We sat down with Keith O’Loughlin, SVP Sportsbooks and Platforms at SG Digital, David McDowell, CEO at FSB and Rob Bone, president at Amelco USA to discuss the growth in the US sports betting market.
How would you sum up the first year of state-by-state US sports betting since the repeal of PASPA?
KL: It’s certainly been an eventful and exciting period. Eight states are now up and running with legalized sports betting, and the market’s rapid growth will only continue as other jurisdictions look to capitalize on this popular form of entertainment. While the first year of legalized sports betting has been a success, there’s still a long runway for market expansion. Don’t forget, for the majority of operators and the public, sports betting is still relatively new and there’s still a need to educate about what exactly our industry offers.
RB: The first year post-PASPA has been one of empathy and education. Amelco has a track record of more than 12 years of successful operation for sportsbook around the globe, and while much of that experience can be applied to operating successfully in the US, there is still a significant learning curve for all players involved.
Differences in the regulatory landscape, customer partnership criteria, and ultimately the US-centric sports involved has required to look at all the elements involved with a fresh perspective. From data feeds and payment processing to KYC geolocation and network architecture, we have been diligent in ‘Americanizing’ all aspects of our product portfolio and support services.
DM: Well, after most commentators anticipated a snail-like rollout state-by-state, the domino effect of sportsbook regulation has actually created an encouraging amount of momentum. This sports betting movement is certainly a far cry from when casino games sluggishly took hold stateside back in 2013 and we have benefited from geolocation and payment processing solutions developed for the online casino market. However, as with any mad rush to market, a number of impulse actions has led to a distinct sense of buyer’s remorse from those operators who have lumbered themselves with intransigent platforms that can’t easily adapt across different channels and, equally tellingly, differing jurisdictions. Fortunately, in these cases of dissatisfaction, at least most have exercised enough foresight to agree short-term contracts. Even if the ground they may lose in the meantime may be appreciable and the cost of switching supplier is never cheap.
What has been the biggest lesson you have learned during that time?
RB: The two biggest lessons have been related to our assumptions on the US compliance process and the customers’ understanding of the intricacies of sports wagering.
Looking back – we certainly underestimated the complexities in dealing with the various test agencies and tribal gaming commissions; while over-estimating what the customers knew about operating a full-service sportsbook. Fortunately, in addition to our own changes in approach, we have partnered with multiple organizations to help close the gap on each subject.
For any operator eyeing the US market, it’s essential to understand that a “one size does not fit all” in such a large and diverse market. We’ve had to leave our egos at the door as we actively listen to our customers, compliance partners, and most importantly, our US end-users. The US bettor is far different from what we are used to in the UK and elsewhere, and we have been laser-focused to ensure we cater our offering to what they expect at launch, while also planning for what they want as preferences mature and evolve.
How much of a concern for the sector is the number of states (such as New York) not including mobile in the sports betting roll-out?
KL: It’s frustrating for the sports fans more than anything, who will miss out on the full betting experience. Mobile wagering enjoys a large market share in other territories, and it will only be a matter of time before it becomes the norm in the US Again, it demonstrates that the overall market is still in its infancy. We’re more than ready to roll out our mobile sports betting solutions, when states approve mobile sports betting, enabling punters to enjoy the benefits of the channel.
For those who can offer betting on mobile, they will be in a position to refine their approach and ensure the user experience (UX) meets each individual bettor’s demands. Google’s approach in which it splits mobile users into three different types – repetitive, bored and urgent – still holds true today and certainly lends itself to the sports betting sector and how best to engage with players.
DM: As we’ve discussed, the rollout of sportsbook in America is ahead of schedule and expectations. Therefore, it’s worth remembering that progress is always better than stasis, even if it’s qualified progress! So, the fact that the perennial buzz around a “mobile-first strategy” has been muffled in certain states, is not an immediate concern for me. Indeed, with all the vested interest groups lobbying for their own agenda in the US, obstacles are inevitable. That said, it’s important to remember that, despite these impediments to mobile progress, any state remains just one practical legislation session away from righting the ship. We all know where the bulk of sportsbook value resides but online, mobile and retail channels can present a happy cross-sell between one another, given the right joined-up service. Whatever the sports-betting rollout format, then, I would lean towards a mutually-supportive co-existence of channels as opposed to any big cannibalisation effect.
The NFL’s Chris Halpin told the audience at ICE North America that the success of in-play hinges on the use of official data. How significant will these products become over the next year?
KL: The use of official data might help evolve the in-play betting experience in the States, but official providers, which include leagues like the NFL, need to be sincere partners in that evolution. Data could potentially sharpen the process for traders to set more accurate betting lines and might lead to improved integrity monitoring. There’s no doubt that in-play wagering will prove popular with US sports fans, which is why it’s important that all stakeholders work together in order to come up with a solution to overcome some of the hurdles that currently exist.
RB: In my view, in-play wagering has already proven successful in many markets where official league data is not offered. The true question is whether or not these official data mandates will justify the proposed costs involved. Contrary to popular belief, operating a sportsbook is not a high margin business, so any additional costs are going to have to provide corresponding revenue premiums that would have otherwise not been attainable.
Looking ahead to the next 12 months in the US, what will be the main talking points?
DM: I think this integrity fee / betting-data debate will rage on and represents a key battleground. “Commercially reasonable terms” is the stock phrase currently doing the rounds, and I’d second that motion. Among the nearly 20 states to take regulatory steps to date, only Tennessee and Illinois have insisted on official data mandates. To my mind, that’s no surprise, considering no-one owns public domain data from a legal point of view, and any attempt to suggest otherwise would seem to implicitly contradict First Amendment rights. And free speech is the one basic human right that potentially protects all others. So, that’s a hard sell in America, and could potentially have ripple effect back to European jurisdictions. Elsewhere, more prosaically, hot potatoes regarding state tax tiers on turnover, revenue and business rates will also define where any contender sticks a pin in the map for feasible business over the coming year.