Fubo Sportsbook shut down, meaning Iowans have one less option to place sports bets.
Fubo Inc. announced on Oct. 17 that it would close its sportsbook operations in Iowa, New Jersey and Arizona.
“We were advised that it was ‘due to economic conditions,’” Iowa Racing and Gaming Commission administrator Brian Ohorilko said. “That was the reason provided to the commission.”
So far, in fiscal year 2023, Fubo’s internet net receipts totaled $16,025. That’s the third-lowest amount from an Iowa sportsbook during the quarter.
As a whole, Fubo will still lose money by shutting down its sportsbook. The company will pay $70 million in a non-cash impairment charge.
Other changes will occur as well, such as severance and employee-related costs. Certain contracts will also come with early termination cash charges.
Fubo, best known for its streaming service, attempted to create its niche in the gambling world when it created its sportsbook. The concept was unique; bettors’ streaming and accounts linked upon creation. The sportsbook would sync with whatever event customers would be watching at the time.
Fubo Iowa customers will receive money back
After Fubo announced it would shut down its sportsbook, the company gave the IRGC a plan. The site shut down temporarily for the removal of the wagering function.
Fubo gave customers 30 days to withdraw funds from their accounts. After that period, the company will mail checks to customers with a balance remaining. It’s a similar process to what happened when The Score shut down.
A plan for shutdown came after the board announced it, which caused some concern from customers. According to Ohorilko, when TheScore Bet closed its Iowa operations, a plan was in place two months prior to the company’s announcement.
Customers were notified ahead of time in that case, too. “There was some confusion from customers,” Ohorilko said. “They did not get a lot of notice. We received a handful of calls asking what was happening.”
The IRGC is confident customers will receive their payments as promised. Ohorilko said:
“We do not believe there is any concern with regard to players getting their money back. That is a primary concern when these things happen. At this point, Fubo has a good plan in place. They are carrying out their plan. We have no reason to believe anything will change as they wind down their operations.”
It’s worth noting that The Score and Fubo are two different situations: The Score still operates outside the United States, while Fubo is shutting down its sportsbook entirely.
Iowa online sports betting laws protect customers
Iowa law protects customers in the event a sportsbook shuts down, just like in Fubo’s case.
“When regulations are written and companies get licensed, there are certain requirements that are put in place to ensure that players’ liability is protected,” Ohorilko said.
Companies must report their player liabilities to the IRGC. That liability totals the money currently in accounts and funds owed regarding future bets. The companies have specific cash reserves in place which exceed that liability.
Additionally, every online sportsbook must have a casino partner in Iowa. Casino partners must have a guaranteed bond that would cover any obligations owed by the online sportsbooks.
In Fubo’s case, it partnered with Casino Queen in Marquette.
Small IA sportsbooks have an uphill battle
Fubo Sportsbook arrived in Iowa during the fall of 2021 and struggled to position itself long-term in the state. It’s a similar battle smaller or midtier sportsbooks face not just in Iowa, but nationally.
Looking at Iowa, specifically, DraftKings, FanDuel, Caesars and BetMGM dominated in September. The four sportsbooks combined for a handle of more than $155 million that month.
To put that number in perspective, the total internet handle for Iowa in September was $177.5 million. That number changes by state, but it’s a trend common across the nation.
Ohorilko recently attended the Global Gaming Expo. One of the seminars touched on the topic of mid-range and smaller operators competing against larger companies. He recalled:
“It was stated that FanDuel and DraftKings have 60% of the market share nationally. When you add BetMGM, that’s 70% of the market share nationally.”
The major sportsbooks are the operators with the biggest advertising budgets. Ohorilko noted that when Iowa’s in-person sportsbook registration requirements dissolved, marketing numbers boomed.
Many of the larger sports betting companies offer new users bonus bets or reward first-time bettors with bonus bets just upon placing a wager. And as these companies continue to grow, some of the smaller operators – like Fubo – will be unable to keep up.
“It’s something that I think many of the industry experts believe we’ll continue to see as the market starts to settle,” Ohorilko said.