Do You Know How Your Kids Are Losing Their Money?

co-authored by Sajan Patel

They say what happens in Vegas, stays in Vegas. But these days, the action might be happening right in your living room, especially if you're a college student.

Or my living room, if you’re a (step)parent to a college student like me. 

Online sports gambling has exploded in popularity, growing from a niche market to a nearly $46 billion global industry as of 2024. About a third of people aged 18-24 are gambling in some form online.

My stepson, Sajan, and I, with our combined perspectives (his as a young adult and mine as a parent), have a unique vantage point on this trend.

We've seen firsthand how mobile-app sports betting is changing the way people, particularly college kids, spend their money.

Sajan

“As a student, I see the trend of online sports betting taking over.

Whenever I watch a game with my friends, one of them is likely to make a bet, and some of my friends will bet on anything - a random horse, the number of corner kicks in a soccer game, even betting on rouge sports like darts. 

It’s so common at this point that I’ll see people placing bets during lectures and in the library.”

Lauren

“As a non-gambler and a stepparent to two young men, I was wowed by the growth. I had no idea that gambling was as pervasive as it’s become.

It made no sense why someone who would gamble would also ask ME for money. So, we assigned this project to my intern to find out. “

We could talk about the morality of sports betting, but frankly, that's a little boring. We are way more interested in where the money is going and who’s benefiting from it. 

You have to understand a market fundamental - it’s winner take all.

There are two mobile gambling giants: DraftKings and Fanduel. These two players hold over two-thirds of the market. And by the looks of it, they're not saving any slices of the pie for the legacy casinos. 

So, the question arises: With such a massive and rapidly growing market, is online gambling a threat to legacy casinos? Will Las Vegas itself lose its appeal to the next generation?

But first, how did we get here? 

The Mobile Model

Betting on sporting events has been around for ages, but placing bets online wasn’t an option in the U.S. until 2018 when a decision by the Supreme Court overturned the federal ban on sports betting and allowed individual states to create their own regulations.

Shortly after, states began to legalize gambling on sports, and now 38 of 50 states allow sports betting.

As states started rolling out the red carpet for sports betting, the online world caught on quickly. Suddenly, it wasn’t just about heading to a physical sportsbook.

Enter the era of mobile betting apps - letting people place bets from anywhere, at any time.

Since then, mobile app betting has exploded in popularity. The ease and accessibility of mobile betting transformed it from a pastime for seasoned gamblers into a mainstream activity, particularly among a specific demographic – college students.

It’s young men that are driving sports betting. The closer you are to a college campus, the more likely you are to encounter this. 

It’s become part of their culture, a social activity. Some of them are more invested in their bets than their degrees.

Why?

Placing a bet creates energy around a game, turning it from a passive to an interactive event.

As Professor McConaughey of the University of Texas explained in an Instagram post: 

“Gambling for me, which I dabble with a little bit for entertainment’s sake, is like buying a ticket to the game… if I’m betting $100 on a game with my friend, I’m gonna watch that game a hell of a lot closer.”

So why is the mobile model a threat to Vegas?

It’s different, it’s stickier, and it keeps people coming back. Here’s why:

Winner Takes All

The online sports betting landscape in the U.S. is dominated by two titans: DraftKings and Fanduel, which combined hold almost 70% of online/app market share. 

The Vegas Casinos have had limited traction with their apps, and we can assume the penetration they have had is limited to their loyalists.

Here’s what the market share looks like now:

DraftKings’ and FanDuel’s success points to a winning formula, but the road ahead holds interesting challenges, especially in the traditional gambling capital: Las Vegas.

Now, here's a hypothetical - what if a legacy player made an acquisition?

Imagine a partnership between MGM and Fanduel…

That’s 50% of the market.

Caesar’s, you’re screwed.

Your competitor now holds nearly half the market. You haven’t been successful growing organically. 

Which casino do you think the MGM-Fanduel players are headed into on their next bachelor party?

Whose loyalty program do they join on their first trip? 

Who is going to be their brand of choice for life?

Weak Defenses Against the Upcoming Tide

Here’s the issue: DraftKings and FanDuel aren’t in Vegas yet, and Vegas casinos are struggling to tap into the online market.

The Las Vegas model works now by filling their casinos with Boomers, Elder Millennials, and Gen Xers. As Boomer gamblers age out of the casinos (a.k.a., die), Vegas needs to capture Gen Z and Alpha to fill the slots.

Vegas’ efforts so far have been poor. Their mobile betting apps have failed. They’ve tried to litigate protection, which has kept DraftKings and FanDuel out of the desert so far. 

Unlike most states, Nevada requires users to register for online sports betting in person at a physical casino. 

That’s not going to work. Players are going to find their way in.

The Hail Mary

This creates a fascinating situation: Vegas casinos need to capture younger, mobile gamblers, while online giants are missing a place in the iconic Las Vegas experience. So, how can they bridge the gap?

This is a winner-take-all. They need to move together, and move fast. 

The casinos need to partner with one of the big mobile brands, or just buy them outright. Once they do, new opportunities will present themselves. 

Here’s what that could look like:

These could be crucial plays for Vegas casinos. 

Luckily, there are signs that partnerships would work. For example, DraftKings has established a sportsbook at Wrigley Field. Styled like a Vegas sportsbook, the space creates a place for sports bettors to gather and be merry, with the benefits of using the DraftKings account they already have on their phones. 

Now imagine a Vegas scenario. 

A young online gambler, already loyal to FanDuel, learns they've partnered with a specific Vegas casino, like Circa Casino, to build a co-branded sportsbook. 

Suddenly, that casino becomes their top choice for a future Vegas trip (helped by in-app promotions on their phone). 

The online brand loyalty translates to the physical experience, creating a win-win for both parties. Think Fanduel in the pool - a place to party and hit a parlay.

So, How is This Going to Play Out?

The online sports betting wave is surging, and Las Vegas casinos are feeling the sand shift beneath their feet. It's like a desert oasis facing a tsunami – the traditional model might not survive without adapting.

The company that successfully merges online expertise with Vegas will be the big winner. They'll not only capture the next generation of gamblers but potentially create a loyal, cross-platform customer base. 

This "victor" will have a leg up in the future of sports betting, offering a seamless experience that caters to both online and offline preferences.

Merging with online giants like DraftKings or FanDuel might not be Vegas' preferred move, but it could be the Hail Mary they need.

The clock is ticking. 

Will Vegas casinos adapt and ride the online wave, or will they be swept away by the tide?

Epilogue: I’m Even More Convinced

Shortly after finishing this article, my husband, Harshal, and I went to Chicago for his business school reunion.  It was a perfect Chicago Saturday in May. The glorious type with blue skies, packed beer gardens, and the Brewers on their way down I-94 to play the Cubs.  

So, we put on our sensible shoes and hopped on the red line up to Wrigley.

When we descended from the Addison Street L, there it was, staring us in the face – the DraftKings SportsBook.

We went inside and I ordered two Modelos, ON TAP (even further proof that I’m right – Modelo IS the number one beer in America).

And, I loved it.

The screens, the music, the vibe. It was just a fun place to hang out.

DraftKings created an immersive environment. Huge screens wrapped above the bar with every sport on television – Formula 1, beach volleyball, baseball, NASCAR, PGA golf, Premier League, college softball.

Fun, loud music from clear speakers. 

It’s also full of different kinds of people. There were young people, middle-aged people, and even some Brewers fans, hanging out at the bar and sitting at tables. All there, just chillin'.

DraftKings has definitely created a fun space.

With just one visit, you could see that you would want to be there during a game, after a game, or even if there was no game going on. And, they’ve opened up betting windows and added kiosks.

Now if you think about what that means for Vegas, I’m even more convinced that I’m right.

Good experiences at the DraftKings SportsBook will make it your Sportsbook of choice when you go to Vegas. The legacy casino that moves on DraftKings or FanDuel, and rebrands their SportsBook, is going to lure in new visitors who’ve had great experiences in their hometowns.

Remember, the path to success is paved with continuous learning and embracing fresh perspectives.

Let's stay connected, share ideas, and elevate your consulting business.

Stay curious, friends.

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