By Conor Durnin, Co-Founder of The Unit
For years, the iGaming and sports betting industries have been able to deprioritise product innovation by turning their focus to aggressive customer acquisition spend and market growth. As long as new market opportunities have arisen and promotional activity has remained effective, operators have typically seen strong topline growth with this approach.
A look at some of the most recent earnings calls, however, suggests that the cracks are starting to appear in this model. Many global operators have become aware of this, with shareholder reactions prompting a return to a more customer-centric approach.
In their Q1 2026 earnings update, Flutter acknowledged that FanDuel had a smaller customer base than expected at the end of last year. Their CEO Peter Jackson publicly stated that the business needed to “go back to basics” to counter its issues with retention. Recently, the company reduced full-year EBITDA guidance from approximately $3.3bn to $2.9bn, while broader reporting pointed toward growing pressure around leadership and performance expectations.
If the dominant player in the U.S. market is openly discussing retention challenges, it suggests the industry is dealing with something much larger than a temporary dip.
Of course, marketing spend can drive downloads, registrations, and first deposits, but it doesn’t compensate for a product experience that fails to retain customers. FanDuel’s marketing succeeded in bringing users through the door, but they have admitted a need to cater to changing customer behaviour. Its post-earnings “improvement plan” focuses on functionality and features, and a product-based strategy.
With plenty of choice at their fingertips, modern betting customers can be unforgiving. If onboarding feels clunky, they leave. If live betting experiences feel slow or unintuitive, they don’t stick around. If same-game parlays are frustrating to build, they’re out.
The challenge for operators is that these UX and UI deficiencies can remain a hidden threat until it’s too late. During periods of market expansion, acquisition spend can cover up poor retention metrics and weak customer experiences. But eventually, markets mature, promotional efficiency declines, acquisition costs rise, and shareholders start demanding sustained profitability, rather than growth. At that point, as FanDuel has demonstrated, product quality becomes one of the primary commercial drivers for success.
Furthermore, the emergence and resilience of prediction markets increase the pressure on operators to focus on product quality. For years, the US sports betting market was heavily protected by state-by-state licensing. If an operator secured market access, invested heavily in acquisition, and established early brand recognition in newly regulated states, they were relatively insulated from competition. The barriers to entry were primarily regulatory and financial, rather than product-led.
Prediction markets, which are only bound by national CFTC regulation, threaten to disrupt that dynamic. While the regulatory position is still evolving, prediction markets are able to scale nationally far more quickly than traditional operators were able to in the post-PASPA expansion era. Hence, we’re seeing the likes of DraftKings make a significant push into the category (albeit one that is weighted towards marketing spend, rather than product).
Many of the traditional advantages sportsbooks once relied upon, including licensing barriers, first-mover advantages, and enormous acquisition spend, are becoming less impactful. In a market with lower structural barriers and more consumer choice, product experience becomes even more important. Simply put, more than ever, operators need to build products that customers genuinely prefer to use.
One of the biggest misconceptions in the industry is that operators do not understand where customer expectations are heading. In reality, most are run by very talented people who are keenly aware of the importance of better live betting experiences, smarter personalisation, stronger engagement mechanics, and more seamless user journeys.
The issue tends to be execution capacity. Internal product and engineering teams are often overwhelmed by maintaining existing systems, supporting market launches, handling integrations, and meeting regulatory obligations. That leaves very little room to innovate and create the projects that can be true difference makers.
Naturally, there’s no shortage of product investment among operators, but they may lack the capacity and dynamism to execute meaningful innovation fast enough to keep pace with the kind of changing customer expectations and behaviours that FanDuel recently referenced.
In mature markets, execution speed is a competitive advantage in itself. At The Unit, we partner with operators across regulated markets who are aware of the opportunities of quality product, but who need to outsource to achieve the capability and bandwidth required to execute quickly enough.
That may involve launching new betting products ahead of a major tournament, improving same-game parlay experiences before a new season, scaling frontend capability across multiple jurisdictions, or modernising legacy systems without disrupting existing operations.
FanDuel have been astute enough to recognise that ongoing success isn’t contingent on spend to fuel acquisition, preferring instead to focus on identifying customer behaviours faster, and retain customers more effectively.
The operators that build the infrastructure, partnerships, and delivery models needed to execute quickly, will create sustainable long-term advantages. The rest may learn that while marketing can bring customers through the door, only product quality convinces them to stay.
