Analysis: Is There More Behind FanDuel's Move into Georgia?

Analysis: Is There More Behind FanDuel's Move into Georgia?
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FanDuel will open an IT and product development hub in Atlanta over the next five years, creating an estimated 900 jobs. The deal ties the sports betting and fantasy sports behemoth to Georgia’s higher education system, which will train would-be tech workers for the company.

A 68,000 square-foot complex in Midtown Atlanta will focus on software and product development, information and design and draw a $15 million investment from the betting and fantasy sports company.Those are impressive numbers. But they do not tell the whole story.

The decision for FanDuel to set up shop in the unofficial capitol of the South and in a state, Georgia, that recently failed to amend its constitution to allow legal sports betting, was also worthy of notice.

FanDuel says this is not a ploy to get an in with Georgia politicians. After all, the company has already donated $70,000 since 2016 to politicians from both parties. But those efforts to bring sports betting to the Peach State have yet to bear fruit.

“We want to bring the excitement of our product to Georgia residents when and if the Legislature decides to take that up. And we’ll support that if they do. But we feel Atlanta is best for our long-term growth,” said Chris Jones, a FanDuel vice president, according to the Atlanta-Journal Constitution. “We didn’t approach this with the mindset that moving here begets legislation.”

Nonetheless, sports betting is expected to be debated next spring when the Georgia legislature returns. There is real potential for sports betting to be on the statewide ballot in November 2022. And while that may not be the primary reason for this move, it undoubtedly gives FanDuel a stronger voice when the issue inevitably returns to public debate.

Coincidence or Harbinger?

There are other reasons why the choice of Atlanta is noteworthy, beyond its airport, continued growth and its expanding cultural, educational and recreational opportunities.

Atlanta happens to be the home of WarnerMedia’s cluster of networks, including Turner Sports (which includes a studio for Bleacher Report), TNT and the Turner Broadcasting System.

This new move will put a tremendous amount of assets — aka talent — working for FanDuel and WarnerMedia/Turner in close proximity.

Why does that matter?

In 2020, Turner and FanDuel entered into a multi-year deal with Turner Sports and Bleacher Report to be the exclusive sportsbook partner for its NBA programming.

The announcement of the new FanDuel campus came just days after it was learned WarnerMedia is being spun off by AT&T and will merge with Discovery.

Mergers are becoming commonplace in both the gaming space and digital/broadcast media world.

The tremendous growth in sports betting — which was legalized in Florida just this week — and the appetite for sports and betting-related content by audiences are not limitless. Every universe has an end.

Consolidation Inevitable After Rapid Growth Ends

Eventual consolidation is inevitable as scale and — yes, profit — becomes as important as growth.

FanDuel and many of its competitor sites grew during the pandemic — thanks to the spread of legalized sports betting across several new states and millions of customers stuck at home watching games on TV or via streaming.

As the intensity and scope of the pandemic subsides, betting entities are now working to adapt to the new and old ways consumers are engaged in sports.

On March 30, DraftKings said it had acquired the multi-platform content provider VSiN, giving the site an established media outlet and production platform in the sports betting space.

Just one month and two days later, Danish-based Better Collective won what was, in essence, a mega-auction and announced it would spend $240 million to buy The Action Network.

And following the announced merger of WarnerMedia and Discovery, long-standing talk of a potential deal that would marry Comcast (NBC) with ViacomCBS resurfaced.

“I think this will set something off in the media landscape,” Neil Begley, an analyst at Moody’s Investors Service, told The Wall Street Journal in the wake of the Warner/Discovery deal. “There’s companies out there without a dance partner and don’t have enough scale.”

Across media, what were once separate entities that provided movies, digital content, television shows and other media have become all-encompassing units. And they’re all competing with behemoths like Amazon Prime, Netflix and Disney.

And they are only going to get bigger.

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