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US Sports Betting – how is the market developing?

Thursday, 06 February 2020

The opening of the US sports betting market back in May 2018 has seen it become one of the fastest developing and most exciting gambling markets. During the last 18 months, 21 states have authorised retail sports betting and within that there are 14 jurisdictions that have authorised mobile sports betting (of which 8 have already launched) – it’s a landscape that changes on a monthly basis and one which Jeremy Kleiman, a partner at Saiber, describes as the “Wild West”.  Whilst this period has clearly been one of rapid growth, it has also presented many challenges and given industry stakeholders an opportunity to reflect on the trends they have seen and the lessons to be learned going forward. 

It is on this note that the panel began by discussing the key trends that have changed the market in 2019 and what to expect looking ahead. One trend is the challenge that regulators are facing with regard to keeping up with the rapid pace of uptake – particularly in states that are introducing retail and online/mobile sports betting simultaneously. Jeremy explained that regulators are finding themselves in the less than ideal position of having to issue barebones regulations and issue temporary licences with a view to fixing it over the next 6-12 months. Looking at the issue through a different lens, Jeffrey Haas, Chief International Officer at DraftKings, explained that the US betting consumer is being educated in some of the more sophisticated betting products, especially in-play betting – a trend which is garnering more engagement with the sector which will likely see more interesting and varied products. Charles Cohen, Vice President of Sports Betting at IGT PlayDigital, added that as player sophistication develops alongside the market we will begin to understand what the US consumer actually wants and that part of the answer is that it will “differ state by state and will be heavily influenced by things like the configuration of the market”- for example, whether mobile is available in a jurisdiction. 

The past year has also been the one that companies operating in the US since the market opened were able to produce real data and provide evidence of the opportunities within, further exemplified by a number of iconic deals including the FoxBet deal and the mega-merger between Flutter Entertainment and Stars Group. Looking forward Ramy Ibrahim, Managing Director of Moelis, pointed out that sports betting profit margins are thin and as the market develops the trend to look out for increased role of mobile and remote registration as well as cross-selling into casinos. 

The discussion then turned to the topic of the regulatory environment in the US. The US is relatively young when it comes to regulation of sports betting and, contrary to the belief that it would draw on the practice and experiences of other regulators (particularly European regulators) and develop into a seamless regime, it appears that it is in fact more fractured than Europe. Jeffrey explained that, similarly to how each European country has a different regulatory framework, the US find itself in a position where it has potentially 48 distinct regulatory regimes. It’s also not just the sheer volume of regulation that’s problematic, but the actual requirements of some of these frameworks. Jeremy highlights that some jurisdictions require advance notice of certain operator activities, for example the offering of new betting markets. This often means operators must wait before receiving approval, impacting on their ability to pivot and plan ahead in a fast-changing market. 

To end the panel, moderator Joe Saumarez Smith (Chairman at Bede Gaming) asked who the panellists believe are the big winners in the US market. Looking at the market as it stands, there is a lot of competition. The big winners will be those that create the best products, provide the best user experience and as Adam Greenblatt, Chief Executive of Roar Digital, suggested those that build their product to work across multiple states. Taking a wider approach, David Briggs, Chief Executive at GeoComply said the big winners are the taxmen on a state by state basis who, prior to the market opening, were not earning any revenue as well as the advertising industry as a whole who are benefitting from the light touch of regulation around the advertising of sports betting in the US and the subsequent spend on media from operators, be it TV adverts or billboards. Ultimately only time will tell as the landscape is constantly changing – 2020 will certainly be a seminal year for the US sports betting industry.  

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