How to get your slice of American pie

Since the repeal of PASPA, the US sports betting landscape has changed rapidly. But today, we only have five states ‘live’, three pending and a dozen still working on legislation. Indeed, the biggest rush is not coming from states or operators but from ‘other stakeholders’: sports leagues, suppliers and patent holders, for example, staking their early claims on a piece of the pie.

How big is it? For some states, like Pennsylvania, many argue too small. Even so, Morgan Stanley predicts that $216bn will be legally wagered on sports by 2025. In New Jersey, sports betting handle rose from $41m in July to $184m in September.

DraftKings led online but the biggest operators, like bet365, are still coming through their regulatory and product planning processes and in the end, what matters is who wins in the first six years, not the first six months. That’s exactly where product comes in.

May the best product win… but which one?

“The best product always wins” – a shared belief by many in business, including DraftKings CEO Jason Robins. And, ceteris paribus, I agree.

The current US offering is dominated by American companies on European platforms, a choice largely driven by the need to launch quickly. The second wave of releases will still lean on European ‘know-how’ but will be more deliberately driven by the need to differentiate.

So which products and channels determined the winners in Europe? From a distribution standpoint, it was the move to digital, first web and then mobile (a step the US will skip). From a promotion standpoint, it was affiliate programs (complex in the US), TV advertising and free-to-play games.

Product-wise, it was range of betting markets – original winner, bet365, is now challenged by platforms like SBTech and BetConstruct. The incumbent US racing operators – TVG, XpressBet, TwinSpires – may hold a natural advantage here, and less so, DFS. Next to rise was in-play betting, catalyzed by the increase in the broadcasting of sports. Exchange betting was perhaps the best new product but (sadly) remained niche. On the contrary, cash-out revolutionized the betting experience and went mainstream.

Arguably, the single most successful product was Sky Sports’ Super 6, a free-to-play pool game, which has reached over 1.7m weekly players with all the cross-sell potential this implies for Sky Bet. TVG’s Super 8 is seeking to replicate this success.

All spoils to the victor… but hedge your bets

Two new product breeds are rising: ‘single game exotics’, with BetVictor’s Bet Builder probably the most complete proposition, and jackpot betting.

The latter is led by synthetic lotteries, unlikely to be permitted in the US, and a resurgence of pools or tote betting, which DraftKings endorsed with their recent ‘Sportsbook Pools’ release. However, there remain obstacles, including that, at least for now, liquidity cannot be shared across states.

One notable departure from the European ‘path’ is the importance of patents. GAN are already seeking to enforce patent US8821296B1 linking online and offline loyalty rewards for casinos. Many observers claim significant prior art and question how such a broad patent has already defeated legal challenges. But going by this precedent – and industry experts claiming that 95% of patents prevail by voluntary license or enforcement, patents will certainly play a major role in shaping the industry.

Ultimately, no silver bullet exists. Market contenders need content, media, free-to-play, jackpots, cash-out and lots more to win. So I have $1 each way on Betfair Paddy Power, bet365, TwinSpires, XpressBet and DraftKings, provided I’m allowed to cash-out in running over the next six years.

Bernard is the Founder and CEO of Colossus Bets, award-winning provider of the world’s biggest sports and racing jackpots and pioneer of Cash Out and ‘crowdfunded’ Syndicates. From a background in financial trading and professional gambling, Bernard saw an opportunity to revolutionise the sports betting space with lottery-size prizes and increased player engagement in the form of Cash Out offers. Today, Colossus jackpots are live with 50+ operators globally, including Betfair, Betclic and Betway Africa, whereas the company’s patented Cash Out technology has been applied to other forms of betting and gaming, including multi-leg racing bets and online slots.