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Define the Opportunity

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Cole Rush, in part two of his sports betting legislation rundown examines the similar offers within the market. He also looks ahead to what sports betting will look like in the US.

Two gaps are filled by daily fantasy sports, free-to-play and prediction platforms.

They offer activities that are similar to betting in those states where betting is not legal. They also offer states that have legalized sports betting activation and engagement tools. They can be very useful in educating a sports fan who is not familiar with betting.

Alex Monahan, co-founder, OddsJam

Alex Monahan is the co-founder and CEO of OddsJam. “DFS props for players are very popular,” he says. They’re all over the social media, and have clearly been able ‘grab’ California betting enthusiasts.

Will they fill in the gaps? Not sure. “I do know that OddsJam’s customers use DFS/predictions firms, even in states where sports betting or regulation is legal.

Eric Frank, founder and CEO of Odds On Compliance believes that these platforms cannot compete with their sports betting counterparts.

He says that, “Given the disparity in popularity between sports betting and those platforms adjacent to it, I don’t think we can expect these adjacent platforms to completely fill the void for the states lacking sports betting.”

Brendan Bussmann is the managing partner of B Global and has an entirely different view.

Bussmann says that “free to play” and similar games have both a legal and non-legal purpose. Part of it is the player journey and customer experience.

Models with both of these features have the potential to reach and engage different audience segments. These models should be taken into consideration for all markets.

Free platforms and predictions services may not have the highest revenue, but they still have a significant role.

Bussmann declares that “DFS should be treated as a separate entity.” In some states it is still a grey area in terms of its legalization. It is better to have it in every state in an official way, as each one has its own classification.

Although each executive has a unique perspective, all agree that DFS and other platforms like free-to play have an important role in the industry.

Has the honeymoon ended?

Now we are looking to the future. In 30+ States, sports betting is legal. As unregulated markets take off, expansion will be slowed. What’s next?

Frank says that he believes it is important to balance the growth of sports betting with the protection of bettors. It has never been so easy to bet on sports in the United States. However, this ease must be balanced with appropriate safeguards and caution for bettors.

I believe that states who have legalized sports gambling would be better off in the future if they used technology to enhance consumer protection measures such as responsible gaming and integrity, and to prevent prohibited bettors.

Bussmann claims that sports betting is always high in volume and low in margin.

He says that while Nevada has been around for many decades, there are economies of scale and synergies that could help to increase the margin. The challenges for sportsbooks are similar to those facing the entire industry. We must continue to communicate and educate.

We are only in the beginning of this industry. Nevada’s model has been around for years, but we’re just beginning to see what the ‘national’ version may look like. It’s a bifurcated system with varying tax rates. States that do it well help those in other states who don’t get it.

Monahan believes that a significant evolution has already begun.

Eric Frank, CEO and founder, Odds On Compliance

We’ve already seen it. “Less capital will be wasted and targeted marketing efforts for customers will increase.”

This year, taxes will top the list of concerns for all states, whether they are regulated or unregulated.

Frank says that while there are states which have tax rates for sports betting online, the average is around 20 percent.

Bussmann does not believe that the current course will be sustainable for the industry.

He says that anything above 15% limits a business’s ability to invest, innovate, and achieve long-term growth. Name another company that enters a market and says, “We will pay the same taxes as every other business but tax us even more on our products.” There aren’t any others that do this.

The failure to communicate the economics effectively from the start is a major challenge. People still get the handle and revenue confused. It’s not a money cow, and treating it as some states do will result in you getting neither the milk nor the meat.

Brendan Bussmann, managing partner, B Global

future.”

No business should be able to see a business model that allows them to make a profit within 20 years, or where they have paid for the right of doing business in an area.

Put it together

Looking back at almost five years in the US, we are now on the edge of a cliff. There are still challenges and wrinkles that need to be ironed out.

California’s failed attempt to legalize betting on sports can be used as an example of “what not do” by the remaining states that are unregulated.

In the meantime, states that have legalized gambling will refine existing laws in order to better protect their bettors.

Some states may clash with operators due to high taxes. New York has a 51% tax rate that is astronomically higher than most other states. The Empire State may face some resistance this year or in the future.

We have not even touched on the younger brother of sports betting: online casinos. If stakeholders can agree to a structure that works, then the refinement of sports betting could open up new avenues for online gambling.

The industry will have to adapt to the changing times as it moves into new waters. The industry has seen rapid expansion, but now we are at a turning point. Small tweaks and fine tuning will have a major impact on its future.


Click Here to Read Part One

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