois -- as they are in every competitive market -- splitting about 70% of online handle share almost evenly, with DraftKings ahead by a hair. But competition for what remains is fierce.  The most recent reports for Illinois, which were from April, show hometown BetRivers at 7%, BetMGM and ESPN Bet at 5%, Caesars and Fanatics at 4% and Circa at 2% -- its highest share to date.

Stevens says he isn’t chasing the market leaders.  “It’s very difficult to compete with a DraftKings or FanDuel model if you don’t have a DraftKings or FanDuel marketing budget,” he said. “That’s kind of a bad mix.”

He says Circa’s chance of breaking through into the consideration set of some bettors comes from a point of differentiation. While FanDuel and DraftKings have found profitability attracting casual, lower-stakes bettors who flock to parlays -- and many competitors have followed their lead -- Circa operates a model with a lower profit rate that appeals to old-school bettors who place far larger bets.

Monthly betting reports from Illinois show that’s precisely who Circa has attracted.  From its opening in October through April, Circa handled $82.8 million in bets, a number dwarfed by DraftKings which took about 5x that much in wagers in April alone. 

But a closer look at those numbers reveals the distinction Stevens described. The average bet at Circa is a whopping $375, more than 10x the state average. DraftKings’ average is $30, and FanDuel’s is $34. The next highest average after Circa belonged to Caesars, at $110/bet.

Sportsbooks that handle lower volumes almost always take in more per bet. But not 10x more. That’ s a product of Circa’s approach, which resonates with bettors who complain that the larger sportsbooks decline their business if they win too often, a claim that may be overblown, but occurs.  “We’re known for taking large bets and for not limiting bettors,” Stevens said. “We work with high-dollar bettors and professional bettors. We want to get more bettors that get squeezed out from somebody else. That’s our thing.”

Sticking to a model that works

Stevens contrasts his sportsbook with FanDuel and DraftKings, which increasingly have focused on $10, $20 and $50 parlay bettors. While FanDuel and DraftKings strive for hold rates of 12-14%, Stevens said his model targets 3%.

“It doesn’t mean our model is right and it doesn’t mean their model is wrong,” Stevens said. “But, for us, we’re kind of the only ones running this model. It’s kind of an old-school model. And I’ve always said, there are sportsbooks out there that are the right sportsbook for each customer. We’re a valuable addition to someone’s phone. But we’re just doing our own thing.”

On the surface, it seems as if a jersey patch would indicate a pivot from that strategy. It will bring a lift in exposure and, Stevens hopes, awareness -- putting his brand in front of those $10 and $20 bettors. But they’re still not the target, he insisted.

“There’s no pivot here,” Stevens said. “It’s not like I’m going after 100,000 $20 bettors here. That’s not the case. But you can’t take big bets from players if the player has never heard of you. You have to have a little bit of awareness.”

It’s a bit like his reasoning behind building the world’s largest sportsbook. Stevens compared that decision to the approach banks took a century ago when they built hulking structures to gain the confidence of customers.

“If a bank opened up in town, you’d want it to have six or eight big columns in the front of the building,” Stevens said. “Something that was substantial. And in the '80s or '90s, Bank of America built all the towers. Effectively what it was doing was providing subtle confidence to consumers. 'Look at my big building. My big building is here, you can see it, you can feel it, you can trust us. So why don’t you take that money out from under your mattress and deposit it in our safe institution.' In a lot of ways, that’s why I wanted to build the world’s largest sportsbook.”

Stevens also hopes that one-of-a-kind flagship will be a differentiator as he opens in other states. Similarly to Caesars and BetMGM, Circa will offer trips to its Las Vegas property as a perk to top customers. “I don’t want to be in a state during launch, though,” Stevens said. “I watch these companies spend money, and they kick the shit out of each other. That’s not for us.”

May brought the highest handle in D.C. since sportsbooks there began taking bets in 2020, breaking a record that stood since October 2021. D.C. operators handled $32.8 million, an 171% improvement over last May’s $12.1 million. 

The surge was driven by the District’s  switch in March from exclusive online provider Intralot to FanDuel , which launched its app in D.C. in April.

With May results in from regulators in all but Illinois, Arizona and Kentucky, handle for the month was tracking 29% ahead of May 2023 in like states. New York was among the top year-on-year gainers, posting a 45% increase to $1.97 billion.

DraftKings led FanDuel 41% to 38% for the month, the first time it has topped the state chart since September. 

Here are the results for May:

• West Virginia became the fourth state to send a cease-and-desist letter to leading offshore sportsbook Bovada when it took action at the end of June, notes Legal Sports Report.

• ESPN Bet has missed revenue expectations in the last two quarters, but ESPN Chair Jimmy Pitaro tells my colleague Mollie Cahillane that he remains confident in the property and the “significant product enhancements” that are coming this summer and fall ahead of football season. “To say we’re in the first inning of ESPN Bet would be a significant understatement,” said Pitaro, also pointing to Penn's recent hire of Aaron LaBerge -- a longtime Disney/ESPN tech exec -- as ESPN Bet’s new CTO.

• Tipico will "sell its U.S. sportsbook and online casino to LeoVegas, a company under the MGM Resorts umbrella that is also BetMGM’s parent company," notes the Cleveland Plain Dealer. With the sale, "Tipico winded down its U.S. operations but still has to settle bets players made on the app." Tipico Sportsbook is still listed as a "founding partner" of the Columbus Crew of MLS, a deal that was signed in January 2022 and marked the first team in Ohio to ink a sportsbook sponsorship deal.