The second part of our legislative rundown on sports betting, Cole Rush reviews similar offerings in the market and examines what the future holds for sports betting in America.
Two gaps are filled by daily fantasy sports (DFS), which is free to play, and prediction platforms.
They offer betting-related activities in states that do not have legal betting. They also offer activation tools and retention tools for states that have legal sports betting. They can be useful in continuing education for a casual betting audience.
Alex Monahan, cofounder of OddsJam, says that props for DFS players are very popular. They’re easily found on social media and have clearly been able to ‘grasp” California bettors.
“Will they continue filling the gap?” I don’t know. However, I do know that OddsJam customers continue to use DFS/predictions firms, even though they live in states where it is legal or regulated.
Eric Frank, founder and CEO of Odds On Compliance doesn’t believe these platforms can match their sports betting counterparts.
He says that “considering the popularity discrepancies among these adjacent platforms and betting on sports, it seems unrealistic to expect such adjoining platforms to completely fill the gap for states without betting on sports.”
Brendan Bussmann is the managing partner of B Global. He has a different perspective.
Bussmann states that free to play and similar games have a place and a purpose in legal and non-legal countries. Bussmann says that part of this revolves around customer acquisition and the customer journey.
“Models that incorporate both are more likely to be heard and to promote the conversation.” Both should be considered in every market.
Although they may not be the biggest revenue generators, prediction and free platforms still play an important part.
Bussmann states that DFS is a unique beast and should be treated as such. It is still illegal in some states. It is better to have it in every state in a meaningful manner than it is in one category.
Although each executive has a different view, they all agree that DFS, free play, and similar platforms are important to the industry.
Is it over with the honeymoon?
Now, we are focusing on the future. In 30+ states, sports betting is legal. As unregulated markets expand, expansion will slow down. What’s next?
Frank says that “a major problem we need to address is how to balance the expansion of betting on sports and the protection of bettors.” It’s easier than ever to place a bet on sports in the United States. However, this ease must be balanced with caution and proper guardrails for customers.
“I believe that states that have legalized sports betting will benefit long-term if they embrace technology to enhance consumer protection efforts, such as responsible gaming and integrity.
Bussmann claims that sports betting has been low-volume and high-margin since its inception.
He says, “There has been Nevada for decades. But there are synergies that can help increase that margin slightly.” “The industry faces the same challenges as sportsbooks. We must continue to educate and communicate.”
“We are still in quarter one of this business. Nevada has it for decades. We are only beginning to see what a “national” model might look like. It is divided by different tax rates and conditions that allow states that do it right to help operators in those states that make mistakes.
Monahan believes that a significant evolution is already taking place.
“I believe [sportsbooks] will be more focused on profits; it’s already happening.” There will be less blind capital spending and more targeted efforts to attract customers.
This year, taxes will be top of mind in any state, whether it is regulated or unregulated.
Frank states that there are “some states with attractive tax rates,” but “the average tax rate online for sports betting is around 20 percent.”
Bussmann does not believe that the current path can sustain the industry.
He says that anything above 15% will limit the business model’s ability to invest, innovate, and sustain long-term success. Name another business that enters a market and says “we will pay all the taxes that every other company pays, but please tax us more on your product.”
“Negligently communicating economics at the beginning is one of the main reasons we are facing the current challenges. People still get confused about revenue and handle. It is not a cash cow, and if you treat it like other states, you will not be receiving the milk or meat it produces in the future.
future.”
“No business should ever be able to see a model that makes a profit in 20 year or where they have to pay for the privilege of doing business in another jurisdiction.”
It all comes together
Now, we stand at the edge of extinction as we look back on nearly five years worth of US sports betting. There are many challenges ahead and wrinkles to be ironed.
The few remaining states that have not yet been regulated can look to legalize betting on sports by referring to California’s failed attempt to do so as a “what to do.”
In the meantime, legal states will work to improve their laws to protect bettors.
Operators might cause a rift with some states over high tax rates. New York’s 51% tax rate is astronomically high. The Empire State may face some resistance this year and in the future.
All of this and we haven’t even touched on online casino, which is the younger sibling to sports betting. If all parties can agree on a structure that works, refining the industry of sports betting could open up new avenues for online gambling.
The industry must be ready to change its course in order to move forward into unknown waters. Although expansion has been rapid, the industry is now at a tipping point and will need to make small adjustments and fine tuning to ensure its future success.
To read the first part, click here
