Shares among several prominent gaming companies fell sharply on Monday, but subsequently rebounded in response to a series of mobile sportsbook outages on Super Bowl Sunday.
While the issues appear to be related to increased demand for online sports wagering, the steady stream of outages raise critical questions on the industry’s ability to handle technological bottlenecks during major events on the global sports calendar. All told, at least five companies – Barstool Sports, BetMGM, DraftKings, FanDuel, and BetRivers –- experienced tech disruptions with their mobile sports betting apps prior to kickoff or during the game itself.
Penn National Gaming, which owns a 36% stake in Barstool, closed on Monday at $121.23, falling nearly 6% on the session. In the days leading up to the Super Bowl, Penn hit an all-time high on Feb. 5 at $129 a share, a far cry from the height of the COVID-19 pandemic when the gaming company fell under $4 a share. DraftKings, meanwhile, lost nearly 3% on the news, closing Monday’s session at $61.97.
The companies largely blamed tech issues with their backend providers for the outages. At the moment, Kambi powers the sportsbook technology for both DraftKings and Penn National, though DraftKings plans to migrate to an in-house platform operated by SB Tech by this fall. On the Nasdaq Stockholm exchange, shares in Kambi on Monday were relatively unchanged.
Extraordinary demand
During Super Bowl weekend, U.S. online sports betting volumes from GeoComply jumped an astounding 254% on a year-over-year basis, according to company data obtained by Morgan Stanley. The demand surge reportedly led to outages at DraftKings and FanDuel, Morgan Stanley analyst Thomas Allen wrote in a Feb. 8 note. Online sports betting volume at Geocomply is measured by the number of pings the company receives to confirm the physical location of mobile sportsbook customers nationwide. GeoComply, a leading geolocation compliance technology provider, services the majority of top North American mobile sportsbook operators.
Other key trends on the weekend’s online sports betting volume from GeoComply:
- Of the states measured, mature jurisdictions such as New Jersey and Pennsylvania performed extremely well with increased volume of more than 70%, according to GeoComply.
- Overall, volumes rose 6% in comparison with NFL Conference Championship weekend. Previously, volumes dropped 4% on the weekend of the NFL Divisional Playoffs compared with a weekend that featured six Wild Card games over a two-day span on Jan. 9-10.
- When evaluating top states across the country, but excluding data from new markets in Virginia and Michigan, GeoComply online sports betting transactions rose 4% from Conference Championship weekend, the data showed.
Online sports betting launched in Michigan on Jan. 22 on the same weekend that several sportsbook operators began accepting wagers in Virginia. Nearly a dozen online sportsbooks went live in Michigan on the date, including all of the aforementioned companies that experienced tech issues on the Super Bowl.
A closer eye on Michigan
The intermittent outages in Michigan are of particular concern since the market is nascent and customers are still experimenting with multiple apps to find a book they can trust. European-based Kambi Group Plc. has forged partnerships with DraftKings, Penn National, Rush Street Interactive, and Churchill Downs Incorporated among others, while FanDuel has tech partnerships with both IGT and Scientific Games. FanDuel extended a multi-year partnership with IGT in August.
“Due to unprecedented demand during the game, FanDuel customers in Michigan and Illinois did experience intermittent outages while other markets saw latency in accessing our Sportsbook mobile app,” FanDuel wrote in a statement provided to Sports Handle. “At no time did our platform cease operating and our team worked quickly to restore and stabilize service in the affected markets.”
FanDuel’s customer service team initially posted a message on Twitter at 5:43 p.m. ET, informing customers in the two Midwestern states that its technicians were working on resolving the issues. The team continued to work through the first quarter when FanDuel posted a second tweet at 7:04 p.m. FanDuel assured customers in every state that they could access the online platform without any issue when the team posted the last of its three tweets, but that message was not issued until 8:47 p.m.
Customers in all states should once again be able to access the Sportsbook platform. You may still receive a notification that the system was initially unable to log you in, if this happens please wait a moment before trying again. We appreciate your patience! https://t.co/yOIBf8Knti
— FD Customer Support (@FanDuel_Support) February 8, 2021
Michigan customers at Kambi-supported mobile sportsbooks appeared to deal with frustrations just as vexing. Bettors using Kambi-supported books began experiencing intermittent bet placement difficulties during the Super Bowl pre-game show. Kambi blamed the difficulties on a “specific player-related bet offer,” as well as the increased range of outcomes offered, which the company said “doubled in size,” for the Super Bowl. When Kambi expanded the number of outcomes for the offer, bettors selected bet and price outcomes that needed to be validated by the system.
The concentrated pressure in “one specific area of bet validation,” first slowed the bet validation process, then prevented the validation processing of a wide range of bets, sources familiar with the situation indicated. Still, Kambi emphasized that the issues were not connected to the overall load on the Kambi systems, which was in excess of three times that of last year’s Super Bowl.
The concentrated volume on this high capacity and expanded bet offer resulted in a backlog in our overall bet validation process which subsequently impacted overall performance. This specific problem was quickly identified and rectified ahead of kick-off, at which point Kambi processed the highest ever bet volumes in its history. Beyond this specific issue, all systems responded within acceptable performance limits.
–Statement from Kambi Group Plc
It is unclear how many DraftKings’ customers were impacted, or which regions were affected the most. Nevertheless, the incident could accelerate the company’s transition to an in-house platform designed by SBTech later this year. DraftKings went public last April, months after it entered a definitive business combination with with Diamond Eagle Acquisition Corp., a special purpose acquisition company and SBTech, a tech/software supplier.
“We’re aware customers were unable to access our mobile and online Sportsbook. It appears this outage was caused by a surge in traffic that caused problems for our backend provider,” DraftKings wrote in a statement provided to Sports Handle. “Our DFS and pools products, supported by in-house technology, functioned without issue. This incident is why we believe owning our own technology is important.”
Across Michigan, as well as several other states, the outages appeared to drag well into the first quarter of the Super Bowl. Virtually none of the top sportsbooks that partner with a third-party provider were spared.
“While outages happen, it happened at literally the worst possible time and that is a VERY important miss considering that all operators just launched in Michigan,” Susquehanna analyst Joseph Stauff told Sports Handle. “The importance of the outage is whether it sours customers in Michigan, in particular, that have not yet locked into a preferred app as that takes a few months.”
FanDuel also experienced issues in Pennsylvania, a source familiar with the situation told Sports Handle.
Other operators
At BetMGM, several Nevada retail sportsbooks were unable to accept bets approximately 10 minutes before kickoff. Although numerous technicians appeared to work assiduously to correct the issues, it was not determined if the issues were resolved by the end of the game, CNBC reported. It is also unclear if BetMGM dealt with bottlenecks in other states. A spokesperson from BetMGM did not immediately respond to a request from Sports Handle.
All MGM books down in Vegas ! Not good for the middle of the super bowl pic.twitter.com/RwTfzMdY8d
— tyler toney (@tylertoney3244) February 8, 2021
Penn National also experienced some technical difficulties, but did not disclose the exact source of the issues, Front Office Sports reported. A Penn National spokesperson did not respond to a request from Sports Handle.
William Hill and PointsBet, which use in-house technology to power their mobile sportsbook platforms, did not experience any major disruptions, according to CNBC.
When it comes to assessing whether the intermittent outages will affect the long-term valuations of major sports betting companies, questions still persist. The NCAA Men’s Division I basketball tournament is scheduled to begin in less than six weeks. Stauff, the analyst from Susquehanna, noted that based on Monday’s downward share movement customers could abandon apps that experience frequent disruptions.
“The risk is that the massive frustration created by not being able to get a bet in on the Super Bowl for 45 minutes prior to the game and during the first quarter is enough for them to move to try competing apps,” Stauff said.
