The US Online Sport Betting and iGaming markets – choosing the right partner for a brighter future
In the United States, Online Gaming* has grown in popularity over the last year, increasing customers base and gaming revenue. The US Online Gaming market is valued at 2B USD and the forecast is to grow further and reach 8.5B USD GGR by 2025, representing a CAGR of over 15%.
*Online Gaming is referring to iGaming (aka internet casino/poker gaming) and online Sports Betting (aka Mobile Sports Wagering)
Circa one-third of states already legalized at least one form of online gaming and others are in the process. I It is clear the growth potential is massive after the pandemic put the entire online industry on steroids. Struggling brick-and-mortar organizations realized that online presence is not just good, but a must-have. It is estimated that the portion of the online gaming revenues from the total gambling revenue in the US is now 20% and it is predicted to double by 2023, on account of additional skins going live, enlarged customers base and more states legalizing online gaming. In 2020, the total GGR from Online Gaming in four of the states- Delaware, New Jersey, West Virginia and Pennsylvania reached over 1.5B USD, representing 200% Y2Y growth. New Jersey with share out of it is almost $1B and Pennsylvania above $500m. New Jersey is currently the largest market for regulated online gambling in the United States. In March this year, the New Jersey operators scooped up 113.7m USD 21%+ M2M. Pennsylvania is the fastest growing market in the US and it attracts operators and providers even though the tax rates – Video Slots 54%, Table games 34% and Poker 16%.
Enjoying the politician support, giving additional state tax revenues from GGR and licensing, increasing in-state employment and decreasing illegal betting through a regulated framework, the online gaming market will continue to thrive. Online Gaming holds a broader potential than the immediate market operators and providers. There is an entire ecosystem of providers in many fields like KYC automation, Anti-fraud and AML systems, AI and machine learning systems, CRM, BI, Gamification tools, payment processors and many more. In other words, this means more indirect taxation and more jobs. Seeing the potential, operators can also take advantage of the growing interest of venture capital organizations and investment banks which have started investing their time, effort and money in the industry. Apart from Tennessee, the regulator has given an advantage to the brick-and-mortar establishments, which should remove some of the fear of losing revenues. As online regulation will cannibalize land-based establishment revenues, mainly from the younger demographic (under 50 years old), going online is a necessity. Not doing so would simply mean that potential online customers will seek to do business elsewhere.
The potential to boost land-based establishments with online gaming revenues comes from the fact that online availability is 24/7, richer products and betting options. It is easily accessible on mobile devices and it extends the business, geographically, throughout the given state boundary
The twelve years between the Unlawful Internet Gambling Enforcement Act of 2006 and the supreme court ruling in New Jersey in 2018 have created an online gaming knowledge gap that US gambling professionals are steadily catching up with by self-learning or/and M&A deals with European technology companies which already have the know-how. Black Friday in 2011 has left a strong impression that things have changed and being compliant is crucial. Land-based establishments which wish to go online are required to close the gaps regarding online gaming products as well as having a better understanding of the regulatory framework requirements of each state and implement technologies that are quite different from the land-based ones. As the payment processing options are richer, player acquisition and retention techniques are various, CSD will also need to be brought up in line with the changes. Unlike the players in Europe who were gradually introduced to new services, products and functionalities over the last decade, the US players are getting an almost complete product in one step.
While the potential is clear, the road to success is not without hurdles, starting with skin licensing, liquidity allocation, and financing. A crucial challenge on hand is to identify the right provider to partner up with. Some Casino owners will look for complete control over the new B2C operation, while others may be reluctant to obtain the know-how and would like to hand the operation to a trusted and experienced 3rd party to run it for them, or to “sell” one of their skins if multiple skins are allowed. Some states allow just one skin per license, while others do not specify a limit. For instance, PGCB in Pennsylvania offers unlimited skins for iGaming licenses, but only one for Sports Betting licenses. Seven jurisdictions are now allowing iGaming and 22 legalized online sports betting. The multi-skin approach is crucial to maintaining diverse and healthy competition. Consumers will be empowered and enjoy better service, and online offering as many more operators are in a given state
Running an iGaming and/or Sports Betting operation is a complex task. Some land-based Casinos are familiar with only running a slot and table games business. With only five states legalizing online casinos, the know-how of Sports Betting is critical; therefore, partnering with the right Sports Betting and Casino partner, like Delasport, is vital. Choosing the right partner can put the land base organizations in the best position to capitalize on Casino and Sports Betting’s opportunities.
Delasport brings to the table the right ingredients to support the local brick-and-mortar establishment. We offer not just technology but also many years of experience in running successful online Sports Betting and Casino operations from the ground up. We support both strategies of turnkey solutions, allowing operators to run their brand and fully managed solutions while we run the day-to-day operations.