Economies Of Scale Could Keep Small Sportsbooks Out Of NC Sports Betting Market

After receiving 18 online sports betting applicants in a month, NC regulators have not received another request for an online operator application since the new year started.

Eight commercial online sportsbooks, pending final regulatory approval, will go live when North Carolina online sports betting launches on March 11, leaving three licenses on the table.

All of these operators submitted completed applications before the recommended deadline of Dec. 27, 2023. Since then, no new operators have requested a sports betting application, the NC Lottery Commission tells NCSharp.

A look at the state of the US sports betting market in other jurisdictions and the landscape in North Carolina doesn’t suggest that those three remaining licenses are a lock to get taken.

Online sportsbook attrition in other states

The Kindred Group, one of the top international gambling companies announced last November that Unibet, its online sportsbook offering in the US, would wind up operations by Q2 2024.

Unibet, live in only five states, had a relatively small footprint in the American market.

Kindred CEO Nils Andén cited the exit of Unibet as part of a “cost reduction” action in the company’s overall strategic review. With no potential for growth in the US market, Kindred turned its attention abroad.

A similar strategic review with a similar line of reasoning has been followed at other smaller books, and we can see the trend of attrition.

WynnBet, which recently sold its sports betting license in Michigan to Caesars will also wrap up business in Massachusetts next month. Wynn, the parent company of WynnBet, cited “higher and better uses of capital deployment” than the US online sports betting market.

Along with WynnBet, Betr Sportsbook petitioned the Massachusetts Gaming Commission to cancel its temporary sports betting license, citing an interest in pursuing a broader swath of customers in other states while avoiding the highly competitive Massachusetts market.

With the exit of WynnBet and Betr, Massachusetts will now have six of a possible eight live online sportsbooks. Those sportsbooks are:

BetMGM Sportsbook

Caesars Sportsbook

DraftKings Sportsbook

FanDuel Sportsbook

Fanatics Sportsbook

ESPN Bet Sportsbook

All six of those books will likely launch in North Carolina on March 11, along with Bet365 Sportsbook and Underdog Sportsbook NC.

NC sports betting market cost-prohibitive to smaller sportsbooks

We’ve looked at the North Carolina market landscape before, noting that North Carolina might not have enough dance partners to serve all the pro sports entities in the state.

While North Carolina’s sports betting operator licensing fees ($1 milliion/year renewable every five years) come in below its neighbors, these aren’t the only costs associated with doing business in North Carolina.

Bill Squadron, an assistant professor of sports management at Elon University, doesn’t see licensing fees as prohibitive but acknowledges the challenges facing smaller sportsbooks.

“I don’t think that the licensing requirements have discouraged smaller sportsbooks,” Squadron says. “It just seems that industry economies of scale and significant marketing costs make it challenging for smaller organizations to compete.”

Along with marketing, these costs include app development, third-party sports betting supplier contracts and promotional spending to attract new customers.

Looking at newcomer ESPN Bet as an example of how these costs play out, last November, the sportsbook launched and accrued roughly 7% of the US market share for the month. This put it in the top three to four sportsbooks in the country in its first month of operations. No small feat.

However, that success came at a cost. PENN Entertainment, ESPN Bet’s parent company, spent Over $50 million on promotional offers to attract new customers. While it led to industry-leading app download numbers for the month, PENN ultimately suffered a larger-than-anticipated loss in its Q4 2023 revenue totals, which has led to a 25% drop in share prices.

NC sports betting partnerships create difficult conditions for small operators

North Carolina’s requirement that online sportsbooks partner with a pro sports entity to gain access to the market creates another significant hurdle for small operators.

Any operator interested in pursuing one of the state’s three remaining licenses with the Carolina Panthers, Charlotte FC or the NC Courage is looking at a steep partnership price.

Especially with the Panthers, which NCSharp has rated as the most valuable sports partnership in the state due to the NFL’s popularity and the team’s central location in Charlotte.

The Panthers remaining without a sports betting partner comes as a surprise to many, including Squadron. “I’m really surprised but have no idea why. Usually, it just means that the parties have different terms in mind and haven’t bridged the gap yet.”

For the Panthers, those terms will also involve an agreement with a likely ten-year commitment. That has been the standard for other sports betting partnerships in the state.

Whether it’s the Panthers or the other remaining pro sports teams looking to partner with a sportsbook, they’ll prioritize those books with the potential for market longevity. And, as we’ve seen, that hasn’t been in the cards for many small operators.

Waiting for kickoff

Now that the NFL season has concluded, a partnership with the Panthers won’t reap immediate rewards from a marketing perspective. Further, any operator that begins the application process today wouldn’t go live until after March Madness concludes and we enter the slow season for sports betting.

If a darkhorse operator makes a run at one of North Carolina’s remaining online licenses, it makes sense that they’d wait until September when the NFL season begins, college football is in full swing and the MLB postseason is around the corner.

That will be the next window for a new operator to hit the ground running in North Carolina.


Image Credit: Brian Westerholt / AP Images

About the Author

Tyler Andrews

Tyler is the Managing Editor for, covering sports, sports law, and gambling for the Tar Heel State. He has also covered similar topics for PlayTexas, PlayGeorgia, PlayCA, PlayFlorida, PlayOhio, and PlayMA. Tyler’s current focus is North Carolina’s pathway to gaming legalization.