FanDuel CEO Amy Howe Wants to Help the Sports-Betting Business Grow Up

Ms. Howe is a fan of Mr. McAfee, but the moment highlights her balancing act: Bringing FanDuel and sports gambling in the U.S. into business adulthood while maintaining its entertainment brand. To do it, she needs to satisfy a number of constituents: gamblers and sports fans, sports leagues, government regulators and investors looking for returns.

FanDuel has grown under her watch. The company said it took in eight million bets on the Super Bowl, a figure that doubled from last year, but declined to say how much revenue that generated. Since then, betting has kept up its pace. FanDuel said it had 19 million bets during college basketball’s March Madness; betting on the NBA playoffs has more than doubled from last year; and the company took six million wagers on the Kentucky Derby and Preakness Stakes horse races in May.

Ms. Howe, a Wharton M.B.A. grad and longtime McKinsey & Co. partner, joined FanDuel in February 2021. It has about 40% market share for sports betting in the U.S., according to the company.

The U.S. sports-betting industry is in its awkward adolescence. Gambling companies have spent themselves into the red on marketing and advertising, fueled by the rush of a potential $40 billion new market. Sports leagues and game broadcasts have become infused with gambling messages and “risk-free” betting promotions, as companies compete for the growing audience. And it all depends on something completely outside the sportsbooks’ control—the outcome of games.

Ms. Howe in October stepped into the CEO role at the New York-based company, replacing then-Chief Executive

Matt King,

who later moved on to sports retailer Fanatics Inc. in its effort to start a sports-betting business. FanDuel got its start in 2009 in fantasy sports.

Ms. Howe describes her primary task as building a multibillion-dollar company from its startup roots and a new U.S. industry that is viable for the long term, including making the company profitable in 2023 while also addressing concerns about gambling addiction.

“What got FanDuel to where it is today is not necessarily going to be what gets us to potentially a $10 billion company,” Ms. Howe said in an interview.

FanDuel is owned by

Flutter Entertainment

FLTR -4.82%

PLC, a Dublin-based company that holds several betting brands operating around the world. Flutter’s U.S. operations reported $1.9 billion in revenue last year. The company said it spent $1 billion last year on customer promotions and marketing in the U.S.

FanDuel’s next biggest competitor,

DraftKings Inc.,

reported revenue last year of nearly $1.3 billion and a net loss of $1.5 billion. Ms. Howe said FanDuel is forging ahead in its marketing spending, in hopes of securing more loyal customers.

“We’re leaning in so that we can build a bigger business by the end of the year,” Ms. Howe said.

So far, 35 states and the District of Columbia have legalized sports betting. Three more states have pending legislation or ballot initiatives, according to the American Gaming Association, an industry trade group. Chief among those is California. FanDuel and DraftKings are backing a proposal that would allow online sports betting in the country’s most populous state; some Native American tribes, though, want sports betting to be limited to tribal casinos.

Despite the enthusiasm, gambling on sports is a tough business. An operator typically takes only about 5% off the total amount wagered. This year, through the month of April, Michigan gamblers placed $1.7 billion in sports bets online. After paying out winning bets, 15 companies took a combined $118 million. That dwindled to about $47 million in revenue after deducting the value of free play credits used by gamblers. FanDuel’s share was nearly $31 million.

Ms. Howe grew up in the farming community of Eden, N.Y., where her family owned a food-brokerage business. She has a twin sister,

Kelly Ungerman,

and the pair lived parallel lives for years, attending Cornell University and Wharton business school, and both eventually joined McKinsey. They engaged in what Ms. Howe calls healthy competition growing up.

“She probably is a notch more aggressive,” said Ms. Ungerman, who is a senior partner at McKinsey in retail and consumer packaged goods.

In 2014, Ms. Howe was recruited by

Live Nation Entertainment Inc.

Chief Executive

Michael Rapino,

after crossing paths with the company as a McKinsey consultant. Ms. Howe was named chief strategy officer of Live Nation and later became chief operating officer of its Ticketmaster subsidiary focusing on digitizing its platform.

“There’s an X-factor to Amy, which is an extraordinarily unique ability to grasp complex concepts faster than pretty much anybody around, and Ticketmaster’s business is anything but simple,” said

Cole Gahagan,

chief executive of sports-marketing firm Learfield and a former Ticketmaster executive.

While at Ticketmaster, Ms. Howe testified in early 2020 at a congressional hearing about hidden fees in ticket prices. Ms. Howe told lawmakers that Ticketmaster would support so-called all-in pricing that provides the total cost including fees upfront, but that the policy should be mandated by law for all ticket marketplaces. New York legislators passed such an all-in pricing law this month.

At FanDuel, Ms. Howe’s executive team is among those in the industry speaking out against gambling companies signing sponsorship deals with colleges.

Young men are at higher risk for gambling addiction, and they are more likely than women to bet on sports, according to the National Council on Problem Gambling. In most states, the legal age for sports betting is 21.

“We don’t want the FanDuel brand associated with college campuses,” Ms. Howe said.

FanDuel also is re-evaluating the use of terms like “risk free” in its advertising promotions targeting new customers—terms that have become ubiquitous, according to a person familiar with the matter.

“I certainly feel a huge sense of obligation,” Ms. Howe said.

Write to Katherine Sayre at katherine.sayre@wsj.com