The month in US sports betting: Will Hard Rock bring its tech in-house?

How Hard Rock Digital will configure its tech stack has been one of the most gossiped-about topics of late, given the division’s ongoing hiring spree and potential online sports betting monopoly in populous Florida.

Industry chatter suggests a Hard Rock acquisition of Amelco – which would provide Hard Rock with end-to-end capabilities – may be close. We note the obvious historical connection between Amelco and the former Stars Group executives now heading up Hard Rock Digital. We also note that these rumors don’t appear to bode well for Hard Rock’s current sports betting technology supplier, Scientific Games.

Meanwhile, Hard Rock going in-house would be unsurprising. The brand has a solid market-access footprint, the ability to trade existing skins for skin access elsewhere, a nationally resonant brand, and a large land-based player database. Other brands with these same characteristics – Caesars, Bally’s, MGM – have taken their tech in-house in an effort to vie for (or in the case of MGM’s Roar Digital joint venture, claim) double-digit share of the national online sports betting market.

Rumors swirl that Hard Rock is looking to boost its end-to-end capabilities by acquiring supplier Amelco

A banner year for expansion, with the possibility of more still on the table

So far in 2021, an impressive 11 states have legalized sports betting for the first time, enacted enabling legislation that stemmed from a previous referendum, or amended existing sports betting laws. In just the last three months alone, approximately 19% of US adults gained access to legal online sports betting, such that now just shy of half of US adults reside in a state with legal online sports betting.

This summer will see whether Maine and North Carolina legalize, and whether a few states enact changes to existing sports betting laws, including Rhode Island, New Hampshire, and Oregon. Should Ohio miss its self-imposed deadline of June 30, it, Massachusetts, and New Jersey will have until the end of the calendar year to move pending, relatively high momentum legislation. Plenty to keep us interested these next few months. Of note, if Maine, Ohio, Massachusetts, and North Carolina were to legalize online sports betting this year, the percentage of the US adult population with access to legal online sports betting will have risen from 27% in 2020 to 56% in 2021 – the biggest single year of population penetration growth in the post-PASPA era.

Bet365 can play the long game

Bet365’s incremental but steady increase in New Jersey online sports betting GGR share has not gone unnoticed. In April, we estimate the world’s largest legal online sports betting operator captured about 2.5% of the market, so nearly an all-time best, and well ahead of its trailing 12-month average (1.6%). The increase comes after a recent step-up in marketing that included a campaign helmed by Aaron Paul of Breaking Bad fame.

Is this bet365 pedaling down on the US? We think not. Bet365 is one of the more intriguing long-term storylines in US online sports betting. Its war chest is big. Its app consistently ranks in the top tier of our proprietary testing. And the states of Maryland, Tennessee, and Wyoming offer it the opportunity to continue field trialing its US offering without the hassle of market-access partnerships.

Privately held and geographically well diversified, bet365 – unlike some of its largest US rivals – can afford to exercise maximum discretion amid (or even wait out) the most irrational iterations of US online sports betting.

A new king of the underserved?

There’s a strong feeling that savvier bettors and high-limit bettors are underserved in the US regulated market (just ask #gamblingtwitter). And that’s potentially an opportunity for anyone who can successfully cater to these cohorts. Circa Sports is looking to claim this lane, but the brand lacks financial firepower, reach, and, for now, a truly top-tier product, according to our most recent round of proprietary app performance testing.

That said, DraftKings seems a potential contender to become a – or the? –legal brand of choice for these cohorts once it moves onto its own tech stack in Q3 2021. The operator did hire Steve Baumohl as its head of US trading last year – and Baumohl comes with a reputation for proprietary pricing and aggressive limits. In light of that, we wonder whether material change in the company’s trading risk appetite is on the cards.

Table tennis is among Colorado’s 10 most bet-upon sports, accounting for around 4.5% of online handle each month

Table tennis more than a Covid-period fad?

Even as mainstream sports like football, basketball, and baseball have normalized post(ish) Covid, we’re seeing clear signs in the Colorado data that the decidedly non-mainstream sport of table tennis remains popular with US bettors. For context, table tennis has been among Colorado’s 10 most bet-upon sports in every month – and has accounted for approximately 4.5% of online handle – since launch.

There are a couple of low-hanging reasons for this. First, table tennis is a high velocity, market-rich sport that is livestreamed and has games during periods with limited tier-one sports on TV, making it ideal for in-play betting (we note that this set of criteria is representative of many of the most successful in-play sports, and we understand some of the world’s biggest online sports betting operators have done and continue to do brisk table tennis business).

Second, we think that table tennis is probably capturing some demand that online casino in Colorado might otherwise capture – after all, and especially to uninitiated bettors, table tennis is rapid fire and almost random, making it slot-like in nature.

We note that the enduring popularity of table tennis in Colorado is reflected in Oregon (the only other state that reports table tennis data), where the sport has accounted for 6.6% of online handle on a since-launch basis.

Eilers & Krejcik Gaming LLC is an independent research and consulting firm with branches located in Orange County, California, and Las Vegas, Nevada. The firm’s focus is on product, market, as well as policy analysis related to the global regulated gambling market. Clients include operators, suppliers, private equity and venture capital firms, institutional investors, as well as state governments. To learn more about the firm, visit http://www.ekgamingllc.com